Small business owners fear Illinois laws have negative impact on staying open

PEORIA (25News Now) – In addition to COVID-19 and inflation, more than a dozen small business owners told 25News that state laws are now another obstacle making it tougher to keep their doors open.

Since 2019, Illinois lawmakers passed several laws to help workers.

The three small business owners we spoke with all agreed their employees deserve a fair and livable wage, but claim the small business climate is already difficult to manage.

For context:

• In 2019, state lawmakers voted to gradually increase the minimum hourly wage.
  • At the time, it was $8.25 per hour.
  • In 2024, the minimum wage is $14 per hour, and it will rise to $15 per hour in 2025.
• The Paid Leave for All Workers Act took effect in 2024, mandating employers give every worker one hour of paid leave for every 40 hours worked.
• Illinois has the second-highest corporate income tax in 2024 of any state in the U.S., according to Tax Foundation.

Sara Ruder is the co-owner of Red Hat Enterprises, Inc. and the Peoria-based entertainment business Gone Social.

In Illinois, business owners are required to pay local, state, and federal taxes. For Ruder, she said 25% of everything the business brings in each month goes straight to taxes.

When asked if she feels her concerns have been addressed on the local or state level, Ruder said she does not think so.

“Many things have come out in the past years that have impacted small businesses. I want to stress that [these new laws] are great for the employees. I absolutely love it,” Ruder said. “But at what cost to the business owner? There’s only so much that the state or city can squeeze from a small business owner before there’s nothing left.”

Ruder said she has seen other seemingly thriving restaurants and shops close and said it is a scary sight for herself and other owners.

“For a lot of small businesses right now, it could take just two to three bad weeks in a row to collapse everything,” she added. “A seemingly good business that was thriving at one point has now shut its doors.”

Katie Kutsunis owns Four Seasons, a women’s clothing store with locations in Iowa and Illinois, including Peoria.

Kutsunis said lawmakers listen to her concerns, but when pro-worker policies are passed, the benefits are felt more by big businesses. She believes those benefits often overshadow the challenges they create for small businesses.

“It’s no different from when you have a little baby or toddler at home. You help them more. You help them learn how to crawl and then walk,” Kutsunis said. “The state should learn to help the little guys crawl and walk, and hopefully, they can become the big business.”

She fears these policies could expand in the future and have a greater impact.

“I hope and pray the state doesn’t think, ‘Well, we’re at $15 per hour. Let’s go higher,’” she added. “Because that’s when, unfortunately, businesses like mine are going to have to look even harder at cutting back and trying to do more with less.”

Jeremy Sargent, owner of the restaurant Highly Flavored, said all of these changes on top of inflation have made keeping costs down even more challenging.

“What you could have got prior to COVID-19 for $5 a pound is now $9. I don’t see it going back,” Sargent said.

25News reached out to Gov. JB Pritzker’s Press Secretary Alex Gough twice in April to schedule a one-on-one interview. Gough told us a “one-on-one is unlikely” and instead provided a statement on behalf of the Illinois governor.

“Governor Pritzker believes all workers have the right to a fair and livable wage. Since day one, his priority has been putting state government back on the side of working families. With the increased minimum wage, we are living up to that promise and making Illinois a more affordable and equitable place to live for everyone while also creating an environment where small businesses can thrive.

In this case, tax breaks for small businesses were included through the Minimum Wage Credit program to help small businesses ease the implementation period. In addition, since taking office, Pritzker has restored funding for small business development centers, cut taxes on small businesses, heavily invested in grant programs for new businesses, and created investments in the Discovery Partners Institute, the Illinois Innovation Network, driving the growth of more small businesses than ever before.”

Gough said the Illinois Department of Commerce allocated $1.5 billion in pandemic-related support for businesses.

Democratic State Sen. Dave Koehler said the state also tries to help business owners by promoting training and access to education.

“You have to look at both because it takes workers, investors, and companies to make a job,” Koehler said. “I think it’s important that we recognize that. Small business is the backbone of this state. It’s the backbone of the United States.”

The Turner Center for Entrepreneurship at Bradley University is a small business development center funded by the state that provides free counseling and programs for start-up businesses.

Additionally, Peoria’s Black Business Alliance was one of 10 groups awarded a share of a $2.5 million grant in May to help minority-owned businesses.

However, business owners fear the resources are not enough for some, and that could mean more small business closures. Owners also said there are not enough tax breaks that they are eligible for.

In Illinois, Gough said tax incentives are there. That said, many small restaurants and shops do not meet the criteria for some of them.

For example, one tax incentive specifically applies to businesses that can “attract large scale projects” requiring $50 million in project costs and creating more than 100 new jobs.

Other tax incentives apply to businesses that work in the clean energy, film production, and research and development industries.

The three small business owners interviewed said they applied for grants due to the pandemic, which did help them, but receiving the grants was only a temporary fix.

“It hurts, and the hurt doesn’t happen immediately. Our heart is in this business,” Kutsunis said. “We want to try to do everything to make it. Sacrifice ourselves, sacrifice our time, and pay our people. But at some point, it’s got to give, and the state can’t keep taking so much.”

The owners said if the business landscape continues the way it is trending now, it will be too expensive for some to stay open, and consumers could have fewer local options to dine and shop.

“I had a hope, I had a dream and I said ‘I’m going for it”, Sargent said. “I learned with every day, every month, with every tax, payroll, and debit that came across, what it actually took to maintain and continue to grow.”

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