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Commentary COVID-19 in Maryland Working & the Economy

David Blair: Annapolis, We Have a Problem

NASA image

Fifty years ago, on its journey to the moon, Apollo 13 experienced a major malfunction and Commander Jim Lovell famously said “Houston, we’ve had a problem.”

Their planned landing on the moon was aborted and in an unprecedented move NASA directed the astronauts to shut down their Command Module. Complex electrical and computer systems never designed to be powered-down mid-flight were switched off with no clear idea how these systems would be restarted. Of course, this life-saving measure was made to conserve power while the astronauts awaited reentry.

Today, much of our business community is in a similar situation – unprecedented, unplanned shut down of commerce . . . resulting in more than 380,000 newly unemployed Marylanders. In the wake of Governor Hogan’s order to “shelter in place,” small business owners across the state took extreme steps never contemplated: closing 24-hour service centers, laying off key staff, canceling customer memberships, donating inventories and more. Driving through any town in Maryland, business after business is cold, dark and lifeless.

And like in 1970, there’s not a simple switch to restart. It will take months for consumers to return to restaurants, fitness clubs, theaters and sporting events and possibly even longer to reach pre-pandemic levels.

Still, business relief packages offered by the federal, state and local governments fall woefully short. Maryland’s small business relief program consisting of $75 million in loans and $50 million in grants was depleted in two weeks and insufficient to have any meaningful impact.

Businessman David Blair. Photo by Danielle E. Gaines

Collectively, these state funds represent less than one-tenth of 1% of the state’s $428 billion gross domestic product. It’s understandable the state doesn’t have the resources to prop up an economy that’s essentially at a stand-still. Only the federal government has the resources to operate on that scale.

Unfortunately, the federal bailout program for small businesses, the Paycheck Protection Program, has been flawed from the start. Many of us read of the large corporations that took hundreds of millions of dollars earmarked for our mom and pop stores. And as concerning, the plan assumes businesses rebound overnight. The program provides funding equal to two and half times an average monthly payroll, and then allows the business eight weeks to spend the funds on wages, rent and utilities, otherwise the funds convert to a federal loan.

This structure creates a perverse incentive for businesses to overstaff for a short period of time, and then inevitably layoff employees when the economy doesn’t return to 100 percent. Governor Hogan’s realistic three-phase plan for reopening the economy has businesses ramping up over many months, not weeks.

Perhaps most disturbing is that Maryland ranks last nationally in businesses receiving Paycheck Protection loans. Only 9.7% of our businesses have been awarded federal funds. Maryland is leaving tens of millions of dollars on the table. We should coordinate with our banks and initiate an immediate outreach to small business owners and self-employed Marylanders to assist them with applying for these funds. There’s still about a $100 billion from the federal government available, but it’s going quickly.

The relief programs also do not address the working capital requirements of small businesses (unlike Fortune 500 companies which have access to capital markets). Think of working capital as the gasoline in your car – you need fuel in order to operate it. Right now, our small business gas tanks are on empty.

A simple example is the restauranteur who will have to purchase food and beverages to restock their kitchen, so they have something to sell. Recognizing that Maryland has limited resources to provide working capital grants, let’s be more innovative – and, fortunately, we already have a mechanism in place, the Maryland Venture Fund that has invested approximately $40 million in Maryland businesses.

Let’s dramatically increase this fund and accelerate our investing. This approach will inject much needed capital into our businesses and potentially provide the state attractive equity returns.

Lastly, in this time of crisis, we need to be more creative and tilt the playing field in favor of small businesses. At last count, Amazon is hiring 100,000 new employees. Their newfound sales come at the expense of our local retailers. Across the world, ideas are emerging that balance safety and economic activity. For example, we could close select streets and parking lots and allow restaurants and retailers to set up tables and merchandise outside at safe distances.

We should rework procurement rules and expand pricing preferences to benefit small businesses. To the extent possible, state and local governments should buy exclusively from our own small businesses. Even if it costs more, it will be well worth the price, providing direct cash infusion into our local economy. And we should advertise it through public service announcements to inform our residents why it’s important and how they can support our local economy as well.

It’s understandable that our elected officials didn’t get everything right initially — we’re in unchartered space. Fortunately, there is time to get it right. In 1970 it was a dedicated team of NASA engineers, including our very own at The Goddard Space Flight Center in Greenbelt working 20-hour days, that devised an innovative plan to power-up the Command Module prior to reentry into the Earth’s atmosphere. Their collective effort allowed the Command Module to reenter safely and save the lives of three astronauts.

They created their own playbook. Now will we?


The writer is a life-long Montgomery County resident and entrepreneur who has founded numerous health care technology businesses in Maryland. His grandfather, Leopold Winkler, served as a senior engineer at NASA Goddard Flight Center from 1959 to 1980.


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David Blair: Annapolis, We Have a Problem