After 42 years of profitable operation, the Moviehouse, in Millerton, New York, has become yet another victim of the pandemic. On March 16, as the magnitude of the spreading virus began to register throughout New York State, owner Carol Sadlon decided to close the three-theater, almost-500-seat cinema in this small, rural Dutchess County village, a stone’s throw from tony Sharon, Connecticut, and the elite Hotchkiss School. “This obviously is a serious situation,” she remembers thinking.
Understanding that gathering people together in close quarters to watch the likes of Parasite was off the table for the foreseeable future, Sadlon took immediate action. She furloughed her 12-person staff. She applied for, and received, a loan of $36,700 from the Paycheck Protection Program. Some friends started a GoFundMe campaign, which raised another $28,830. In 1977, she and her late husband, Robert, bought and then meticulously restored the dilapidated 1903 Grange Hall. The Sadlons turned it into a local mecca for first-run and independent films. But as the revenue dried up along with the moviegoers, Sadlon had to give serious thought to whether she could get to the other side of the pandemic. Her husband’s death, in May 2019, exacerbated her dire situation. “I realized that it is really time for me to make the tough decision—that was very difficult to make—that I can’t do this myself going forward,” she tells me. In October she put the building and the business up for sale for $1.195 million. She wants the buyers, if there are any, to keep showing movies. Until then, the theater will remain shuttered.
Sadlon is not alone, not even in Millerton. Local restaurant Manna Dew has been closed for indoor dining and instead transitioned to offsite catering, while 52 Main “is open and struggling to keep solvent,” says Sadlon. Taro’s, the pizza place, has refocused on its peripatetic takeout business. What was a handblown glass store sits empty at a key intersection in town, catty-corner to another empty storefront. The Millerton Inn is open but struggling. “It’s the saddest thing,” Sadlon says. “When you used to go into Millerton, any night of the week there would be cars all over the place and people on the streets. Now it’s totally dead.”
What’s happening in upstate Millerton, New York, is emblematic of what is happening across the country. Millerton might as well be Independence, Missouri, or Walla Walla, Washington. Small and medium-size businesses—especially those dependent upon seeing and serving people on a regular basis—are facing the existential question whether to keep going, or if it’s even possible. On December 15, on CNBC, Warren Buffett said small businesses became “collateral damage in a war that our country needed to fight.” This is not trivial. Small and medium-size businesses in America form the backbone of our economy. According to the U.S. Small Business Administration’s 2019 profile, there were nearly 31 million businesses with fewer than 500 employees, representing 99.9% of all companies and 47% of private sector employment. These businesses create more than 1.5 million jobs a year. And they are hurting. According to a September Goldman Sachs survey, 88% of small business owners said they’d exhausted their PPP loans; a third had been forced, like Sadlon, to cut wages or lay off employees; and 30% said that without another PPP-like infusion from Congress, they would run out of cash by the end of the year. The statistics were even worse for Black-owned businesses: 43% of owners said they would have no cash by year-end. In May, Facebook reported 31% of small U.S. businesses had “shut down.”
Compounding the existential threat for small businesses is the fact that thanks to actions taken by the Federal Reserve in March and April, effectively underwriting the loan and bond markets, most big businesses have been able to get all the capital they’ve needed—and more—during the pandemic, giving them a major competitive advantage over smaller companies that can’t access the financial markets or that banks, even local ones, often ignore. “Small businesses don’t have that access,” David Solomon, the CEO of Goldman Sachs, said on the same CNBC segment where Buffett made his comments. In his September congressional testimony, Jay Powell, the Fed chairman, recognized the magnitude of the problem. He urged Congress to provide “direct fiscal support” to small and medium-size businesses. The Fed’s actions in March and April, he said, were only a “backstop,” adding that its “lending powers” were no substitute for Congress’s “spending powers.”
But the lame-duck Congress and president seem nowhere to be seen. Repeated efforts to supplement the original $2 trillion CARES Act have crashed. Ongoing bipartisan efforts to pass new legislation that would provide somewhere between $748 billion and $908 billion in new aid keep coming up short, although today there is again talk of a supposed compromise. Key parts of the CARES Act are expiring, or already have. The PPP stopped taking applications in August. Direct stimulus checks to individuals have come and gone. The $600 supplement to weekly unemployment checks ended in July. Two other benefits for the unemployed—the Pandemic Unemployment Assistance program and the Pandemic Emergency Unemployment Compensation program—are set to expire at the end of December. Deferments of student loan payments and the CDC moratorium on the evictions of renters are also likely to expire at year-end, as is the paid family leave program for small and medium-size businesses. The Treasury has asked the Fed to return billions in unused emergency-relief money too. Considering how badly many Americans are suffering, the failure of Congress to act is reprehensible. Buffett said he hoped Congress would step up “very soon.” It could start by forgiving outstanding PPP loans or by providing new ones to struggling small businesses. But it may take a new administration and a new Congress to find a way to get something done to help.