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Single Proprietor Businesses See Little Help and Plenty of Catch-22s

In the war against COVID-19, America’s smallest businesses, sole proprietorships, may be taking most economic casualties. We’re talking your mom-and-pop livelihoods unsupported by lawyers, accountants and credit lines.

Many have little or no buffer against the economic calamity facing them. Yet federal, state and local emergency financial aid programs are structured in ways that are confusing, work against them or, in some cases, specifically exclude them.


Blocked at Every Turn 


Pauline — she asked that we use only her first name — has been offering cosmetology and hair styling services from her Sunnyvale studio for almost three decades, earning from $50,000 to $70,000 a year.

But when COVID-19 shut down the country, her income was shut down with it. With zero income for the last six weeks — even as she spends down her savings and does one-off personal assistant jobs — she can’t pay her rent and feels increasingly desperate.

And even though her landlord is accepting partial rent payments and the rent on her studio has also been waived, she will have to be able to pay up eventually and it’s hard to see how her prospects will be better in the foreseeable future.

When Pauline applied for financial help from a local small business loan program, she learned the program was already out of money.

She can’t apply for a federal Payroll Protection Program (PPP) because she didn’t file a 2019 tax return.

She isn’t eligible for Sunnyvale’s small business emergency loan program because she has no employees beyond herself.

After days of fruitless effort struggling with California’s problematic online filing system, Pauline finally completed an application for unemployment but has yet to see a check. Even that required something that many solo workers don’t have — a current resume.

Pauline got ready to reopen her salon on May 4, stocking up on disposable masks, gloves and capes for customers, increasing her inventory and trash collection costs. She worked out the social distancing for customers and has no waiting area.

“I can plan appointments so there’s plenty of time between each for cleaning and clients don’t have to wait,” Pauline said.

So, when the County extended shelter-in-place to May 31, she found herself facing an even longer pitiless stretch with no income.

“Another month of this is going to be devastating,” she said. “I don’t feel safe, I don’t feel healthy. I feel very, very depressed.”


You Can’t Train Dogs on Zoom

Dog trainer and boarder Cindy Gehring’s income likewise nose-dived with the mid-March shelter in place order. Even without that, her clients’ money worries kept them from taking vacations, so they didn’t have to board their dogs.

Previously, the San Jose resident cleared about $30,000 in profit from her business. Only in recent years has she been able to add to her retirement savings. Now, she’s living on them, a state of affairs that can only go on so long.

“When people say it’s a small sacrifice to shut down,” she said, “you’re telling me that it’s a small sacrifice to lose everything.” Recently, she learned that her landlord is at risk of losing the property she lives on.

Gehring, a self-described “solo-preneur,” likes to say that she doesn’t teach dogs, she teaches people to understand their dogs and interact with them. She’s tried to move her work online, but it’s a poor fit. Teleconferencing is designed for people, not dogs.

Solo businesses exemplify the qualities that Americans profess to admire, she says: building yourself up by your bootstraps, taking risks, and finding niches to serve customers creatively. Yet in the structure to support them, “We’re forgotten.

“We don’t get the benefits of having an employer, and we don’t get the benefits that big companies do, like group insurance,” she continued. “We’re 73 percent of businesses in this country, but we’re forgotten. The system should work for everyone.”

With the help of MeriWest credit union, Gehring was able to get a PPP loan that will cover her for May. “I’m starting to get calls again,” she said. “But I still worry. What will happen if things don’t get better in June?”


Cleaning Houses to Working Construction

Raquel Ochoa of San Jose still works, although her house cleaning business closed with the County’s first shelter in place order.

Now, she works at her brother’s construction business as a laborer.

“I did construction in the past, but over 50 it’s a different story,” she said. “I have back pain, bad knees. When I go home I ache. I’m working two times the hours and it’s just physically harder to make the same amount of money.”

Ochoa built her roster of regular cleaning clients over six years, when the pandemic put her out of business overnight.

“I’m one of those Americans who lives paycheck to paycheck,” she said. “I lost all my clients except two, my brother and a person who is disabled [an essential service]. It hit me hard.”

Ochoa has filed for unemployment, but she hasn’t received assistance. She also applied for food stamps. She heard about the PPP loans, but didn’t know that they could be fully forgiven if the borrower complied with the terms.

Some clients offered to pay her as usual, but she said, “I can’t take somebody’s money if I haven’t worked.”


Most Businesses hold the Most Excluded

According to the IRS single proprietor businesses are nearly three-quarters of the nations’ businesses. Yet they’re not at the top of anyone’s list for help.

It took several go-rounds before the federal PPP program explicitly included them as eligible for grants and made clear how to calculate “salary,” as most solo proprietors don’t pay themselves a salary.

Community small business emergency grants — such as Santa Clara’s and Sunnyvale’s — and other loan programs are restricted to businesses with two or more employees, or those with commercial storefronts.

Even when programs are open to small businesses, it can be a full time effort to apply for them and solo businesses don’t have the expertise to navigate these programs easily. In the best of times, solo businesses have difficulty getting loans because banks consider them high risk.

“Big banks — they don’t care about us in good times and they sure don’t care about us in bad times,” said Gehring.



There are some resources for the self-employed:


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