One-in-Five Indiana Small Businesses Will Have to Close if Economic Conditions Don't Improve

Date: August 31, 2020

Indiana Small Business Owner Will Shut Down in November Without Additional PPP

The NFB Research Center released the latest COVID-19 related survey assessing the health crisis impact on small businesses. Congress is currently negotiating additional financial support for small businesses after the initial Paycheck Protection Program (PPP) loan period expired on August 8. If eligible, 44% of small businesses surveyed said they would apply or re-apply for a second PPP loan with another 31% saying they would consider applying for one.

“The unprecedented and devastating crisis isn’t going away. Many small businesses here in Indiana are still suffering,” said NFIB State Director in Indiana, Barbara Quandt. “While some small business have been able to get back to work, there are other industries still stuck at a standstill and likely will for months to come. For every small family business that is coming back to life, there’s one that is circling the drain. We need to help those small business owners and we need to do it now. Many can’t hold on much longer. They need money to keep their doors open and support their employees and their families.”

In Greenwood, Rick Harris is faced with the toughest decision of his life: should he take out a loan to keep his small business afloat, or does he cut his losses, sell his equipment and shut his doors? It’s a heart wrenching choice for Rick: while he wants to keep supporting his employees and their families, he isn’t sure a loan will ensure his small business survives. That’s because Upland Management specializes in building and setting up exhibits for trade shows: an industry that has come to a stand still since the coronavirus pandemic hit back in March.


Upland Management employees setting up an exhibit at a trade show before the coronavirus crisis hit.


“It’s not like I can wear a mask and do my job or set up tables outside and serve customers. The trade show industry is dead in the water and there’s no telling when it will come back. I haven’t made a penny since March 3rd. I’m in a rough spot right now and unless I get help immediately, I’ll be out of business in November.”

Rick has been able to keep his doors open till now thanks to the Paycheck Protection Program loan he received back in April. He’s used the money to keep his three full time employees, 60 part-time employees, and pay his bills. However, that money will soon run out. Rick only has enough PPP money to give his employees one more paycheck. Then, they’ll have to file for unemployment. Rick worries that could signal the end of his small business.

“If I can’t pay them, I will lose my talented and trained employees who have been with my small business for the past 12 years. If and when business picks up again next year – they’ll be driving a truck for Amazon or employed somewhere else. The trade show industry has been forgotten. It’s a $70 billion dollar industry that is operating at zero right now. Congress needs to help the industries that aren’t coming back, and they need to do it now.”

Rick says another round of PPP would get him through until the middle of next year. He’s hopeful that by then, people will feel more comfortable traveling and gathering for trade shows. Rick doesn’t want a handout: he thinks Congress should give more funds to small businesses that are still devastated by the pandemic.

“Congress should help small businesses that have seen a massive drop in revenue. I’m operating at 0% of what I was last year. I’m happy to open my books and show my losses. I don’t know what to do right now. I’m in limbo. The next round of PPP funding should be for business that have lost 80% or more of their revenue since March and not just companies that have taken a small hit.”

Key findings from the survey include:

Most PPP borrowers (84%) have now used their entire loan, up from 71% in July.

  • The 16% of borrowers are likely not far behind on spending.
  • Most PPP borrowers (81%) applied for the loan through the financial institution that they normally use for business purposes.
  • About 43% of borrowers plan to use the EZ form when applying for loan forgiveness,

Thirty-five percent of respondents have applied for an Economic Injury Disaster Loan (EIDL).

  • Nearly three-quarters (74%) were approved for a loan and 9% were denied.
  • About 18% still have not heard yet about the status of their loan application.
  • Of those who applied for an EIDL loan, 22% of loan applicants are “very satisfied” with the EIDL program overall and another 44% were “satisfied.”

Almost half of PPP loan borrowers (47%) anticipate needing additional financial support over the next 12 months.

  • If eligible, 44% of small business owners would apply or re-apply for a second PPP loan.
  • Another 31% would consider applying for one.

Sales levels remain at 50% or less than they were pre-COVID sales levels for about one-in-five employers.

  • Another 28% report sales levels of 50-74% from pre-crisis levels.
  • Half (50%) are nearly back to where they were with some (14%) exceeding pre-COVID sales levels.

About one-in-five (21%) of small business owners report they will have to close their doors if current economic conditions do not improve over the next six months.

  • Another 19% of owners anticipate they will be able to operate no longer than 7-12 months under current economic conditions.
  • Over half (61%) are better situated and do not anticipate any near-term problems.

Most small business owners do not expect business conditions to improve to normal levels until next year at the earliest.

  • Only 19% of owners anticipate conditions improving to normal levels by the end of the year.
  • Six percent of owners say that conditions are back to normal now.
  • Over half of owners (52%) anticipate it taking until sometime in 2021 and 20% believe sometime in 2022.

The CARES Act provided additional financial assistance of supplemental unemployment insurance benefits through July 31. The program presented a significant challenge to some small business owners.

  • About one-third (32%) of small business owners reported that the extra $600 per week has hurt their business by making it harder to hire or re-hire workers.
  • However, the UI program has also helped support customer spending, with 9% of owners feeling like they benefited from the program by putting more money in their customers’ pockets.
  • Three percent of owners said they had to offer a higher wage to encourage a worker to come back to their job, and 4% reported having an employee agree to continue working but only with reduced hours in order to also receive the $600 per week benefit.

The threat of legal action against small business is a serious concern for 21% of owners and a moderate concern for another 34% of owners.

  • Just under one-third (31%) are not too concerned and 14% are not concerned at all, likely due to limited contact with the general public or having few employees, if any.

About one-in-five (21%) of small employers have had an employee take COVID-19 related paid sick leave or family leave as mandated and offered through the Families First Coronavirus Response Act (FFCRA).

  • Only 30% of employers have claimed the tax credit or an advance refund for reimbursement of these costs.

This publication marks NFIB’s 11th Small Business COVID-19 survey assessing the health crisis impact on small business operations, economic conditions, and utilization of the targeted small business loan programs. The first series was published in early March 2020 with subsequent publications every 2-3 weeks, found here. The full survey is available here.


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