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Help Small Businesses

Businesses can apply for a Small Business Relief Fund from the city here.

#ShareYour50, organized by Anna Purcell of Manayunk’s Threads on Main, encourages shoppers to spend $10 each at their five favorite local stores.

Adam Erace, owner of recently-shuttered Green Aisle Grocery, launched #Five4Fifty, encouraging shoppers to spend $5 a day at a small business for the next 50 days.

The Merchants Fund (TMF) has provided support to merchants and small businesses during times of financial hardship since 1854, and you can now donate to the Merchant Relief Fund to support small businesses in Philly, particularly those in under-resourced areas with little access to other programs.

You can buy an e-gift card bundle for a group of Philly businesses at loveyourlocal.org, organized by Jordan Denny, founder of Momentary Ink Company.

Buy gift cards for your favorite shop.

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PA's Shared Work Program

A Shared-Work plan allows an employer to temporarily reduce the work hours of a group of employees and divide the available hours equally rather than laying off any employees.

Employees covered by a Shared-Work plan receive a percentage of their Unemployment Compensation (UC) Weekly Benefit Amount (WBA), while they work the reduced schedule, if they are otherwise eligible for UC.

Learn more about how to apply for PA’s Shared Work program here.

Guest Commentary: How Not to Help Small Businesses

Congress’s plan to save the country’s businesses during the Covid-19 shutdown was a failure, a former Philly official says. Here’s how it could be done better

Congress’s plan to save the country’s businesses during the Covid-19 shutdown was a failure, a former Philly official says. Here’s how it could be done better

When the history of the pandemic is written, the federal government’s small business assistance programs will go down as one of its biggest policy failures.

In late March, Congress and the Treasury Department cobbled together a dizzying array of federal programs designed to help small businesses, notably the Payroll Protection Program (PPP).

I recently spent time working with a team of lawyers and financial experts, assisting small businesses in Philadelphia who were trying to get access to these loans and grants. Our work revealed several fundamental flaws with the program design.

First, creating a limited pool of funds is a terrible way to help the needy. It sets up a system of social Darwinism that rewards the strongest players.

Do SomethingMany of our clients were childcare providers. Some of them had no accountants or formal payroll systems, so that they had a hard time understanding or providing the information and records that were required.

The result was that firms that had in-house expertise could quickly apply and others, including sole proprietors, were mostly left in the dust. By the time many of them got their paperwork together, the money had run out.

Second, definition of “small business” included firms with 500 employees and even more, because of the rules governing affiliations. So kudos to Shake Shack for returning their PPP loan—but they didn’t really do anything wrong. The program design allowed them (and thousands of big companies like them) to access the money.

Limiting assistance to businesses with fewer than 100 employees (or 50) would have been a better approach. So would a set-aside for really small businesses, preventing the large ones from gobbling up all of the money

Third, using banks to process applications is a terrible idea if you want to get money out quickly. The banks didn’t have the staff to handle this volume and they were quickly overwhelmed—again not their fault.

From day one there was a bottleneck that never went away. And understandably, banks wanted to deal with their customers first. So if a small business did not have a strong banking relationship, they had trouble even applying for funds.

Fourth, the PPP program has a built-in conflict between businesses and their Read Moreemployees. Businesses can get their PPP loans forgiven if they put their employees back on the payroll for eight weeks. But many employees would make more money by staying on unemployment, since Congress recently provided an extra $600 per week to unemployed workers.

We talked to many businesses who struggled to balance their desire to stay “open” with their conflicting desire to help their workers get more money.

The only good thing about these failures is that they have been so spectacular that they provide us with a clear opportunity to completely revamp the way we do this in the future. Fortunately there are some better ideas and models elsewhere.

Cheat SheetOne model worth looking at is a work-sharing program used in several European countries, such as Germany. It allows companies to quickly tap government funds to keep workers on payroll during a downturn.

It’s not perfect, but it eliminates many of the flaws of the U.S. programs—it doesn’t depend on banks to get the money out and it coordinates business assistance with the unemployment compensation system.

If Congress provides another wave of funding later this spring, they should address the flaws in the PPP program and create assistance that works for all small businesses.

Photo courtesy Eden, Janine and Jim Flickr

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