New Report: The Impact of COVID-19 on Small Businesses
Last week, Main Street America conducted an online survey to assess the impact of the COVID-19 on the approximately 300,000 small businesses across the network. Specifically, this survey was designed to help us understand small businesses’ ability to withstand what may be several months of suppressed revenue and what kinds of support programs will have the most impact.
With thanks to our Main Street Network for encouraging participation in the survey, more than 5,850 small business owners responded. Respondents came from more than 1,000 places across the United States, including big cities like New York and Chicago and small towns like Blairsville, Georgia and Greybull, Wyoming. Nearly 40 percent of the small businesses represented in this survey operate in towns with fewer than 10,000 residents.
The findings in our just-released report, The Impact of COVID-19 on Small Businesses: Findings from Main Street America’s Small Business Survey, highlight the profound impact on the smallest, locally-owned businesses that are the backbone of many downtown districts. The findings are sobering:
- Millions of small businesses will be at great risk of closing permanently if the crisis continues for several months. Of the nation’s approximately 30 million small businesses, nearly 7.5 million small businesses may be at risk of closing permanently over the coming five months, and 3.5 million are at risk of closure in the next two months.
- COVID-19 has had a devastating impact on small businesses’ revenue, and millions of Americans employed by our nation’s smallest businesses are at risk of unemployment as a result. Approximately 35.7 million Americans employed by small businesses are at risk of unemployment as result of the COVID-19 crisis.
- Our survey finds that business owners primarily need financial assistance and penalty-free extensions on expenses.
The report also outlines what government economic development authorities need to consider as they look to better support small businesses. These actions will be critical to ensuring that the voids highlighted in the survey data are addressed while the CARES Act is being deployed.
What does this mean for your local Main Street programs?
Main Street programs are essential resource connectors and educators for small businesses during the current crisis. The survey suggests there is an acute need for Main Street programs to continue serving as the link between small businesses and resource opportunities. Given the menagerie of financial assistance programs at the local, state, and federal levels, 40 percent of small business respondents indicated concerns about accessing recent COVID-19 financial programs. This response is consistent with anecdotal evidence demonstrating access issues involving new CARES Act stimulus programming.
Simply put, Main Street programs remain a critical source for communication and education about these programs, along with other resource and technical assistance partners directly associated with these programs. If you have questions or need additional information on CARES Act opportunities, please refer to the Main Street COVID-19 Resources webpage.
Small business financial assistance programs should not only address revenues, but expenses as well. Minimizing permanent business closures is critical to downtown and district recovery. The survey reveals 60 percent of respondents have less than 5 months remaining of likely business survival. Thus, there is the need to not only address the revenue side of the income statement, but find ways to reduce expenses. Currently, much of the focus has been on revenue enhancement by supporting carry-out, gift card purchases, and online shopping where/when possible.
However, 66% of responders indicated a need to suspend some expenses in the interim while they are mandated to be closed. These typically consist of rents, utilities, and other operating fees. Main Street programs should engage with city officials on programs at the local level, in which there may be influence and/or control over utility operations, parking fees, etc. In addition, while small business operations are being negatively impacted during this time, property owners represent a key stakeholder group. Main Street programs are also encouraged to dialogue with property owners as partners to help retain small business tenants, and continue as a connector and educator on programs at the federal level designed to suspend mortgage payments.
Small businesses desperately need support in transitioning to e-commerce selling. It’s not surprising in a time of social distancing and stay-at-home orders that online shopping would be rising dramatically and represent a critical component to small business survivability during the pandemic. However, with nearly 63 percent of respondents lacking e-commerce sales, we as small business supporters have a long way to go in encouraging and supporting small businesses in making that transition to having a strong e-commerce presence, along with their storefront operations. E-commerce training programs, website development grants, and connections with low cost e-commerce platforms have to be as prevalent now and in the recovery as traditional Main Street programming, like façade grants and retail events. Main Street America will be working in the weeks and months ahead to identify resource partners who can support this transition.
We know that the impacts of COVID-19 are not felt evenly across the country. We will be digging into this data at a more granular level, and providing states and communities with information next week that will help them understand what is happening at the local level. This information will serve as a powerful advocacy tool in explaining to state legislators and local elected officials what types of resources are needed by small businesses to weather the storm.
Finally, there will inherently be changes over time as America’s small businesses deal with the challenges of COVID-19. As such, Main Street America plans to follow up with small business owners who expressed interest in participating in additional surveys. We look forward to providing updates to the Network over the coming weeks.