Behind the Money: Running a small business during a global pandemic

April 14, 2020

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5 min read

In January, the U.S. economy was humming with 3.5 percent unemployment, and economists at the American Economic Association meeting in San Diego were debating how to prepare for the next recession. Former Fed chair Janet Yellen argued for automatic stabilizers—mechanisms that would automatically pump government money into the economy when businesses pull back. By the time the coronavirus hit the real economy, those stabilizers weren't in place. The government has since scrambled to invent them on the fly, with mixed results.

A small business on the edge

Marin Pereira runs My Atelier, a drapery workroom in Marshall, Virginia, that grew out of her mother's basement sewing operation in 1985. She had relaunched the company as a wholesaler, grown it from a mother-daughter duo to a team of part-time workers, installers, and her first full-time employee. Her crowning achievement was signing a lease for a commercial storefront on Main Street—a risk she took partly to help revitalize rural America. "It was worth the risk," she says. 2020 was projected to be her best year yet, with gross revenue up 20 percent from the previous year.

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What you'll learn

1 (00:23) **The Pre-Pandemic Economy and a Missed Warning** - Brendan Greeley attends the American Economic Association meeting in January, where the unemployment rate is at historic lows and economists, including Janet Yellen, argue for automatic stabilizers before the next recession.
2 (02:33) **A Small Business Owner's First Warning: Supply Chain Disruption** - Marin Pereira, owner of My Atelier, a drapery workroom in rural Virginia, gets an early sign of trouble in January when a rug delivery from China is repeatedly delayed.
3 (05:58) **The Crisis Hits Home: A Restaurant Shutdown and a Mentor's Call** - In March, Marin is installing drapes at a top D.C. restaurant when it announces a shutdown. Her mentor in New Jersey, a COVID-19 patient, tells her to "shut it all down."
4 (07:34) **The Stay-at-Home Order and the Immediate Economic Fallout** - Virginia's Governor issues a stay-at-home order, forcing Marin to furlough part-time employees and cut hours, as her business, on track for $250-300k in revenue, loses its ability to operate.
5 (09:20) **The First Data-Driven Shock: 2.3 Million Unemployment Claims** - Brendan Greeley explains that the first unemployment claims number after stay-at-home orders—2.3 million, compared to a normal bad week of 300,000—was the first real, non-anecdotal sign of the unprecedented scale of the collapse.
6 (10:17) **The Paycheck Protection Program: A $350 Billion Grant Disguised as a Loan** - The core of the government's small business response is the Paycheck Protection Program (PPP), which uses the existing SBA loan program but makes the loans forgivable if used for payroll.
7 (11:33) **The "Last Mile" Problem: Banks Can't Keep Up** - The sheer scale of the program creates a bottleneck. Brendan Greeley reports that US Bank, a major SBA lender, receives 50,000 applications in a week, compared to a high of 600 in a normal year.

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Guests on this episode

Brendan Greeley

Show Notes

Behind the Money is a podcast from the Financial Times that takes listeners inside the business and financial stories of the moment, with reporting from FT journalists around the world. You can find Behind the Money wherever you get your podcasts, including FT.com/behindthemoney.

Mauren Pereira's drapery business was on track for its most financially successful year to date. That was until the coronavirus outbreak reached Virginia. Behind the Money reports on how one small business owner is navigating the current economic crisis. With Brendan Greeley, US economics editor for the Financial Times.

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