43% of Small Businesses Closed, Research Finds

CAMBRIDGE, Mass. – Researchers at the National Bureau of Economic Research have published a working paper based on a survey that finds 43% of the nation’s small businesses have closed and employment has fallen by 40%.

Noting that small businesses, those with fewer than 500 employees, employ nearly 50% of the nation’s workforce, the paper says the COVID-19 crisis “represents a shock to America’s small firms that has little parallel since the 1930s. Our results suggest that many of these firms have little cash on hand, which means that they will either have to dramatically cut expenses, take on additional debt, or declare bankruptcy.”

The research bureau, which is affiliated with Harvard University, surveyed 5,800 small businesses in a sample that was representative of overall state demographics, according to the working paper, but ended up being skewed to retail and more tech-savvy companies.

“As of the last week in March, 38% of businesses viewed it as unlikely or only somewhat likely that they would be open as of the end of 2020. While optimism increased when they were informed about the CARES loan program, it is unclear whether the CARES act will enable most of America’s small businesses to survive – or whether beliefs about its impact are overly optimistic,” the report found.

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Published by The Business Journal, Youngstown, Ohio.