ImpactAlpha, March 10 – In the face of the coronavirus outbreak, local leaders are being forced to sacrifice local economic activity in the national interest.
On Friday, Austin canceled SXSW, the tech and culture fest that contributes some $350 million to the local economy – and let go of a third of the festival’s full-time employees. Organizers of the Comic Con, under pressure from Seattle officials, rescheduled the geek convention which was set to bring 100,000 people into the city at the heart of the U.S. COVID-19 outbreak. Chicago’s Coachella music festival is expected to be postponed.
The U.S. government is weighing bailouts for big hotel and cruise companies. Entrepreneurship advocate Victor W. Hwang tweeted, “America needs more bailing out of little people who make and create things, like products we need and jobs that pay the bills.”
Seattle Mayor Jenny Durkan said measures taken to mitigate the spread of coronavirus will hit the 200,000 people who work in small businesses hardest. “I want to get as much federal relief into the hands of those businesses,” she said. Some such efforts underway around the globe:
Softening the blow. The Japanese government will provide interest-free loans for small- and medium-size companies that experience a sharp drop in revenue. In China, where most Beijing restaurants remained closed, the government will allow small and medium-sized businesses to defer payments, and pay lower rents and interest on loans. Taiwan’s $2 billion package includes loans for small businesses, subsidies for tour agencies, tax cuts for tour bus drivers and food vouchers to Taiwan’s night markets. Italy has provided small business tax cuts and credits as part of billions of dollars in aid. President Trump is scheduled to meet with Senate leaders today to discuss proposals for a payroll tax cut, assistance for hourly workers and loans to small businesses.
Recovery grants. Nonprofits are being hit by the coronavirus disruption as well. “Donors need to act now to ensure these organizations can not only help us through the crisis but also be in a position to rebuild our communities in the future,” writes Nonprofit Finance Fund’s Anthony Bugg-Levine in The Chronicle of Philanthropy. Among Bugg-Levine’s suggestions: Provide unrestricted funding, pay full costs and mobilize recovery grants.
Catching up. Congressional Democrats are seeking to provide interest-free loans of up to $2 million to outbreak-affected businesses. They are urging banks and regulators to be flexible with consumers and businesses that miss payments due to temporary virus-related disruptions. The $8.3 billion in U.S. coronavirus funding so far is focused exclusively on healthcare. “States and cities are going to have to act in the national interest right now to prevent a broader epidemic,” says Scott Gottlieb, the former chief of the Food and Drug Administration. Needed now, he says, is assistance to people and cities “to try to give them an incentive to do this.”
Tech mobilization. In China, Alibaba is waiving service fees and rents on warehouse space for small merchants. Ant Financial will offer interest-free or low-interest loans to Hubei-based merchants. JD.com is creating a chatbot to collect patient information at triage. In the U.S., Google and Microsoft are providing temporary free access to enterprise conferencing tools.