September 2020 – Businesses Struggling Due To Lockdown Insanity

Labor Day weekend 2020 came with continued difficulties for small and medium-sized businesses throughout the country. Due primarily to tremendous inconsistencies in lockdown policies across various states and municipalities, businesses are facing continued uncertainty and additional costs, as well as stifled ability for customers to access the products and services that those same businesses are trying to provide and have provided for years. To a large degree, these products and services are important and consumer demand for them is high, whether or not they meet the arbitrary standard of being “essential”, as determined by a local or state government official.

When lockdowns were first instituted in response to Covid-19 in March 2020, there was little to no thought given to when these severe measures would be lifted and at what point, a full re-opening would occur. Therefore, the past few months have seen tremendous inconsistency and confusion about how to re-open and when to re-open various communities and businesses.

Many business owners around the country have been put in direct conflict with mayors, civic leaders and governors in their cities and states due to lockdown restrictions. Keep in mind that the vast majority of the lockdown restrictions were put in place through executive order or some executive policy decision by a Public Health department and not through any legislative or democratic process. And yet many of the restrictions have not been lifted and are continuing to cause severe disruption to most business models, six months after they were initially put in place. The conflict has arisen due to the fact that no clear criteria were ever agreed upon as to when it is safe to re-open and resume operations and/or in what capacity the businesses will be allowed to re-open.

In most locations around the U.S., the numbers of fatalities, hospitalizations and people reporting Covid-like illness has fallen considerably from the March/April/May timeframe, creating fuel to debate if and when it is the right time to resume normal business operations. In many jurisdictions, the Covid-19 statistics have fallen below the same rates that existed before the lockdown measures were put in place or even below rates from before the beginning of 2020, creating tremendous confusion and controversy about restrictions still being placed on business owners, customers and the general public. These conflicts will likely need to be resolved in the court system and will probably linger for years, as businesses begin to file lawsuits against the cities and states, in which they operate.

In New York, a $2.0 billion lawsuit is being filed by restaurant owners against the city because of the restrictions against indoor dining. The rate of people testing positive for Covid-19 has been below 1.0% for over 30 consecutive days in New York City. Meanwhile, thousands of restaurants are facing permanent closure before the end of the year, if they are not allowed to open, at least partially. So these business owners are literally taking to the courts to fight for their business lives, a story which will likely repeat itself for the next several years in cities around the United States.

In the coming weeks, we will be publishing a detailed analysis of the severe costs of lockdown policies, in terms of additional lives lost, lives shortened, loss of economic output, loss of economic opportunity and increased need for social services.

In today’s piece, we begin to look at the efficacy of the Federal government’s new Main Street Lending Program and investigate some of the challenges that this program has faced, which have caused the Main Street Lending Program to sputter and not gain much traction among the small business community, for which it was intended.