Here’s One Way to Provide Small Businesses a Fresh Start
The coronavirus is already causing an economic crisis in the United States. But no business will be hit harder in the coming weeks and months than small businesses, which account for more than 99 percent of all businesses in the United States and close to 50 percent of all employment. Of these, 73 percent are sole proprietorships and 89 percent have fewer than 20 employees.
As the virus continues to spread across the nation and people practice social distancing by staying away from stores, restaurants, dry cleaners, it is these mom-and-pop shops that are at biggest risk of failing. As of this writing, a $2 trillion economic relief package has passed the Senate and moved on to the House. It includes some measures that will help many small businesses weather this difficult time, notably a $367 billion loan program.
But there are other specific and immediate steps the federal government can take—including easing the path to Chapter 7 bankruptcy—to help America’s small-business owners.
Even in normal times, small businesses have a high failure rate. Only about 50 percent of businesses survive the first five years and only 30 percent survive longer than 10 years. America’s bankruptcy system allows these failed entrepreneurs a “fresh start.”