92% of small employers are negatively impacted by COVID-19
The NFIB Research Center’s latest survey on the current impact of the COVID-19 outbreak on small business shows continued deterioration of the small business sector. The severity of the outbreak and regulatory measures that cities and states are taking to control it are having a devastating impact on small businesses.
Currently, 92% of small employers are negatively impacted by the outbreak of the novel coronavirus, a continued escalation from 76% of small employers reporting negative impacts 10 days earlier. About 3% are positively impacted. These firms are likely experiencing stronger sales due to a sharp rise in demand for certain products, goods, and services. This will likely ease in the coming weeks as consumers feel more secure about their personal supply levels.
“We are being inundated with calls and emails from Michigan small business owners seeking help, information, and clarification,” said Charlie Owens, NFIB in Michigan State Director. “While the loan and grant assistance offered in the federal CARES Act will help, it will not be near enough”. Owens said that it is likely a second round of funding will be necessary.
Almost all small employers are now impacted by economic disruptions related to COVID-19. Only 5% of small businesses are not currently affected by the outbreak. Of these businesses, 44% of them anticipate that changing if the outbreak spreads to, or spreads more broadly in, their immediate area over the next 3 months.
Among negatively impacted small employers, 80% report slower sales, 31% are experiencing supply chain disruptions, and 23% report concerns over sick employees.
How long can small businesses continue to operate under current conditions? About half of small employers say they can survive for no more than two months, and about one-third believe they can remain operational for 3-6 months. Not surprisingly, many small business owners are anxious to access financial support through the new small business loan program to help alleviate some of the financial pressures building up. About 13% of small employers are not as severely impacts and expect to remain open indefinitely.
The level of concern among small business owners about the coronavirus impacting their business has elevated significantly over the past three weeks. About 72% of small business owners are “very” concerned about its potential impact on their business now compared to 16% on March 10th. Another 22% are somewhat concerned, and 6% are slightly concerned. Just 1% are not at all concerned.
Due to escalating financial stress on the small business sector, more small businesses are talking with their bank about financing needs than was the case 10 days ago. About 29% of small employers have talked with someone at their bank or with the Small Business Administration about finance options, and 23% are planning to do so soon. Another 38% of small employers have not, and do not, intend to do so.
The CARES Act includes new small business loans through the Paycheck Protection Program (PPP). Almost two-thirds of small employers plan to apply for the loan. The PPP is another targeted loan assistance program to help small businesses weather the rapidly changing economic crisis.
The vast majority of small businesses are now impacted by the COVID-19 outbreak, and owners are taking the threat to their business seriously. Many owners have already sought out financial help and more are planning to do so in the near future. The outbreak has left few, if any, owners unscathed. The economic impact is immense, and now, the questions are how long will it last and how quickly can the small business sector recover once on the other side.
This survey was conducted with a random sample of NFIB’s membership database of about 300,000 small business owners. The survey was conducted by email on March 30, 2020. NFIB collected 1,172 usable responses, all small employers with 1-465 employees.