Faulty Leadership Breeds a Fragile Foundation
Small businesses across America are on the brink of collapse. So far, it’s evident their survival isn’t a priority — contrary to what’s…
Treasury Secretary Steve Mnuchin announcing the CARES Act — Of which public companies have taken $1B of the allotted capital. Leaving many actual small businesses, barely breathing.
Recently, I’ve fallen inside a deep abyss of observing truths in American Society that I’ve had inklings about, yet have not stared at dead in the eye. In complete honesty, I’m disappointed. The trappings of what we understood to be fixtures of a reliable government, a semi-decent level of accountability and leadership from our municipal, state, and federal policymakers, and a lack of trust placed in the people who are in office, has ashamed me as an American.
From watching Dirty Money on Netflix featuring Jared Kushner’s predatory real estate track record to reading about the NSA’s expansive overarching powers in Permanent Record by Edward Snowden, anyone can come to realize that many, many powerful leaders in the last two decades have focused their energy on the wrong things. We’ve entrusted a largely selfish bunch of bureaucrats too busy pursuing and collecting political power at the cost of forgetting the individuals who put them there in the first place: us. The American People.
Let’s get more concrete. It doesn’t take a genius to realize that the middle class just got absolutely shammed by the slew of stimulus packages that Congress & Senate passed in the wake of the COVID-19 crisis. American small businesses make up 48% of employment across the country. Huge figure. However, it as if the 58.9M+ small business owners, managers, and employees were an afterthought to the larger small businesses across the country.
Why might that be? Well, it’s a little something called money. Banks were rewarded a 5% service fee on every loan they brokered for assistance in regards to the Payment Protection Plan & Economic Injury Disaster Loans and Loan Advance that were passed by Congress in early April. As of today, $10 billion was made by banks who processed PPP and EIDL transactions. So, as hundreds of stories flooded out about the lack of transparency on behalf of the SBA to small business owners who rushed to get their loans approved, it became increasingly clear that the system wasn’t exactly designed to accommodate the companies who needed it the most. 41 publicly traded companies received PPP or EIDL related government funds.
“We remain fully committed to ensuring that America’s workers and small businesses get the resources they need to get through this challenging time.” — Steve Mnuchin
Beautiful rhetoric. Lackluster execution across the board. While initial press promised streamlined grants and loans for small businesses, the first release of $349 billion was exhausted quickly after 220,000 loans were approved in the first two weeks. It wouldn’t be until a slew of stories that reached the press quickly exposed why money was drained at such a fast pace, yet most small business owners were complaining about not even having their application processed.
Ruth’s Steakhouse comes away a winner; a corporation with 159 franchises, $42M of profit, and $468M of revenue.
Can’t forget Ashford Hospitality Trust (owning or having shares in 150+ high end hotel properties), which landed a whopping $30M loan via a PPP loan.
Or how about the Los Angeles Lakers, yes the Lakers, receiving $4.6M in loans (ultimately decided to return it). In case you’re wondering, the Lakers are worth $3.7 billion.*
In catching up with my former marketing professor who runs a startup and employs a small team of people, he told me about his struggles in obtaining any grant/load aid whatsoever. Being the leader he is, he cut some of his pay and did his best in offering employees half of their normal hours in an effort to keep everyone employed and not furloughed.
Forget the humble family-owned restaurant in Nebraska who filled in their SBA application as quickly as possible to remain able-financed in retaining their staff who lives paycheck to paycheck, or the corner laundromat owner in NYC who’s existed for ten years, among countless other examples you can conjure up easily in your own community. People are hurting, and it’s the ones who need it most who are forgotten as banks are incentivized to push forward large deals, thus earning higher service charges. They’ve financially benefitted to the sum of $10 billion to date.
This hits close to home for me. Literally. Growing up in a small business environment and seeing my parents work day in and day out to grow and operate a successful, stable business taught me the value of what it takes to create sustainable employment for the eight team members we have at our franchise motel. All of our employees depend on our direct ability to pay them a stable wage for their livelihoods and peace of mind.
3 out of 5 American adults live check to check. 3 out of 5.
How much longer can we expect small businesses to hold the tide? Withstanding the pressures of survival are hard enough, yet the treasury and SBA have epically failed in providing necessary funds to those who need it.
There’s a fundamental disconnect that exists between Wall Street and Main Street, between Washington and the rest of the country.
As unemployment reaches mammoth proportions of 30 million since the start of the pandemic, and as 4 million new grads enter into a shaky economy, it’s time to seriously reconsider the foundation of our leadership in charge of ‘moving’ the economy along. Our policies and tax laws have favored the notion of trickle down investment from the top down, effectively meaning that the upper crux of the economy — big name entrepreneurs, technology firms, the venture capitalists, and massive corporations — can be trusted to maintain job stability and growth in times like these.
That’s not the case. Google froze hiring, massive retailers like Macy’s furloughed 125,000 employees, and U.S. Steel expects to relieve 2,700 people of their duties in the coming days. We must come to understand that our very ability to truly bear the fruits of American opportunity comes from exercising our rights to vote for genuine leadership that looks out for its citizens, not for corporations and people of power.
The linkage between the suits who work in D.C. and the people who provide them their power though votes and money via consumerism has never been more shaky. Questioning and deeply observing inequality and inequitable outcomes during trying times like this can hopefully accelerate much needed change where we need it. The fact of the matter is, unless Gen Z’er and millennials step up to the plate and aspire towards leadership positions in the private and public sector, corporate capitalism will prevail and inequality will only further divide America as it as right now.
We need to look ourselves in the mirror and ask very simple question: do our leaders in the public and private sector know and care about our interests?
If you find yourself saying no, as millions of small business owners and employees are saying, then think about what you’re going to do. Because doing nothing or ignoring reality, has proven to allow money, power, and bureaucracy to do a hell of a lot more harm than good.
My family’s motel business recently did in fact receive PPP funds, yet our EIDL loan has been approved yet not transferred into our business account. Many of our friends in the industry are either in the same boat or have not had their loan processed yet either. Fortunately, my parents have always preserved some liquidity for economically challenging times following the lessons of the ’08 recession. It’s these savings and funds which have come in handy in preserving the hours of our employees and keeping their income steady. But I know not that’s the case for everyone. Most small businesses run month to month.
I hope this is a much needed wakeup call for all — it’s time to put in the work as communities and push for genuine, human leadership that looks out for the people. I hope my generation runs toward the challenge with vigor. Our country badly needs it.
*The Lakers among a few other public corporations have returned the money back to the SBA. Most have thus far stayed quiet or have acknowledged publicly they will be keeping it.