Howard Schultz, the former chairman and CEO of Starbucks, on Monday warned of a small business “apocalypse” unless the federal government spends more to save restaurants from the coronavirus crisis.
“We are going to be facing a situation by Labor Day in which probably 20% to 30% of all small businesses and independent restaurants in the entire country are going to be forced to permanently close,” Mr. Schultz told Fox Business’ Neil Cavuto.
The hundreds of billions of dollars already spent by the federal government on loans and grants such as the Paycheck Protection Program to keep businesses afloat during the shutdown would not be enough, he said.
Businesses will need more federal aid when they try to reopen in a business environment completely and possibly permanently reshaped by the COVID-19 pandemic.
He called for the Federal Reserve to use emergency powers to act as a backstop to banks providing long-term loans to every small business in America.
His warning of “economic carnage” contradicted Capitol Hill Republicans who want to put the brakes on more stimulus spending.
“Those small businesses represent 44% of the overall economy,” he said. “They will not have enough money after PPP runs out for those that were able to get it, and most of them didn’t, to reopen in a world in which they will only have 25% or perhaps 50% of their revenue.”
Mr. Schultz said that Starbucks wouldn’t have survived a coronavirus economic shutdown in the late 1980s when he took over leadership and the company had 11 stores.
“We are talking about many of these businesses that could potentially be the next Starbucks of the future to represent a national brand, to build a company with thousands of employees,” he said. “These companies are not going to have a chance.”