Supporting SmallBusinesses


Locally owned, small businesses are essential for a resilient economy.

Over the past 10 months, many small businesses have struggled to stay afloat amid levels of economic distress unseen in decades. While a majority of the nation’s most profitable corporations have increased their profits throughout the pandemic, small businesses have not seen similar results: at least 100,000 small businesses permanently closed in the first two months of the pandemic alone. (Washington Post) Though federal Paycheck Protection Program (PPP) loans and state-level small business funding have offered temporary relief to struggling small enterprises, these measures have, for the most part, been bandaid solutions during the ongoing pandemic.

In spite of small businesses suffering enormous financial setbacks, one positive trend has emerged amid these struggles: our country’s collective re-emphasis on, or even realization of, the critical role small businesses play. To stave off the closures of cherished local establishments in our communities, resounding pleas to “shop small” and “buy local” have outlasted the holiday season, right as we enter a New Year in which most Americans will not have access to a vaccine for several months. Congress also recently passed legislation–though perhaps too little, too late–providing an additional round of stimulus checks and PPP loans for struggling small businesses.

From shuttered windows to “Going Out of Business” signs, it’s become abundantly clear how dire the situation is for America’s small enterprises, and additional government assistance will certainly be necessary for those still afloat to survive the remainder of the pandemic. Given how impactful small businesses are in maintaining vibrant local economies, we must continue to support measures to save our small businesses, the backbone of the American economy

Small Businesses as The Linchpin of Local Economies

According to a 2017 report, small businesses employed 47% of the country’s private workforce. (U.S. Small Business Administration Office of Advocacy) What’s more, in 2018, jobs created by small businesses accounted for approximately 62% of all net new private-sector jobs since the end of the Great Recession. (Inc.)

While clearly playing a major role in the U.S. economy overall, the success of small businesses is especially crucial at the local level, where small businesses help create vibrant local economies. Small businesses keep dollars local, ensuring that more money stays within the community than if it were spent at large big-box stores and corporations, also known as the “multiplier effect.” (American Independent Business Alliance) Small businesses also contribute to their local tax bases, where taxes support community-wide developments like road improvements and updates to green space, and create jobs, increasing the likelihood that residents will stay within their community and continue supporting their local businesses with their spending dollars. (Medium)

Small business owners are also more likely to be rooted within the community: nearly 90% of small businesses’ charitable donations support local causes, while business owners also create strong partnerships within their respective communities, including with neighbors, other small business owners, local institutions, and community leaders. (Medium, Forbes) What’s more, small businesses support other small businesses. According to Bill Brunelle of Independent We Stand, “the success of one business can steamroll through the economy.” (New York Times) For example, small business owners may patronize a local cafe during the lunch hour or hire small firms or freelancers for various business needs, such as accounting, social media marketing, or shop maintenance.

Of course, small businesses provide numerous social benefits for communities as well. Among these include their contributions to the unique identity and social fabric of their community and tendency to offer consumers a more diverse selection of goods, including locally made items, compared to that of big-box stores. The benefits can also be environmental; clusters of small businesses, particularly in downtown shopping districts, encourage walking and may even reduce car usage and traffic congestion. (Medium) Further, about 66% of small businesses profess to use recycled materials. (HuffPost)

A Long Way to Go: Small Businesses’ Current Struggles, and What We Can Do

Due to the pandemic, which led to mandated closures of many non-essential businesses, a large number of small businesses across the country are in serious financial jeopardy. According to a poll from the U.S. Chamber of Commerce Current Small Business Index, 50% of small businesses anticipate “operating for a year or less in the current business climate before having to permanently close.” (US Chamber of Commerce) In Michigan specifically, small business revenue has decreased by 35% compared to January 2020. (Detroit Chamber) It’s also evident that targeted government relief to date has not gone far enough: a majority of respondents did not believe that “they have all the support they need from the federal government for their business to succeed.” (US Chamber of Commerce)

So, what can be done? First, additional direct payments to individuals and aid to struggling small businesses are needed from the federal government, especially given the likelihood that vaccines for most Americans will not be readily available until summer at the earliest. President-elect Biden has pledged swift action once inaugurated to provide aid to businesses, individuals, and local governments, as well as spending on infrastructure and increasing tax rates for the wealthiest Americans. The proposed stimulus package would aim to provide $1,400 to qualifying individuals, which on top of the $600 already guaranteed would reach the previously proposed amount of $2,000 that had been blocked by the Senate. (New York Times)

In addition, the government can revise the tax code. On the whole, small businesses pay more taxes than large corporations; according to Inc., a “majority of small businesses are subject to higher tax rates than their larger C corporation counterparts” as part of the Tax Cuts and Jobs Act, which lowered the corporate tax rate from 35% to 21%. (Inc.) In fact, in 2018, at least 60 corporations, including Amazon and Netflix, paid $0 in federal taxes. (The Center for Public Integrity) Meanwhile, those small businesses classified as S corporations pay an effective income tax rate of 31.6 percent. (The Business Journals) Re-raising the corporate tax rate on giant corporations and establishing fairer tax rates for smaller enterprises can relieve some of the burdens that small businesses currently bear.

As individuals, we can be part of the solution too. Obviously, we can choose to patronize small local businesses instead of large retailers whenever possible. We can “shop small” at businesses that align with our values, including those that are BIPOC-owned, committed to sustainability, and pay employees fair wages. But we can also continue to be mindful of our personal responsibility during the ongoing pandemic, as increases in COVID-19 cases may bring about further statewide restrictions that negatively affect small businesses. This responsibility includes continuing to wear masks, social distancing, limiting non-essential trips and vacations, and electing to receive the vaccine when it becomes available to us.

Ultimately, the success of struggling small businesses may hinge on the government’s effectiveness in providing aid to hurting business owners, as well as Americans’ willingness to continue abiding by COVID-19 precautions. At the same time, simply believing that we can “return to normal” and expecting that businesses will bounce back accordingly is both unrealistic and unwise. Let’s keep this in mind for the next several months and throughout the remainder of the pandemic, and remember that when we “shop small,” we’re contributing to something much larger.


Washington Post

U.S. Small Business Administration Office of Advocacy


American Independent Business Alliance



New York Times


US Chamber of Commerce

Detroit Chamber

New York Times

The Center for Public Integrity

The Business Journals

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