Economic damage to small businesses continues to skyrocket, NFIB says
Photo / Maureen Milliken
Small businesses report increasingly devastating affects from COVID-19 restrictions, a National Federation of Independent Business survey reports.
The devastation to the small business sector from the COVID-19 outbreak continues to increase, with nearly all small businesses in a survey by the National Federation of Indpendent Business reporting economic damage, up from three-quarters 10 days before.
Some 92% of small employers reported on March 30 that they were negatively impacted by the outbreak of the novel coronavirus. That number was 76% when the businesses were surveyed March 20, the organization, which represents more than 300,000 small businesses, said in a news release late last week. Businesses that employ 465 people or fewer were surveyed.
The news comes as many small businesses are having trouble accessing the $349 billion in loans for small businesses that is part of the $2 trillion federal CARES Act aid package passed March 27.
"We are hearing from far too many small businesses that they are being shut out of the Paycheck Protection Program," said Brad Close, president of the organization, in a separate release. "Small businesses make up half of our economy and employ nearly half of all workers, but this has the potential to be the last straw for many small businesses and their employees.
"The current delays are unacceptable, and hurt those that need the help most — very small businesses that find themselves in the worst of financial circumstances," he said.
The survey did not indicate how many of the businesses responding are in states, like Maine, where nonessential businesses have been ordered closed, there are restrictions on essential ones and residents have been asked to stay home, restricting commerce. More than 30 states now have such orders.
'Major health, economic hurricane'
Among businesses reporting a negative impact:
- 80% report slower sales;
- 31% are experiencing supply chain disruptions;
- 23% report concerns over sick employees.
In Maine, 98% of the businesses are considered small, employing fewer than 500.
“The dramatic change reflects the rapid spread of the coronavirus and protective actions we see in Maine. Virtually no business or activity is untouched in some way,” said David Clough, Maine director of NFIB. "What didn't seem real just a few weeks ago now feels like a major health and economic hurricane. Everyone is trying to hang on until the storm passes and they hope it passes quickly."
About 3% surveyed March 30 reported a positive impact, likely because of a sharp rise in demand for certain products, goods and services. "This will likely ease in the coming weeks as consumers feel more secure about their personal supply levels," the release said.
Some 5% of small businesses report they have not yet been affected by the outbreak; 44% of them anticipate that will change if the outbreak spreads to, or spreads more broadly, in their immediate area over the next three months.
Time running out
About half of small businesses, those with less than 500 employees, say they can survive for no more than two months, and about one-third believe they can remain operational for three to six months.
About 13% of small employers are not as severely impacted and expect to remain open indefinitely, the report said.
Almost all small business owners are taking some sort of action in response to the outbreak by adjusting to changing economic conditions or protecting themselves from potential disruption. Just 5% of owners have not taken any action in response to the outbreak; in the first survey, on March 10, 52% were not taking action.
Actions taken by most small employers are those related to recommended CDC steps to protect and prevent the spread of COVID-19 in the workplace, including talking to employees about hand washing and social distancing and disinfecting and cleaning offices and workplaces more frequently.
Another 56% have scaled down or adjusted business operations, and 26% have delayed payments to creditors.
About 72% of small business owners are “very” concerned about its potential impact on their business now compared to 16% on March 10. Another 22% are somewhat concerned, and 6% are slightly concerned. Just 1% are not at all concerned.
Calling on lenders
More small businesses are talking with their bank about financing needs than was the case when the previous report, on March 23, was released. That survey was done before the relief package was approved.
About 29% of small employers have talked with someone at their bank or with the Small Business Administration about finance options, and 23% are planning to do so soon. Another 38% of small employers surveyed have not, and do not intend to.
Almost two-thirds of small employers surveyed said they plan to apply for the federal PPP loans.
Close said that banks and other financial institutions "need to do everything in their power to get these loans out the door to Main Street businesses now, whether or not the small business is an existing customer, or a new customer. And our government agencies have to ensure that all banks and financial institutions have the guidance they need to make these loans immediately.
“Every day without access to the PPP loan program means more lost jobs and more shuttered businesses," Close said. "America’s small businesses are facing an economic crisis that is not of their making. These small businesses did their due diligence and were ready this morning, but are hearing 'no.' "
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