Will Californian Small Businesses Recover Post-Vaccination Drive?
The year has begun as the last one ended – with both despair and hope about the future. In 2020, we began the fight against COVID-19. Millions of people became sick and hundreds of thousands died in the US alone. There has also been a catastrophic impact on the economy, both in terms of jobs lost and businesses shutting down.
However, towards the end of the year, things started to look up as multiple pharmaceutical companies revealed successful trials for vaccinations. These vaccinations have given us the prospect of an end to the pandemic. Nonetheless, considering that we are still seeing the worst of the pandemic, there is a long way to go before things get back to normal.
Californian small businesses have suffered tremendously. Many have closed and many more are holding on by the fingernails. Just how bad has it been? And will they be able to recover after widespread vaccinations?
California’s Small Businesses In COVID-19
Needless to say, there are tons of small businesses in California that thrive on in-person patronage or tourism. While some businesses have been able to go completely digital – or, in the case of restaurants, switch to order-in options – companies which provide entertainment, outdoor activities, and social gatherings have had little to no income.
At the beginning of the pandemic, Congress passed the CARES act which gave many businesses the support they needed through significant Paycheck Protection Program (PPP) loans. California businesses alone received approximately $100 billion in the first two rounds of funding. Nonetheless, by June, more than 400,000 Californian businesses had permanently shut down.
Even businesses that managed to survive the first wave could do little to prepare for the second. Businesses thrive on momentum, and there has been almost no momentum since March last year.
Furthermore, it has since emerged that significant corruption likely played a part in where much of this money went. For example, a group of companies partly owned by California Governor Gavin Newsom received nearly $3 million.
Along with the fact that hundreds of thousands of small businesses that would have opened in 2020 put a hold on their plans, small business revenue dropped more than 40% on a month-on-month basis.
These statistics are undoubtedly grim, but as we have mentioned, vaccine rollout has begun. What can Californian businesses realistically expect in the coming months?
Vaccine Rollout In California
California began vaccine rollout like the rest of the country – with frontline workers being prioritised. Now, the state has expanded its rollout, allowing anyone over the age of 65 to get a vaccine. This is in an attempt to lessen the load on hospitals which are struggling from the recent surge.
In spite of this expansion, there is still a long way to go before enough people are vaccinated to stop the spread of the virus. Rollout depends on a number of factors, including production, distribution, administrative efficacy, and the willingness of residents to get the vaccine.
It is likely to be months still before life can return to a semblance of normalcy. For California’s small businesses, this is not good news. Nor is it good for the rest of the country, parts of which have nowhere near the same intrinsic opportunity value as states like California.
However, with the latest stimulus package, along with state initiatives, there are loans available for surviving businesses. And once things do return to normal, California is one state that can look forward to a strong recovery.
Californian small businesses will not suddenly start flourishing, as people will still have less money to spend than before the pandemic. But the services offered by the many hospitality, leisure, tourism, and entertainment companies will always be in high demand in the state.
It will take a while before tourism from the rest of the country to California returns to normal. But as the country’s economy restarts and we see a rebound, California will be a popular destination once again.
Once international travel reopens, there will be a tourist boom as well. While many would-be visitors no longer have the money to do so, there are plenty of people who have been waiting to get away and will flock to the most bonafide vacation spots in the world. Of course, vaccine rollout across the world will also take its time, but the countries getting the vaccine first are where most of California’s international tourism comes from.
What Should Small Businesses Do Now?
So, with vaccine rollout set to take a few months before it brings California back to pre-COVID norms, what should small businesses do in the meantime?
There are undoubtedly a number of small businesses who know that they cannot wait another few weeks, let alone months. Some of these businesses will still try their best to survive, while others will look for benefits in order to file for bankruptcy (which in itself can be expensive).
But there are at least tens of thousands of small businesses in a position to survive with the right type of help. New government grants are on the way, as well as more PPP-type loans. The good news is, there are now more financing options to drive business survival.
California’s online lenders have themselves suffered through COVID-19, with debts going unpaid and businesses unable to afford new debts. Now, they are slowly returning, becoming active again with new products.
For companies trying to get short term business loans in California, this provides a whole range of opportunities. Private lenders have had the past nine months to work on both products and contingency plans that take the impact of COVID into account. They have been able to assess just how much risk they can take on, as well as how much the government is likely to help them out.
They also understand that struggling small businesses can use this time to plan their resurgence once vaccinations have become widespread. Leisure businesses especially will be able to reassess their target markets to better understand what they can realistically expect, as well as how to change strategies to better serve that market.
Survive Now, Thrive Later
No small business plans on merely surviving. Every business person has a dream they want to fulfil. However, in times like these, survival is the most a business can hope for, in order to thrive later.
Private lenders understand this, which is why they are providing loans again. They will likely not see the fruits of all their loans being honored in the near future. But as businesses use their funds to rebuild, and consumer behavior returns to normal, the economy will grow as a whole, benefiting everyone.
The current vaccine drive is taking longer than we all hoped. However, it is happening, and there is an end to this pandemic in sight. With online lenders getting active again, there is renewed hope for California’s struggling small businesses. There may well be a rebound soon to follow.
