America’s small businesses may not survive the economic shutdown enacted by federal, state and local governments to stop the spread of the coronavirus — and Congress’ $2.2 trillion relief passage is unlikely to save them.

The U.S. may already be in a recession that could become a full-blown depression, with unemployment numbers not seen since the 1930s. Millions of businesses ― restaurants, stores, bars, nightclubs, gyms and more ― are shuttered, and millions more workers have no jobs with the economy in an induced coma.

“In my view, they are all at risk from the shock because small businesses are really facing an extinction-level event,” said Adam Hersh, an economist at the Political Economy Research Institute at the University of Massachusetts Amherst.

Hersh estimates that 84.2 million Americans are employed at businesses with fewer than 1,000 workers at a single location. A study by the JPMorgan Chase & Co. Institute found that in 2014, 48% of all U.S. employees worked in small businesses with fewer than 500 workers. As many as 47 million people will be unemployed by the virus shutdown and the recession it causes, according to estimates from the Federal Reserve Bank of St. Louis.

To blunt the shock, Congress passed a third coronavirus bill on March 27 to provide relief to large corporations and financial institutions, small businesses and the unemployed. It includes, among other things, a massive expansion of unemployment insurance, $425 billion with few strings attached to aid large firms, tens of billions to bail out airlines and Boeing — and $377 billion to support small businesses, with $360 billion of that going out as loans that can turn into grants if businesses maintain payroll.

This will almost certainly not be enough to help small businesses survive, according to both conservative and progressive economists, and the funds are also unlikely to go out fast enough to save them. Meanwhile, the imbalance will likely give big businesses a leg up whenever the economy comes out of its coma.

Not Enough Money For Small Businesses

ASSOCIATED PRESS Peck's Food owner Theodore Peck stands outside his closed business on March 18, 2020, in Brooklyn's Clinton Hill neighborhood in New York City.

Small businesses will need at least $1 trillion in support to survive a three-month shutdown, according to Glenn Hubbard, head of the Council of Economic Advisers in the George W. Bush administration, and Michael Strain, at the conservative American Enterprise Institute.

The $377 billion Congress has approved is much less than half of that ― and that’s assuming small businesses can easily access the money and it isn’t gobbled up by much bigger corporations also eligible for the funds.

This money will run through the Small Business Administration, a small agency that mostly backs bank loans to help support small businesses. Although the bill contains provisions to speed up delivery, the SBA is known for its bureaucracy and complicated loan application processes, and has never handled a pile of money this large. (The large corporate relief, meanwhile, is funneled through the Treasury Department and can be leveraged for trillions more from the Federal Reserve.)

Small businesses do not maintain large capital reserves and do not have access to the same markets as large corporations do to obtain capital ― let alone access to the Federal Reserve’s secret bailout operations. Most are unlikely to have ever dealt with the SBA to obtain a loan before.

An added problem is that the funds will also be available to some larger corporations like Starbucks, Darden Restaurants — and maybe even the Trump Organization’s small chain of hotels. That’s because franchises and large businesses with multiple locations that each have fewer than 500 employees successfully lobbied to be included in the SBA loan program.

“Taking a loan right now is ludicrous.”

JASON REDMOND / Reuters Pedestrians walk past Neumos music club in Seattle on April 10, 2014. “Taking a loan right now is ludicrous until everybody understands it,” said Steven Severin, owner and operator of Neumos.

Some small- and medium-sized businesses understandably fear taking out a loan, even if it may turn into a grant, in these wildly uncertain times.

“Signing a loan doc when you don’t know how much money you’ll make or you don’t know what the loan terms will be is irresponsible,” said Molly Moon Neitzel, founder and CEO of Molly Moon’s Homemade Ice Cream, a small business with eight locations in the Seattle area.

Neitzel officially shuttered her eight ice cream shops on March 22, firing her 90 employees. Small businesses like hers operate on the daily, weekly and monthly margins. Closing even for one week is a real challenge. Closing for weeks at a time is devastating. “I’ve run out of most of the cash of the company,” she said.

She would have preferred Congress to have made the small business relief into a grant program instead.

“I have no idea what my business will do in terms of revenue this year and no one will know,” Neitzel said. “Signing loan terms in such uncertainty feels very unwise.”

Signing a loan doc when you don’t know how much money you’ll make or you don’t know what the loan terms will be is irresponsible. Molly Moon Neitzel, founder and CEO of Molly Moon’s Homemade Ice Cream

Neitzel is now pushing Seattle’s city government to provide educational services for small businesses to help them navigate the loan program. State and local governments are launching programs to support their small business communities, but they can’t reach the needed scale.

“Taking a loan right now is ludicrous until everybody understands it,” said Steven Severin, owner and operator of the music venue Neumos and the bar Life on Mars, both in Seattle.

A host of small business advocacy groups and local associations called for grants in lieu of loans before Congress passed the bill. Some economists have instead called for zero-interest loans. There is, however, no bureaucracy currently set up aside from the SBA and its long-standing loan program.

“We wanted to see that as a grant program that is then converted to a loan or penalized if misused,” said Amanda Ballantyne, national director for the Main Street Alliance, a progressive small business trade group.

For businesses like Severin’s, the damage from the shutdown will last longer than a month or two. Music venues can expect to see a loss of business throughout the year or longer as bands cancel tours and the virus’ potential return makes it nearly impossible to plan crowded gatherings months in the future. Congress needs to plan for much longer-term damage to some small businesses.

“They better be working on a fourth [relief bill] fast,” Severin said. “There’s going to be so many businesses that just don’t make it.”

“This is going to be a feeding frenzy.”

AP Photo/Michael Conroy A sign on an Indianapolis liquor store announces its closure due to the coronavirus on March 28, 2020.

Meanwhile, large corporations have access to an unprecedented tranche of money that the Treasury Department can dole out as needed or use to back trillions in lending from the Federal Reserve that will keep them alive for much longer than the SBA loan program can keep small business afloat. (The Federal Reserve announced a Main Street Business Lending Program for small businesses, but few details have emerged.)

“For the bigger players, it will be easier to go back to business as normal of late last year,” said Mike Konczal, a fellow with the progressive Roosevelt Institute.

This could present a perfect opportunity for big businesses to swoop in and consolidate their market power since even the small businesses that survive a recession are likely to come out of it with considerable debt.

Big businesses have already been on a merger-and-acquisition binge since the last recession in 2008-09. This crisis event could put them into an even more dominant position as they build up cash for future expenses while minimizing payroll, unlike small businesses. Private equity firms are already looking at struggling businesses to purchase, according to CNBC.

“This is going to be a feeding frenzy,” said Sarah Miller, executive director of the American Economic Liberties Project, an anti-monopoly group.

For now, small businesses are just trying to understand the loan program they’ve been offered and are hoping that more help is on the way.

“If the government effort to shore up the economy doesn’t really take care of the Main Street businesses, life in America won’t be the same,” Neitzel said. “It will be permanent damage to the way our communities work.”