The coronavirus (COVID-19) pandemic and the economic hammer blow that accompanied it have had a huge but uneven impact on small businesses.
A survey by the National Federation of Independent Businesses (NFIB) found that 20 percent of business owners say they will not be able to remain open if business conditions don’t improve. Another one in five expressed doubts about whether they can last another 12 months.
“The health crisis is not impacting small businesses equally,” Holly Wade, NFIB director of research and policy analysis, told The Hill.
Small hardware stores appear to be doing quite well. On the other hand, full-service restaurants have struggled to keep the doors open, and many have already closed for good.
Wade says the pandemic has changed the landscape for small businesses, forcing them to adapt to abrupt shifts in consumer behavior, ever-changing information on health and safety, and new rules and regulations from varying levels of government.
Most took advantage of PPP
The Paycheck Protection Program (PPP) passed by Congress proved to be a valuable lifeline for many small businesses. Seventy-eight percent of small businesses that responded to the survey say they applied for a PPP loan, and the overwhelming majority received funds.
But the deadline for applying for new loans passed earlier this month, and Congress is still negotiating ways to extend support for businesses. Lawmakers are bogged down in many of the same partisan arguments that have blocked the extension of aid programs for consumers.
One problem in crafting a program to help small businesses and their employees is to determine which businesses need the help. The NFIB survey shows that the crisis severely impacted most small businesses in the beginning, but the economic recovery has been less uniform since then.
Some are actually doing better
Sales levels are still about half of what they were before the crisis, but 22 percent of businesses have restored sales to as high as 74 percent of pre-crisis levels. Fourteen percent said they are actually doing better than they were before the pandemic hit, but there are many more that have seen sales dry up.
“About one-in-five of small business owners report that they will have to close their doors if current economic conditions do not improve over the next six months,” the authors write. “Another 19 percent of owners anticipate they will be able to operate no longer than seven to 12 months under current economic conditions.”
Assuming they can produce enough sales to stay open, small business owners are also worried about surviving coronavirus-related lawsuits. Fifty-five percent of owners said liability is either a serious or moderate concern.