Survey: More than half of NMI businesses reduced operations or are temporarily closed

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BASED on a survey conducted by the Saipan Chamber of Commerce, 55% of respondents have either made large operational reductions or are temporarily closed.

Other survey results include:

  • 72% have either reduced staff or decreased hours.
  • 40% of total respondents have had to reduce over a quarter of their total staff.
  • 79% have seen a reduction in revenue for more than four weeks.
  • 47% of respondents have foregone over $100,000 in revenue due to Covid-19 and the economic downturn.

In a letter to Gov. Ralph DLG Torres on Tuesday, Saipan Chamber of Commerce President Velma Palacios said 64% of the respondents had less than 25 employees, and all respondents had less than 500 employees, “which is the typical cut-off determination for what the Small Business Administration considers a small business.”

Operationally, she added, the respondents have had to make drastic changes in the last five months.

She said “over 91% have sought some source of financing or financial relief during Covid-19. The top three ways respondents were successful in securing financing are through the Paycheck Protection Program of the Small Business Administration (59%), the SBA Economic Injury Disaster Loans (15%), or their personal savings (13%).”

She said, while this “may seem like the Paycheck Protection Program was successful, it is important to note that over two-fifths (41%) did not receive PPP funding. For those who did receive the PPP, the loan only covered eight  weeks of payroll. Reduction in tourism has been ongoing for over 26 weeks, and there are still fixed costs such as rent, utilities, and inventory that are not accounted for in the total PPP amount received. Additionally, less than 10% have been able to secure bank relief through debt flexibility or payment deferments, have succeeded in postponing payment in fixed costs such as rent or utilities, or have secured any other types of relief or financing.”

Palacios said the top four concerns of businesses are:

  • Uncertainty on the return of international flights or tourists (53%).
  • Loss of customers or market share (51%).
  • Financial impact on operation and capital (49%).
  • A local recession (44%).

Palacios said, “The most telling number of the survey showed that the majority of the respondents (52%) could not confidently answer if they would have to further reduce staff, temporarily close, or permanently close within the next two months.”

She said this “uncertainty takes an emotional toll on business owners and managers. It is crushing to not know if an operation you sunk your investment, heart, and livelihood into for years will not see 2021. For those that were more confident in their responses, 39% said they would have to further reduce staffing, 15% said they would have to stay closed or temporarily close until January 2021, and 2% were confident they would permanently close. Only 9% were confident they would not reduce staff, temporarily close, or permanently close.”

When asked to identify what actions would be most helpful for them at this time, Palacios noted that 57% of the respondents said a reduction in CNMI business gross revenue tax or excise tax; 48% said a reduction in government fees; and 37% said access to interest-free capital (grants), more information about the reopening of tourism, or the partial resumption of tourist activities.

Palacios said the chamber believes that “together, we can solve our complicated conditions by sharing, listening, and taking active steps to rise as one.”

She said the chamber is inviting the governor, Lt. Gov. Arnold Palacios, Senate President Victor Hocog, Speaker Blas Jonathon Attao, Jerry Tan, the chairman of the governor’s Council of Economic Advisers, and a select number of other public officials to a Small Business Open Town Hall Forum on Aug. 5, 2020 from 4 p.m. to 6 p.m. at the  Hyatt Regency Ballroom.

During the forum, she said small business owners and chamber members will offer recommendations on how to move forward to ensure our small businesses make it to 2021.

On behalf of the chamber, she thanked and commended the administration “for the swift and thorough response during the initial months of our community’s fight with Covid-19.”

She added, “Many lives were saved, and health-wise our community is in a much better position as compared to most destinations worldwide due to the quick action through your leadership and the Covid-19 Task Force. While businesses did not always agree, these initial decisions allowed us to arrive here today with the only new Covid-19 cases occurring through incoming passengers. I also want to acknowledge that you have the difficult task of leading our community in an ever-changing landscape, meaning that we will continue to adapt as we learn what works well — and what might need altering — based on other communities and our own experiences. Thank you for continuing to make difficult choices on behalf of all of us.”

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