Welcome to the Covid Economy, CNBC Make It's deep dive into how the coronavirus pandemic is impacting all areas of our lives, from food to housing, health care to small business. We're focusing on North Carolina, a swing state that has seen rapid economic growth — and growing inequality — since the last recession to learn how residents are weathering the economic consequences of this once-in-a-lifetime health crisis.

When Patrice Graham opened Colors of Yoga Raleigh three years ago, it became the city's only Black-owned yoga studio, an inclusive space for people of color and the LGBTQIA+ community to feel comfortable and confident practicing. 

Though her space was intimate, and she kept class sizes to 12 or under, it was plenty big enough to serve people who often felt unwelcome in other yoga studios. Graham is proud of the community she helped foster; members would stay for an hour, sometimes two, after classes to sip tea and talk.

Now, the doors of Graham's colorful studio are closed for good. Seven months into the coronavirus pandemic, she has transitioned all of her classes online, and she gave up the lease on the studio. Though many of her core members are still taking virtual classes, they don't tend to stick around after class anymore. No one wants to spend another hour on Zoom.

Patrice Graham owns Colors of Yoga Raleigh in North Carolina. "I'm worried every single day," she says.

"I'm worried every single day," Graham says. "No matter what I do, I'm going to be anxious and worried about if the yoga studio will survive."

Like other small business owners in North Carolina and across the country, Graham has had to pivot to keep her business alive in a new world in which none of the old rules apply. In March, small business owners braced for what seemed like a few weeks of financial pain. But as the coronavirus pandemic — now in its seventh month — drags on, many small businesses are still operating at limited capacity or have shuttered completely. 

These entrepreneurs face not only the quotidian stresses of living through a global pandemic, they also are grappling with ever-changing health and safety standards, managing potentially hostile customers and spending money to restructure their physical stores to be Covid-compliant, all while bringing in significantly less revenue.

All of this has taken a toll: Almost 100,000 small businesses in the U.S. have closed permanently since the pandemic began, according to a recent Yelp analysis

"There's so much uncertainty, therapy should be free right now," says Graham. "No one can get any kind of grounding. There's so much going on, so much changing."

Small business owners create their own pandemic guidelines

It doesn't help that state reopening plans keep changing or getting pushed back with little to no notice, says Joy Currey, executive director of Corral Riding, a nonprofit outside of Raleigh that works with high-risk girls involved in the juvenile justice system. 

A general lack of any guidance from the government on how to keep businesses afloat and clients and employees safe is also frustrating, she says. 

Corral Riding had its biggest fundraising night of the year planned in the spring, but the dinner, like most other in-person events for the past seven months, was canceled. Still, the nonprofit has actually increased its services during Covid-19, offering a place for 15 teenage girls to do their virtual schooling every day. Currey and her coworkers have had to not only figure out how to provide a safe environment for their charges, but to do so while creating a whole new fundraising strategy and caring for their own families. 

It should not be a decision of a small business owner of how to protect people from a worldwide pandemic.
Joy Currey
executive director of Corral Riding

"It should not be a decision of a small business owner of how to protect people from a worldwide pandemic," Currey says. "That was absolutely a failure of our government … we wasted a lot of time coming up with guidelines and safety protocols. That's an inefficient use of a small business's time."

There are approximately 935,000 small businesses in North Carolina, according to the Small Business Administration, accounting for 99.6% of all state businesses and employing 45.3% of the private workforce. Helping them stay afloat is an economic imperative, says Kevin Dick, president and CEO of Carolina Small Business.

Not only do these businesses provide local tax revenue and jobs, they're also critical to the vibrancy and livability of their communities. Losing them would not only hurt owners and employees but would send economic shock waves through entire communities.

Lauren Clements, managing director of Corral Riding's Neuse River Campus, works with a high-risk teenager.

"These are places that people gather, they define the character of corridors and communities," Dick says. "Losing small businesses can take the flavor out of what makes the city attractive."

The federal government, for its part, has provided over $500 billion in small business loans via the Paycheck Protection Program, and continues to deploy Economic Injury Disaster Loans, represented by the U.S. Department of the Treasury and the SBA. As of mid-August, SBA had approved over 129,000 PPP loans worth $12.2 billion to North Carolina businesses. 

Localities around North Carolina and other states have also provided loans and grants. Dick's organization has deployed around $10 million in capital in the past seven months to aid small businesses.

But the headaches and uncertainty persist across the country. State and local leaders seemingly change rules for reopenings daily. And with coronavirus cases growing this fall, some owners worry about what will happen if they have to shut their doors again. 

Service sector and Black-owned businesses hit hard

As with every other aspect of the coronavirus recession, not all small businesses are equally impacted. Those that do not rely on customer foot traffic, or are able to mostly pivot away from in-person services, like stores that can sell goods online, have fared better than service-oriented businesses like restaurants, barber shops, nail salons and others, Dick says.

More than 82% of the jobs lost since February have been service jobs, according to the U.S. Chamber of Commerce. Even within the service sector, the impact is bifurcated: Retail jobs are down 4% while leisure and hospitality jobs are down about 25%.

Black-owned businesses have also faced disproportionate hardship during the coronavirus pandemic, according to an August analysis by the U.S. Federal Reserve. They have been hit from every direction: Not only did researchers at the Fed note that Covid-19 cases are higher in predominantly Black areas, but Black owners have had more trouble accessing capital — historically from commercial banks and from the federal government's Paycheck Protection Program — than White business owners.

In North Carolina, service-oriented businesses that require in-person interaction are disproportionately Black-owned, Dick says. Like it has with so much else, the pandemic is spotlighting inequities built into U.S. business and financial institutions, he says. 

Industry groups are pushing for more aid from the government, ideally better targeted to help the businesses that were left out of previous rounds. While PPP funding was helpful for those businesses able to access it, the crisis has lasted longer than anyone anticipated. A full 40% of restaurant owners think it's unlikely that they will be in business in six months if there are no more federal relief packages, according to the National Restaurant Association.

Commercial rent relief would be particularly helpful, says Mike Whatley, VP for state and local affairs at the National Restaurant Association. While many small businesses were able to make deals on their leases at the beginning of the pandemic, their landlords need to get paid, too.

"If this continues for several more months, there is going to have to be more government relief or you're going to see more restaurants go out of business," Whatley says.

Congress and the White House are currently at a stalemate in reaching a new deal.  

Unfortunate circumstances breed creativity 

Still, it's not all bad news. As recovery continues, small business owners are "significantly more optimistic about their future situation and have become more positive about the future since April," according to the Wells Fargo/Gallup Small Business Index from September. Almost 90% report that they are fully or partially open, according to the most recently available data from the U.S. Chamber of Commerce

Small businesses are adapting daily to their new circumstances. Restaurants, 70% of which are independent operations nationwide, have gotten especially creative over the past few months. 

Across the U.S., new outdoor dining spaces abound, transforming streets once congested with cars into gathering spaces for friends and family members who haven't seen each other in months. Carryout cocktails, once illegal in most places in the U.S., have become money makers for kneecapped bars (though not in North Carolina). Operators have scaled up take-out and delivery options for all of those quarantining. 

It's been an incredibly hard time, no one's seen this challenge before. You are seeing a lot of creativity amongst operators.
Mike Whatley
National Restaurant Association

"It's been an incredibly hard time, no one's seen this challenge before," the National Restaurant Association's Whatley says. "You are seeing a lot of creativity amongst operators."

Not every business will be willing — or financially able — to pivot, says Dick of Carolina Small Business. Many small business owners poured their life savings into their companies to get them off the ground originally. Most don't have more than a month or two of cash on reserve. 

"People underestimate the emotional toll of losing your business," he says.

But Currey, of Corral Riding, sees it as an opportunity, too. She's been amazed at the creative problem solving her team has applied to business issues since March, and says certain things, like online seminars for donors and volunteers, will likely become permanent parts of the business. 

"We're here to serve our community and if we find that there's a better way to serve our community, if we learn new practices, we're going to take them forward," she says.

Graham, the yoga studio owner, estimates that her business has actually increased slightly because people need a stress-relief activity during the pandemic. 

She also received an outpouring of community support and new members during the Black Lives Matter protests over the summer, when activists were encouraging allies to spend their money at Black-owned businesses. Overall, it's been a roller coaster.

"You have to evolve or die," Graham says. "We are in survival mode."

CNBC Make It will be publishing more stories in this series each week in October. If you live in North Carolina and are interested in sharing your experiences related to the pandemic, please email reporter Alicia Adamczyk at alicia.adamczyk@nbcuni.com.

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