LAEDC supports bill H.R.6040 to reduce the interest rate to zero on Small Business Administration emergency loans to businesses. Here is LAEDC’s support letter to local Congresswoman Judy Chu, a coauthor of H.R.6040. Thank you, Representative Chu for your leadership on this issue.
March 5, 2020
The Honorable Judy Chu
United States House of Representatives
2423 Rayburn HOB
Washington, DC 20515
Re: H.R.6040 — SUPPORT
Dear Representative Chu:
On behalf of the Los Angeles County Economic Development Corporation (LAEDC), an organization whose purpose is to advance opportunity and prosperity for all the residents of Los Angeles County, I am pleased to support House of Representatives bill 6040 (H.R.6040), titled: “Small Business Relief from Communicable Disease Induced Economic Hardship Act of 2020”, which would amend the Small Business Act(1) to ensure that small businesses affected by the onset of communicable diseases, such as COVID-19 (“Coronavirus”), are eligible for disaster relief.
Enacted more than 65 years ago, the Small Business Act affirms and carries out the long-standing declared policy of the Congress “to aid, counsel, assist, and protect, insofar as is possible, the interests of small business concerns.”(2) Unfortunately, not since the financial crisis of 2008 have the interests of small businesses been more at-risk and in need of federal aid, assistance and protection than now.
Similar to the other parts of the nation and across the globe in Asia and Europe, here in Los Angeles, our 489,618 (mostly small) business establishments, which support more than 3.87 million payroll workers, are likely to experience a number of maleficent and perhaps irreversible financial damages, ranging from lost revenue and operating losses, to credit defaults and business failures, to temporary and permanent layoffs, as a result of the forecasted global economic slowdown due to the Coronavirus. From customers who stay home to workers who call in sick, small business owners, many of whom are not well-positioned financially to weather a long downturn, will no doubt be grievously hurt as the Coronavirus impacts expand from a few sporadic outbreaks to a global pandemic, which Anne Schuchat, principal Deputy Director of the Centers for Disease Control, said will not be “a question of if this will happen, but rather more a question of when this will happen.”
On macro level, the Coronavirus is already having a negative industrial impact here in Los Angeles. The twin (“San Pedro”) ports of Los Angeles and Long Beach, responsible for about 40 percent of all waterborne freight into the United States and the centerpiece of our region’s trade and logistics industries, supporting thousands of warehousing, transportation and freight forward businesses and over 580,000 workers across Southern California (2017), are seeing slowdowns as Chinese and Korean factories struggle to sustain production. In fact, container operators have recently canceled nearly 60 trans-Pacific sailings to the ports of Los Angeles and Long Beach.(3)
In Los Angeles’s tourism and hospitality industries, which support more than 530,000 workers and serve and accommodate an estimated 50 million visitors annually (2018),4 businesses that depend on travelers are already experiencing fewer reservations and numerous visitor cancellations, reducing revenue and income for those businesses. And finally, in our manufacturing industries, which support more than 364,000 payroll employees (2019), many businesses are unable to get needed parts from overseas suppliers, making it difficult to keep some manufacturing lines running and meet the needs of their wholesale and retail clients, which will be further exacerbated and compounded by the upstream (i.e. supplier) and downstream (i.e. customers) losses and broken linkages subsidizing and benefiting these businesses.
In light of current events and the near-inevitable future risks to small business solvency, the LAEDC firmly believes that federal emergency assistance must be made available to mitigate the above mentioned outcomes in the form of emergency Small Business Administration zero-interest loans that are made available to small businesses. For these reasons, the LAEDC strongly supports H.R.6040.
Sincerely,
Stephen Cheung
Executive Vice President
Los Angeles County Economic Development Corporation (LAEDC)
1 Public Law 85-536, as amended
2 Ibid., see e.g., §2(a)
3 The Wall Street Journal, Jennifer Smith and Costas Paris, dated: March 3, 2020