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  • Writer's pictureBy Mar-Vic Cagurangan

The backbone of economy

Running a small business isn’t a walk in the park. Small scale entrepreneurs have to confront high rents, taxes, other collateral expenses, tigerish competition from bigger companies and a labyrinth of bureaucratic requirements. With or without the coronavirus pandemic, small businesses have always faced these dizzying odds.

The Covid lockdown was a nail in the coffin of many small businesses on Guam. According to the Department of Revenue and Taxation, 451 companies permanently shuttered their doors as of September last year. While anecdotal evidence indicates mass bankruptcies, Tax Director Dafne Mansapit-Shimizu said earlier that the current record at DRT is not sufficient to make a categorical conclusion because some business owners simply stopped operating without cancelling their licenses. There could more unrecorded business closures.

The forgivable Pandemic Payroll Program loans and Economic Injury Disaster grants under the CARES Act were a saving grace for many. But such federal funding assistance did not trickle down to some businesses. During the first round of PPP last year, only 2,208 small businesses on Guam were approved for the program and the U.S. Small Business Administration granted a total of $192 million in loans. But this number represented only two-thirds of the 3,566 total number of small establishments locally registered in 2020.

Last month, SBA announced it would prioritize mom-and-pop businesses for PPP. But, dismayed by last year’s rejections, some are not holding their breath.

With Guam transitioning to PCOR3, more businesses have been permitted to resume operations. Bars and taverns, which had been on a forced hiatus for nearly eight months, have reopened under restricted conditions, hoping to see their old customers back.

But a return to normal will be gradual and guarded. Under the post-Covid market landscape, many businesses will continue struggling for months or even years.

Helping small businesses get back on their feet is imperative. They are the backbone of any small economy. What would Guam be like without the coffee shops, hair and nail salons, food trucks, gyms, restaurants?

Helping these businesses survive requires that they be given direct aid, access to low interest loans and tax relief.

Previous legislation had made this happen such the Dave Santos amendment, which exempted small businesses from payment of the 5 percent GRT for first $50,000 of business revenue. In response to the pandemic, Public Law 35-90, signed on June 26, 2020, allows businesses with gross annual incomes of between $50,000 and $500,000 to pay GRT at 3 percent for the first $250,000 revenue.


The local Guam Small Business Pandemic Assistance Grant Program launched on May 19, 2020 offered $20 million from the federally-sourced CARES Act.

Certainly, there is hope in this time of despair. There is silver lining in the form of unique opportunities that the crisis has thrown open, as gleaned from the 1,459 new business licenses issued by DRT as September 2020.

New pieces of business-friendly legislation are coming out of the legislature, including Bill 1-36, which would temporarily waive the payment of business license fees from Oct. 1, 2020, through Sept. 30, 2022. Another bill, which has lapsed into law, cuts the LLC filing fee from $1,000 to $250.

Most recently, Sen. Frank Blas Jr. and Sen James C. Moylan introduced Bill 64-36 that would simplify the business filing process and minimize government interference. The government can step up now to help small businesses cut through onerous red tape and allow them to file paperwork with a single point of contact and making it easier to obtain licenses. Easing this burden offers a relief.

No one is certain how the Covid-19 crisis will shape an economic downturn, but we are certain that an economic recovery without small business is unimaginable.

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