In Spite Of Aid, Many Nevada Small Businesses Shutting Down For Good

Aug 15, 2020

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Krysta Bea Jackson opened the doors to Reno’s Sugar Love Chocolates in 2015 after a photo of her homemade chocolates went viral on Reddit with over a million views, and she was flooded with requests for orders. 

Jackson grew up in the kitchen of her mother’s restaurant and said cooking and sharing food is the way her family from the South expresses love. 

“That's how we show love is by cooking you food, whether you're mourning or celebrating or you’re happy or sad, we're going to make you something to eat … which is why everyone in my family is skinny,” she said with a laugh. 

But almost five years after realizing her idea, Jackson shuttered her gourmet chocolate shop in the basement of the old post office in downtown Reno following the economic fallout of the business shutdown ordered in March in response to the COVID-19 pandemic. And she’s not alone. 

Nearly a quarter of companies across the country closed temporarily or permanently in March and April, according to a National Bureau of Economic Research study, despite efforts to keep businesses afloat, such as the Payment Protection Program (PPP), commercial rental assistance and eviction moratoriums. 

Two-thirds of the 2,630 Southern Nevada businesses that responded to an Applied Analysis survey presented at the Clark County Commission meeting this week said they are experiencing a decline in sales and revenue as compared to 2019, with 58 percent seeing a decline of more than 25 percent. 

Closures of businesses that have long reigned in communities, such as the Santa Fe Basque restaurant and the Awful Awful Burger in Reno, have caused sadness among community members who grew up patronizing the establishments. 

Jackson’s decision 

Jackson’s chocolate shop was already struggling with declining revenue before Gov. Steve Sisolak ordered nonessential businesses to close. But the federal aid offered by the PPP and the Economic Injury and Disaster Loans (EIDL) gave her hope the shop could survive. 

She realized she’d need to close her doors for good when she didn’t receive the funding she needed. 

“If there was one thing that really put the nail in the coffin,” Jackson said, “I was turned down for the EIDL, which was that first emergency loan for businesses.”

The loan is designed to provide relief for businesses experiencing a loss of revenue and can be used to cover expenses such as rent, utilities, fixed debt payments and a continuation of health care benefits, whereas the PPP funding specifically focuses on payroll expenses. The loan would have provided about $25,000 for her business and would have allowed her to stay open for six months, despite the financial difficulties. 

“So having that not come through, that was like, ‘Oh, okay. So I need to batten down the hatches as much as possible.’” 

Jackson announced the closure of her shop on Instagram, but made the firm statement her business and chocolates would survive.  

“I'm sad to say that Sugar Love will close its physical doors on Saturday, June 20th…  After the closure, we will remain online and I'm excited to add that I'm in the process of acquiring a trailer to allow us to do events, outdoor markets and pop-up events throughout the region!”

She added that with 40 million people unemployed across the country, “high-end confections are not a priority for many.” 

The stark change has a greater impact on business owners such as Jackson, who is still processing the past few months. 

“It changes every day… I mean, some days, it's hard to even want to do emails, or look at anything for the business because it just feels so defeated,” she said. “And then other days it's like, well, it's a new challenge and let me figure out what we can do … It's definitely a rollercoaster.” 

Small business in Nevada 

Small businesses are a major driver in the Nevada economy, although some of the aid programs designed for them have been unable to carry them through the crisis.

There were over 270,000 small businesses in Nevada as of last year, according to the state’s Small Business Administration economic profile, and more than 480,000 people employed by a small business, which represented over 40 percent of overall workers in the state. 

2019 report from the Nevada Small Business Development Center, a statewide resource for business owners that offers expertise, training and business development, found that the largest percentage of businesses in the state — 86 percent for both Clark and Washoe counties — were establishments with under 19 employees. 

Just over 30 percent of small businesses in the state are owned by women and just under 30 percent of businesses are minority-owned, with Hispanic owners leading the percentage of owners at about 10 percent. 

The center said it provided counseling for 1,635 small business owners since March who are navigating the CARES Act disaster assistance funding and adjusting to their business models and strategies. The organization also reported assisting more than 1,200 clients through a COVID-19 business crisis call center established in late March. 

Tens of thousands of Nevada businesses and organizations received at least $3.1 billion from the PPP stimulus package, including casinos, law firms, churches, mining companies and strip clubs. 

As of April, just before the $349 billion PPP funding was exhausted, Nevada had received the least aid for businesses out of seven other states with similar population sizes, such as Iowa, Kansas and Connecticut. 

Critics say the program, created as a temporary measure to aid business owners and prevent layoffs amid the business shutdown, falls short of its intended purpose. 

A survey from the National Federation of Independent Business, a trade association for small businesses, found that 22 percent of PPP recipients have laid off employees or expect to, according to The Washington Post

Jackson received PPP funding, but said most of it went to her employees, which she was grateful for, but it was not enough to salvage her business and her employees were all laid off.

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