Scratching the Surface of How Hard Small Business Has Been Hit
The definition of what constitutes small business seems to move on a sliding scale these days. Reasonably agreeable metrics, however, show that 30.7 million small businesses generate roughly 50% of the GDP. Of those small businesses, 81% are sole proprietors. With that consideration, two surveys were recently released giving insight into how hard small businesses have been hit by the pandemic. Let's just say the results are not terrific. In a CNBC/SurveyMonkey Small Business Survey of 2,200 small businesses, while the results could effectively change overnight, what sticks out is that without federal help, or the economy reopening in time with a hopeful release of pent-up demand, 31% of the businesses surveyed can operate for a few more months, 7% less than a month, and 6% less than a week. As a parallel, Main Street America released results from 5,850 small businesses surveyed, of which 91% of the respondents employ less than 20 employees. The results are equally grim, to say the least:
Of the approximately 30 million small businesses in the US, nearly 7.5 million may be at risk of closing over the next five months, 3.5 million of which could close in the next two months.
Roughly 35.7 million people that work for small businesses are at risk of unemployment.
Business owners are primarily looking for financial assistance and penalty-free options on operational expenses.
It is worth considering that not only have small businesses had the most challenges with getting relief from PPP loans, but even for those who have, it has been reported that the 75% payroll rule make the funds useless because businesses need help with operational costs. Also, according to the IRS guidelines, the business expenses that are used under PPP loans are not tax-deductible. There is no doubt that the American economic engine will recover. A chef does not cease being a chef because a restaurant closed, and it is just a matter of time before another opportunity presents itself. What may be worth considering in the discussion, though, is instead of economic recovery we view the strategy moving forward more as a restart - an environment where entrepreneurs and small business owners thrive. If they started it once, they can start it again. Not only is it in their psyche, but it is in their blood. This is something to look forward to. Stay safe and healthy.