The COVID-19 (coronavirus) pandemic has hit small businesses in the U.S. particularly hard. Many are facing issues such as forced closures due to lockdown disruption, supply chain issues, and cash flow crunches.
To get a full picture of the economic impact on small businesses, OnDeck conducted three surveys of U.S. small business owners:
- One in March as the pandemic took off in the U.S.
- A second survey a few weeks later in April after most states had entered lockdown orders
- A third survey after the first round of Paycheck Protection Program funds was exhausted
Unsurprisingly, nearly all small businesses surveyed have been impacted by the pandemic, and the level of impact increased rapidly over just a few weeks.
While there are some early signs that federal assistance programs like the Paycheck Protection Program could help small businesses with some short-term financial relief, business owners still see a long road back to reopening their businesses.
Concerns over COVID-19 increased dramatically between March and April
When we first surveyed small business owners in March**, 87.7% said they were either somewhat or very concerned about the virus. When we re-surveyed business owners three weeks later, that number rose to 95.6%.
These concerns correlated closely to the business impact felt by small business owners. In March, 42.1% of business owners said they had been impacted (either personally or their business); that number doubled to 84.1% in April. And of those, 89.9% said they had experienced a revenue slowdown, up from 80.7% in March.
And the next few months may continue to be bumpy
Looking ahead, most small business owners expect the virus to continue to impact their business in the coming months. 98.1% believe their customers are very or somewhat concerned over the virus, up from 95.5% in March. While states are gradually lifting lockdown restrictions, businesses may find that customers are slow to return due to these high levels of concern about the pandemic.
Because of this, business owners are expecting little relief in the short term. 76.8% of business owners believe the virus will impact their business in the next few months. This number has dramatically increased since March, when 52.4% of business owners believed their business would be impacted. Of those who believe it will have an impact, more than half (54.1%) believe it will be a major impact, up from 42.1% in March.
The impact has been widespread
However, virtually all business owners believe the impact from the virus has been widespread – 94.6% believe there will be an impact to the overall U.S. economy in the next few months, up from 88.1% in March. Of those who believe it will have an impact, three quarters (75.5%) believe it will be a major impact, up from 55.9%.
Businesses need more government support
While the federal government has passed a few different relief packages in the last month, the number of small business owners who believe the government is doing enough to help remains relatively unchanged. 48.7% of business owners felt the government was not doing enough to combat the spread of the virus in April, compared to 48.2% in March.
Part of this may be caused by the limited availability of funding from the Paycheck Protection Program (at least in the first round). When we conducted a separate customer survey at the end of April***, only 15% of our customers were able to get a PPP loan during the first round of funding. 72% of our customers were planning to apply for a PPP loan once the fund was replenished.
However, business owners who were planning to apply for funds were not confident that they would actually receive them, likely due to the PPP’s bumpy start. Out of those customers who planned to reapply, 78% were either unsure or not confident that they would receive a PPP loan.
Most businesses were closed, and have a long road back to reopening
Unsurprisingly given how widespread lockdowns were across the U.S., 68.6% of small businesses surveyed were forced to shut down their business due to the coronavirus. The effects were widespread across U.S. states and industries: those who responded represented nearly every state and a wide range of industries (retail, restaurants, professional services, auto repair, construction, landscaping, etc.).
49.3% of those surveyed agree with the decision to reopen certain states. However, while 43.5% of small business owners felt confident they could safely reopen their business with their own preparations, others felt certain conditions would need to be met:
- 29.1% would want to see a steady decline in new COVID-19 cases in their area before reopening
- 20% would need to have easily accessible testing in their area
- 7.4% would not feel comfortable reopening until their was a readily accessible COVID-19 vaccine
The majority of business owners surveyed felt that they would need to go above and beyond their state government’s safety protocols once they reopen. 58.7% of small business owners plan to maintain stringent hygiene and social distancing protocols even if not required by their local or state government. 21.9% plan to follow state guidelines, and 16.5% felt that their business could reopen safely without implementing stringent protocols. It’s important to note that our survey covered a wide range of industries, some of which are inherently better suited to social distancing (I.e., landscaping).
For more information on how you can safely reopen your business, check out “How to Reopen Your Business Post-Coronavirus Lockdowns.”
OnDeck is here to support small businesses – check out our COVID-19 Resource Hub for more helpful information for small businesses impacted by COVID-19. You can also learn more about other resources, including financial assistance, available from the SBA for small businesses here.
*This article has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transaction.
*Survey 1: surveyed approximately 700 U.S. small business owners in March 2020
**Survey 2: surveyed approximately 700 U.S. small business owners in April 2020
***Survey 3: surveyed OnDeck customers at the end of April 2020; approximately 1600 responses