Fed Survey: Pandemic’s Impact on Businesses Universal
YOUNGSTOWN, Ohio – A Federal Reserve survey of nearly 10,000 small businesses paints a picture of the issues facing them at the six-month mark of the pandemic, including decreasing revenue, access to credit and the need for more relief funding.
The harm of the coronavirus pandemic has been, unsurprisingly, virtually universal with 95% of the 9,693 respondents saying their business was affected. Just over a quarter – 26% – closed temporarily, 56% reduced operations and 48% modified their operations. More than half of respondents, 53%, said they expected sales revenues to decrease by more than a quarter because of the pandemic. Overall, 78% said their revenues dropped in 2020.
Likewise, the need for emergency funding was seen across the country, as 91% said they applied for such money; 82% said they applied for Paycheck Protection Program loans and 77% received all the funding they requested.
Nearly two-thirds said they would apply for more government assistance if it were made available. Of those, 39% said it would be unlikely they’d survive until sales return to 2019 levels without such assistance.
Businesses also took on debt in 2020, with 79% having outstanding balances, up from 71% the year before. The share of companies with more than $100,000 in debt rose to 44%, up 13 percentage points from 2019.
For businesses seeking aid from banks, the rate of approval for loans, lines of credit and cash advances dropped to 76% from 83%. The line is drawn firmly at the start of the pandemic: prior to March 1, 81% of applicants were approved for at least some of the funds they sought, while only 70% of applicants after that date were at least partially approved.
The race of business owners played a crucial factor in how a company fared in 2020. While 57% of all respondents said their financial condition was “fair” or “poor,” that number jumped to 66% for Latino-owned firms, 77% for Black-owned companies and 79% for Asian-owned businesses.
The Federal Reserve’s Small Business Credit Survey was conducted in September and October, receiving responses from 9,693 businesses with up to 500 employees. All business surveyed were operational or temporarily closed at the time; no permanently closed businesses were surveyed.
The report can be read in full HERE.
Image via Tim Evanson, CC BY-SA 2.0 https://creativecommons.org/licenses/by-sa/2.0, via Wikimedia Commons
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