Protecting Small Businesses from Crises: A Study on Governmental Relief for Small Businesses During Hurricane Sandy and COVID-19.

Abstract

This thesis discusses the complex nature of small business support during crises. This study focuses on small businesses because they are the heart of the United States economy. There are over 28 million small businesses in the United States that contribute significantly to job creation, economic output, exports, and the economy's health. Small businesses represent 79.5% of United States job creation, and 44% of the US economic activity, with a total of $5.9 trillion in output (in 2014). A major problem exemplified in this study is the fragility of these small businesses. One crisis or major event can wipe them out completely. Due to their importance and fragility, it is vital to protect and maintain them for the economy and society in general. The paper discusses effective policy measures and areas where policies fell short and can improve in restoring small businesses. Both Hurricane Sandy and COVID-19 can act as natural experiments for effective small business policy. The first crisis this paper studies is Hurricane Sandy. This hurricane resulted in billions of dollars of damage along the East Coast of the United States. The specific magnitude of damage amounted up to $70 billion and resulted in the death of over 150 American citizens. The primary recovery initiative was the Disaster Relief Appropriations Act. The thesis analyzes the efficacy of the Disaster Relief Appropriations Act and highlights several areas of improvement for future crises. The paper then analyzes specific businesses in Ocean City, New Jersey, impacted by Hurricane Sandy. This analysis provides a more in-depth and firsthand account of the effectiveness of government support during Hurricane Sandy. There were many insights from the small business case study that yielded further improvements for government policy and programs. The thesis then analyzes the effect that COVID-19 has on small business and looks at both macro and micro data in the process. COVID-19 started in 2019 and continues to this day. There were similarities and differences among the impediments businesses faced, and the paper analyzes the new forms of policy and relief the government implemented, such as the Coronavirus Aid, Relief, and Economic Security Act (CARES). The report studies many of the same small businesses affected by Hurricane Sandy to illustrate the juxtaposition of small business support through two different crises. The case study also illustrates the evolution of support almost 10 years later. The paper includes conclusions on both Hurricane Sandy and COVID-19 policy reform to help inform future decisions and increase the chance of survival and resilience. The thesis concludes with a list of specific policy recommendations and reforms to include for future crises.