Small Businesses Expect Long-Term Pain From Pandemic
More than half of small business owners continue to say they don’t expect their operations to return to normal for at least another six months, if ever, a signal of the pandemic’s long-term grasp on a major source of job creation in the U.S.
Nationwide, 46.4% of small business owners surveyed by the U.S. Census Bureau in early January estimated their business would not return to the same level it was before the pandemic until the second half of 2021. Another 7.1% said they didn’t expect their business to ever recover.
The U.S. Census surveys small businesses weekly. The percentage of respondents falling into the “more than six months” and “never” categories has moved little since August—when the first round of Paycheck Protection Program (PPP) applications closed—suggesting that the bulk of small business owners have seen little reason for optimism in the ensuing five months. Nearly three-quarters of respondents said their business received financial assistance from the first round of the PPP.
Among the businesses reporting little short-term hope in early January were those in sectors like education, arts and entertainment, and accommodation and food services. For example, 72.8% of those in the accommodation and food service industries said they expected business won’t return to normal until the second half of 2021, at best.
However, the pandemic has affected small businesses unevenly, with the Census Bureau noting an increased level of polarization in the data collected Jan. 4-10. Businesses in industries like construction, finance and insurance, and real estate were more likely to report not being affected or already having returned to normal operations.
The Census Bureau started the Small Business Pulse Survey (SBPS) in April, attempting to measure how the pandemic has affected small businesses, how they have adapted to current economic conditions, and whether they have needed any financial assistance from the federal government since the start of the pandemic.
The Small Business Administration (SBA) reopened the PPP this month, first to new borrowers on Jan. 11 and then Second Draw PPP Loans for businesses already in the program on Jan. 13. The federal stimulus package passed in December allotted $284 billion in funding toward this round of PPP loans through March 31.
Small businesses employ nearly half of all Americans. Between 2005 and 2019, 64% of net new private-sector jobs were generated by small firms.