Full post originally from Main Street America.
Main Street America recently conducted a follow-up to its survey on the impacts of COVID-19 on small businesses to better understand the continued challenges businesses face as the crisis evolves. The hundreds of responses we received from business owners across the country indicate that small businesses remain severely challenged by reduced revenues and are uncertain about their path forward. Federal financial programs associated with COVID-19 have provided stopgap support but may ultimately offer limited relief as the public health crisis looms large in the minds of consumers.
Detailed findings are outlined below, followed by recommendations for Main Street programs to consider as they begin the recovery process.
Less than half of respondents who applied for federal relief dollars in the initial stimulus round received funding, and the smallest businesses had the least success with their applications. As of the end of the first federal funding allocation, 78 percent of the small businesses who responded to the follow-up survey had applied for federal relief associated with COVID-19. Of those who applied, 48 percent received funding. The smallest businesses responding to the survey had the least success with their applications: Of those business owners who applied and have fewer than 6 employees, 39 percent received funding. In comparison, 64 percent of business owners who applied and have six or more employees received funding.
Businesses in small towns applied for federal relief dollars less often and had less success receiving funding. As of April 23rd, businesses from larger towns and cities—places with at least 50,000 residents—had applied for federal relief in greater proportions and received funding in greater proportions. In our sample, 89 percent of businesses in larger towns and cities applied for federal relief, compared to 76 percent of businesses in places with fewer than 50,000 residents. In the smallest towns—places with fewer than 5,000 residents, only 69 percent of businesses in our sample applied for federal relief dollars. 59 percent of those who applied from places with 50,000 residents or more received funding, compared to 45 percent of those who applied from places with fewer than 50,000 residents.
Funding from the Payroll Protection Program (PPP) and Emergency Injury Disaster Loan (EIDL) offered little long-term financial relief. Half of the businesses that received funding through the PPP or EIDL programs and disclosed their funding amount received less than $8,000, suggesting that those businesses had relatively few employees and limited payroll expenses. Separately, we asked business owners how long their businesses could avoid permanent closure if current trends continue, and 234 businesses provided an estimated number of weeks they could stay open. Of those, 93 businesses had applied for PPP or EIDL funds and received money, 93 had applied and not received money, and 48 had not applied for either program. The businesses who had received PPP or EIDL funds provided an average estimated life expectancy of 12 weeks and 6 days, which is about 30 days longer than the average estimated life expectancy of businesses who applied but did not receive federal relief.
Read the full post here.