As of May 28, 2021, the Paycheck Protection Program has run out of funding. You can learn more about the PPP with our COVID-19 resource hub.
As the United States braces for the social and economic impacts of the coronavirus pandemic, many cities and states around the nation have been ordered to shelter-in-place in order to slow the spread of coronavirus and protect the functionality of the US health care system. As part of this, in states where the order has been issued, all nonessential businesses have been forced to suspend their operations until the order is lifted. Obviously, this is an incredibly unfamiliar and scary time for many Americans, and business owners and consumers alike have been wondering what exactly constitutes an essential business. In particular, many have been wondering why so many essential businesses are breweries, distilleries, and liquor stores. In this article, we will explore what an essential business is, as well as why there are so many seemingly nonessential stores that qualify.
Essential Business Can Vary by State
Before we start, while many Americans have been closely following the actions of the federal government, a large portion of the response to the coronavirus outbreak is also determined by the states based on the executive orders and other actions taken by their governors. As such, what qualifies as an essential business can vary state-by-state. However, that said, there are some general stipulations that are fairly standard across the states.
Typical Essential Businesses
Typical essential businesses are those that the public tends to rely upon on a day-to-day basis in order to survive. These include, but are not limited to the following:
- grocery stores
- convenience stores
- restaurants that provide carry-out and delivery services
- drug stores
- health care providers
- financial services
- chemical plants
Typical Nonessential Businesses
At the same time, nonessential stores include, but are not limited to the following:
- recreation centers
- shopping malls
- sporting venues
- concert venues
- tourist attractions
- hair salons
- clothing stores
- art, craft, and music stores
- jewelry stores
Why Do Businesses Like Breweries, Distilleries, and Liquor Stores Qualify?
A few businesses that have stood out as being surprisingly essential during the COVID-19 outbreak are breweries, distilleries, and liquor stores. While these may seem like odd essential businesses at first, digging deeper we can see the essential roles that can play.
Breweries, for example, play a large role in supporting agricultural supply chain demand. Each year, craft breweries buy billions of dollars with of barley and other grains, which are used to make craft beer. Spent brewers’ grain is also commonly used to feed livestock. Now, obviously, while the breweries are still allowed to operate, their tasting rooms are closed, and their operations are limited to internal functions and takeout and delivery.
Distilleries are another business category that has been deemed essential. Many distilleries are able to convert their operations to produce hand sanitizer by transforming their neutral spirits. In fact, many small businesses in the business of distilling alcoholic beverages have begun making hand sanitizer for local essential services, including police and fire departments and hospitals.
Bulk alcohol supply is an issue given the increased demand, “Companies like Ultra Pure have put people on quotas, so whatever you were buying before that’s what you get now. We’ve been able to pass along some of our quota orders to our competitors to help out the greater good,” said Tim Kelly, Founder and CEO of Felene Vodka.
Liquor stores are another example of an essential business that has left people wondering. In fact, many of them have been offering pick-up and curbside options during the stay-at-home requirements. The reason why they are considered essential is on account of the health risks associated with sudden alcohol withdrawal.
For those who are addicted, being forced to take on a sudden detox can lead to serious consequences and even death. In fact, according to George F. Koob, the director of the National Institute of Alcohol Abuse and Alcoholism, a division of the US National Institute of Health, each year there are roughly 25,000 emergency room visits and 850 deaths related to alcohol withdrawal.
On account of this, suddenly cutting many Americans off from alcohol could lead thousands of additional emergency room visits, further burdening the already stressed US health care system. So, while keeping liquor stores open during the novel coronavirus epidemic is certainly helpful to the economy, their continued operation is more of a health care issue than an economic one.
With all that in mind, demand is soaring for alcohol in this time period, “Every liquor store I deal with has seen at least a 100% increase year-over-year in February and March,” said Kelly.
Does My Business Qualify as an Essential Business?
It is no secret that this is an incredibly difficult time for small businesses. Being closed for a week can cause serious issues for a small businesses bottom line, let alone being closed for multiple weeks in a row. As such, it is understandable if you, as a business owner, want to keep your business operating to the fullest extent possible. However, at the same time, we must all be conscience of the public good and the laws and regulations that have been put in place in order to slow the spread of COVID-19. If you are unsure whether or not your business qualifies as an essential business, it is best to contact your state’s governors office or your local representative. They will be able to provide you with information that is specific to the actions being taken by your state.
Remember, in the last week or so, state governments have begun cracking down on the operation of nonessential businesses. The penalties can include larges fines, various penalties, and even the revocation of business license. Michigan, for example, has begun issuing $1000 civil fines and $500 criminal fines. If you are unsure whether or not your business can legally operate during this time, it is better to be safe than sorry and halt operations until you can be sure that your business qualifies as essential.
If your business is nonessential, there are a number of ways to try to mitigate the damage being done during this time. In particular, you should begin thinking about different loan options to shore up cash flow and meet ongoing expenses. You should also begin mapping out a business continuity plan so that you can hit the ground running once businesses are allowed to resume their normal operations. Lastly, you should make sure you are exploring the different forms of aid that have been opened up to your business via the new $2 trillion stimulus plan passed by Congress.
How are Essential Businesses Adjusting?
Essential businesses like Wine Insiders continue to provide service to their customers despite the inherent challenges with supply chain, labor, and shipping. “By offering consumers what they want – curation, convenience, and value – we hope that our service lifts people’s spirits, even if just a little bit, in this difficult and uncertain time,” said Josiah Gordon, CMO of Wine Insiders.
As always, the most important thing to do during this time is keep yourself, your family, and your employees safe. Even if your business is essential, make sure you are keeping up to date on local, state, and federal recommendations.
Be sure to keep up to date with our Biz2Credit blog as well. As the COVID-19 epidemic continues to impact the nation, we’ll be posting articles on the different funding and support options available and how you can minimize the damage done to your business during this time.