Most of the commenters here focus on the finances of individual firms. The only reasons for a government to bail out a company are 1) to protect the supply chain of a necessary good or service, 2) as a way of providing a safety net for people that doesn't involve direct payment, 3) a way of maintaining the structure of the economy so it can resume normal operation more quickly after the shock, or 4) a way of giving a handout to a set of wealthy and connected members of society. I think most of us can agree that 1-3 are necessary response to a major disruption and 4 is corruption.
For a small business like a dog groomer or a restaurant, we expect the fraction that aren't viable to go out of business with some probability during small economic shocks, and we expect that this will be a small fraction. So we let them go. But in a crisis where an entire sector will be mostly wiped out, such as restaurants in the current pandemic, some attempt at preserving the sector makes sense because otherwise you send shocks through everything connected with it. For example, if a restaurant occupies the bottom floor of an apartment building, and the building's cashflow depends on that space not being unoccupied for more than two months, then you can have a sequence of events that result in mass evictions unless you control those side effects as well. It's probably easier to try to maintain the web of cashflow.
Now, you may be able to get side effects that you like in some sectors, such as restaurants turning into food kitchens for the duration as part of the direct injection of cash. On the other hand, a bar or a salon probably just shuts down. But even there, most stylists rent a chair in a salon, so you need to make sure that web of cashflow isn't broken by an owner pocketing it. It still gets very complicated. For some areas like farms we already have large measures in place, since bad seasons tend to affect large swathes of farms. Thus reserve boards, farm subsidies and the like.
Others have pointed out that such structural maintenance can be gamed by having a barely-viable company that is too big to fail. Then even small shocks can be turned into structural crises. Someone else suggested requiring capital reserves the way we do for banks, and for large companies that makes sense. If you're that big and structurally risky, you should be required to derisk yourself.
One discussion I hope we will be having as a society during and after this is what disaster preparedness looks like. We should have the regulations for what putting the economy on such a footing looks like, run simulations every few years for a week, and have adversarial gaming on an ongoing basis to try to find loopholes and close them.
For a small business like a dog groomer or a restaurant, we expect the fraction that aren't viable to go out of business with some probability during small economic shocks, and we expect that this will be a small fraction. So we let them go. But in a crisis where an entire sector will be mostly wiped out, such as restaurants in the current pandemic, some attempt at preserving the sector makes sense because otherwise you send shocks through everything connected with it. For example, if a restaurant occupies the bottom floor of an apartment building, and the building's cashflow depends on that space not being unoccupied for more than two months, then you can have a sequence of events that result in mass evictions unless you control those side effects as well. It's probably easier to try to maintain the web of cashflow.
Now, you may be able to get side effects that you like in some sectors, such as restaurants turning into food kitchens for the duration as part of the direct injection of cash. On the other hand, a bar or a salon probably just shuts down. But even there, most stylists rent a chair in a salon, so you need to make sure that web of cashflow isn't broken by an owner pocketing it. It still gets very complicated. For some areas like farms we already have large measures in place, since bad seasons tend to affect large swathes of farms. Thus reserve boards, farm subsidies and the like.
Others have pointed out that such structural maintenance can be gamed by having a barely-viable company that is too big to fail. Then even small shocks can be turned into structural crises. Someone else suggested requiring capital reserves the way we do for banks, and for large companies that makes sense. If you're that big and structurally risky, you should be required to derisk yourself.
One discussion I hope we will be having as a society during and after this is what disaster preparedness looks like. We should have the regulations for what putting the economy on such a footing looks like, run simulations every few years for a week, and have adversarial gaming on an ongoing basis to try to find loopholes and close them.