Almost all Indiana businesses continue to be negatively impacted by the crisis by varying degrees
The NFIB Research Center released a survey with an update on the state of small business and the progress with federal loan programs. Twenty-seven percent of owners reported experiencing a significant or moderate increase in sales due to eased restrictions in the states. Another 27% reported a slight increase and 42% of owners said sales levels did not change.
“The economy is showing signs of life and small businesses are reporting increased sales. However, we are far from out of the woods,” said NFIB State Director in Indiana, Barbara Quandt. “Many who’ve received assistance are saying it was helpful short term but they will need more to help them survive this crisis.”
That includes Indianapolis small business owner Rick Harris. Harris hasn’t worked since February 28th. His small business, Upland Management Services, installs and tears down exhibits at trade shows across the country. Needless to say, the trade show industry has been decimated from the COVID-19 crisis and even though Harris did receive PPP money, he’s worried about what will happen when his money runs out on September 12th.
Harris’ employees set up an exhibit at a trade show before the COVID-19 pandemic hit.
The PPP funding has allowed Harris to pay his four full time employees, keep the lights on and the mortgage paid, however, it won’t last much longer. Harris is worried about the future of trade shows. There is finally one scheduled to come to Indianapolis – the M-Pact show, which features leaders in the Midwest’s energy industry – but of the five clients he had last year – just one will be there to give Harris business. To add to the pain, what was a 40×40 booth last year will be just a 10×10 booth this year. That reduces his paycheck for the job from $7500 to $900. Meanwhile, the bills are piling up. He owes Nationwide nearly $10,000 for unemployment insurance and the company that handles his insurance so he can get into trade shows and set up booths has told him he can’t defer his payments any longer.
“I don’t know what I’m going to do when my money runs out. I guess I could tap into my line of credit at the bank but I’m nervous to get into debt just to make it to 2021 when the future of the trade show industry is so uncertain. I’m going to need more funding in the near future or I’m going to have to close my doors. It’s as simple as that,” said Harris.
A finished exhibit at a trade show pre-coronavirus.
Key findings from the survey include:
The number of small business owners applying to a Paycheck Protection Program (PPP) loan increased slightly over the last two weeks.
- Eighty-one percent of respondents reported applying for a loan compared to 77% as of May 29th.
- Of those who have not applied, only 3% anticipate applying for a loan before the program ends for new applicants.
- Most PPP loan applicants (85%) applied through the bank that they normally use for their business.
Almost all PPP applications (97%) have received their loans.
- Most PPP borrowers are still using their loan but over the next few weeks, more will have exhausted their funds and will be ready to apply for loan forgiveness.
- Currently, only 3% of PPP loan borrowers have applied for forgiveness.
Over half (59%) of PPP loan borrowers are taking advantage of the extended 24-week forgiveness period.
- Forty percent of borrowers find the new flexibilities (including allowing more of the loan to go towards non-payroll expenses and new FTEE exemptions) very helpful in maximizing loan forgiveness, another 19% find them moderately helpful.
- One-in-ten reported that the original terms were fine for their purposes and 9% of borrowers were not familiar with the recent changes.
Some owners report having to adjust their workforce to reflect the economic environment with 14% of PPP loan borrowers anticipating having to lay off employees after using the loan.
- Half of those who anticipate reducing staff levels expect to lay off one or two employees.
- About 12% will likely reduce their staff by 10 or more employees.
Over one-third of owners (35%) have applied for an Economic Injury Disaster Loan (EIDL) and most are still waiting for their loan to be processed.
- Only 38% of applicants have had their loan deposited.
- Small business owners have experienced faster processing with the EIDL emergency grant advance with 72% of those who requested the grant advance receiving it.
Economic conditions have improved for many small business owners over the last month as states have eased business restrictions and stay at home orders.
- However, of those small business owners who have applied for a PPP loan, an EIDL, or both, almost half of them anticipate needing additional financial support in some form over the next 12 months.
The economic and health crisis is lasting much longer than the PPP’s initial design of primarily supporting two months of payroll and limited non-payroll expenses, and of the EIDLs reduced loan distributions.
- Most owners (56%) expect they’ll need less than $50,000 to support business operations in the near term and just over one-in-four (27%) anticipate needing more than $100,000.
About 41% of respondents are familiar with the new tax deferment provision and about 6% of respondents have taken advantage of it.
- Of those who have not yet deferred their tax payments, about 5% plan to do so and 31% responded “maybe.”
- Almost two-thirds of small business owners are not planning to defer their tax payments.
Most small business owners have had to adjust their business operations to some degree due to the COVID-19 health crisis.
- The crisis has required significant change in business operations for 23% of respondents and a moderate change in operations for 32% of owners.
- About 30% of owners have had to modify their operations slightly and 16% of businesses have not changed any business operations.
The full survey is available here.