A large economic rescue package would include aid to small businesses to help retain workers and direct cash payments to some Americans.
The Federal Reserve announced new initiatives on Monday, including the establishment of a Main Street Business Lending Program to support lending to small and medium-sized businesses, complementing efforts by the SBA.

Julie Verratti, co-founder of Denizens Brewing in Silver Spring, Maryland, had to furlough 30 employees a few days ago. While her company may be able to operate for the time being, others won’t. She’s urging Congress to take immediate action by calling a temporary halt to rent, mortgage and commercial-debt payments.

“I’m not against SBA disaster loans, but they’re not part of the solution in the first wave,” Verratti said. “That’s the second or third wave.”

The SBA may be the only entity that will lend to small businesses during this crisis. Banks aren’t set up to make fast working-capital loans, said Kurt Chilcott, chief executive of San Diego-based SBA lender CDC Small Business Finance. Such loans would be too risky, especially when no one knows when businesses will rebound, and federal regulators would need to relax all kinds of rules, he said.

In some cases, emergency funds set up by states could provide some “bridge” funding until the company gets its disaster loan from the SBA, he said. Florida’s program, for example, offers as much as $50,000 generally, or $100,000 in certain cases. However, the mix of state and federal money probably won’t cover the overwhelming need.

“We’re still going to lose a lot of smaller or not particularly well-capitalized small businesses,” Chilcott said.

Small businesses employ almost half of the private workforce in the U.S., and contributed about two-thirds of net employment gains in the U.S. since 2011, according to the SBA. The tiniest firms, of 20 or fewer people, account for about 20 million employees. Their collapse under the current stay-at-home orders will reverberate across the economy.

Other hard-hit countries are grappling with the same conundrum -- seeking to contain the virus without destroying small and medium-sized businesses. From Italy to France and Germany, governments are weighing measures including loan guarantees, moratoriums on repayments and support for furloughed workers.

In the U.S., many are seeking creative ways to generate sales. Kimberly Anderson, who had to shut down her fashion boutique in Philadelphia a week ago, took pictures of her inventory and reached out to clients via Facebook, Instagram and text messages. She contacted designers to try to get light spring looks for her customers.

The mother of two applied for an SBA loan, but was unable to complete the application right away because she didn’t have all the required documents at hand.