Business owners tap into savings to withstand pandemic

NEW YORK (AP) — When the coronavirus outbreak forced cruise lines to cancel trips to Alaska, it wiped out Midgi Moore’s tour business, leaving her with thousands of dollars in deposits to refund.

Moore’s company, Juneau Food Tours, didn’t have enough cash on hand. So, she withdrew $30,000 from her retirement account — a painful decision for a 56 year old starting to look forward to the day when she can stop working.

“It was a gut punch,” Moore says.

Many business owners are tapping the money they socked into personal savings and retirement accounts to withstand the pandemic. For some, like Moore, there are big expenses coming due while for others it’s a way to offset the losses and stay afloat until the virus eases its grip.

Owners are trying to keep their businesses alive at a critical time for the U.S. economy. Small businesses employ nearly half the nation's work force. In April, payroll provider ADP reported nearly 20 million jobs were lost at U.S. companies and said more than half were at businesses employing under 500 people. Many economists expect a sizable portion of those job losses will be permanent.

A report issued by the National Bureau of Economic Research found that 2% of small businesses surveyed had shut down permanently in March, a number that certainly has increased since, meaning it’s likely hundreds of thousands of businesses have failed. The government's Paycheck Protection Program helped by giving out more than 5.2 million loans to small businesses and non-profits. But owners and advocates say struggling companies need more help from Congress, and lawmakers themselves are urging the Federal Reserve to expand its lending to small and medium-sized businesses.

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