Small firms’ pandemic pain varies widely
In Austin, they’re expecting more closures. In New York, they’re struggling to pay the bills. In San Francisco, they worry that the old normal is never coming back.
Small businesses are often described as the heart of the U.S. economy. They employ about half the country’s private workforce — and they’ve been hit especially hard by the pandemic. But the effect varies widely from region to region, depending on things such as the severity of lockdowns and the local mix of industries.
The latest Small Business Pulse Survey by the Census Bureau, based on responses collected Aug. 9-15, offers a glimpse of how small U.S. companies see their prospects, five months into the worst economic slump in generations. Most said there’s still a way to go before business gets back to normal — if it ever does.
Nationwide, about a third of the companies said they’ve experienced a large negative effect from the pandemic. Roughly 1 in 20 expect to permanently shut down in the next six months.
The latter figure is substantially lower than worstcase scenarios outlined when COVID-19 first hit the U.S. That’s testimony to the resilience and adaptability of small companies — and the help they’ve gotten from government initiatives such as the Payroll Protection Program, which offered a mixture of grants and loans.
“Thus far, the U.S. appears to have avoided the surge in COVID-19-related permanent business shutdowns that many feared at the pandemic’s onset, likely because the PPP and other policy support helped businesses survive the sharp pullback,” Goldman Sachs economists wrote in a recent report.
Still, the overall numbers mask some sharp variations by region. In the week before the survey, for example, 4.2 percent of small companies in the area of San Jose, Calif., and 3.8 percent in San Antonio said they had closed a location, while the nationwide figure was 1.3 percent.
Looking ahead to the next six months, it was businesses in Austin — a hub for the kind of nightlife that’s been curtailed by social distancing — that showed the highest levels of anxiety.
The survey found that only 3 percent of companies have missed a loan payment (excluding debts that have been forgiven or postponed) since March 13 — the date when President Donald Trump declared a national emergency and the one chosen by the Census Bureau as a starting point.
But another survey question that expanded the net to include other kinds of scheduled payments — such as rent, utilities or payrolls — revealed more widespread problems. Almost 10 percent of companies nationwide said they had missed at least one payment, and in New York City, the figure was nearly twice that level.
Overall, most small businesses do see light at the end of the tunnel — even if they don’t expect a full recovery until well into next year. But a significant minority don’t think they’ll ever return to normal.