The COVID-19 pandemic has disproportionately impacted metropolitan areas, which have seen a higher rate of small business closures than non-metropolitan areas. However, in recent weeks, the New York City metropolitan area has reopened faster than the national rate. Read “Small Business Facts: Pandemic Pressures City Businesses” to learn more.
Resource Category: Economics (General)
Businesses Won’t Survive Without Additional Relief
Small Business Majority’s latest survey reveals that the uncertainty of whether more help will arrive has left too many small businesses on the brink of collapse.
The survey finds that without additional funding, more than 1 in 3 (35%) small business owners will not survive past the next three months. The number is even higher for small business owners of color: an astounding 41% of Black and Latino-owned businesses won’t make it through the next few months without additional financial support. And 1 in 5 small business owners report they’ve considered filing for bankruptcy.
Big Ideas for Small Business
Given current market conditions, it is clear that absent major federal interventions, whole
swathes of the small-business sector will never return, minority business owners will suffer
more than their fair share of the burden, and entrepreneurship levels will remain depressed for a
generation or more. But the collision of these forces—COVID-19, economic consolidation, and
deep racial inequality—also create a window of opportunity for significant reform. This report
provides a five-step roadmap towards a more inclusive, dynamic, and productive small-business sector. We break down the five steps into ten major policy recommendations. While the
federal government must take the lead for many of our recommendations, we also suggest how it
can galvanize the full energy of public, private and civic institutions.
PPP Neglected the Neediest Small Businesses
This report provides preliminary findings from the Select Subcommittee’s ongoing investigation of the implementation of the Paycheck Protection Program (PPP) by the Small Business Administration (SBA) and the Department of the Treasury (Treasury). The report finds that contrary to Congress’s clear intent, the Trump Administration and many big banks failed to prioritize small businesses in underserved markets, including minority and women-owned businesses. As a result, small businesses that were truly in need of financial support during the economic crisis often faced longer waits and more obstacles to receiving PPP funding than larger, wealthier companies.
Ownership and Opportunity
In a new report from Urban Reform Institute edited by Joel Kotkin, J.H. Cullum Clark and Anne Snyder explore what happens when opportunity stalls. Pete Saunders and Karla Lopez del Rio tell the story of how homeownership enabled upward mobility for their respective families. Wendell Cox quantifies the connection between urban containment policies and housing affordabilty.
Black Business Owners Hit Hard by Pandemic
Black owners show biggest decline in business activity. Effects of the COVID-19 pandemic on business owners have varied across demographic groups. Data on demographic characteristics and self-employment are collected through the Current Population Survey and available through IPUMS. In July 2020, the total number of people who were self-employed and working was 7.3 percent lower than in July 2019. That decline was a partial recovery from April 2020, when the decline was 20.2 percent relative to April 2019. Declines have been largest for Black self-employed workers, with a decline of 37.6 percent in April and a partial recovery to a decline of 18.4 percent in July. The effects of the pandemic have varied by industry, and demographic differences in the effects of the pandemic reflect demographic differences in distributions across industries.
COVID’s Effect on Female-Owned Small Businesses
Women-owned small businesses have been more heavily impacted by the coronavirus pandemic than male-owned small businesses, and they are less likely to anticipate a strong recovery in the year ahead, new data show. The Special Report on Women-Owned Small Businesses During COVID-19 from the U.S. Chamber of Commerce also found that women-owned small businesses have less optimistic revenue, investment and hiring plans compared to male-owned small businesses.
Vulnerable Households Navigating Impact of COVID-19
The COVID-19 pandemic has already had an unprecedented impact on the financial lives of households across the country. During June and July 2020, Prosperity Now conducted a national survey of lower-income households to better understand the circumstances these households are confronted with and the strategies they use to secure resources to navigate this crisis.
Impact of COVID-19 on LMI Communities
The Federal Reserve’s community development function promotes the economic resilience and mobility of low- to moderate-income and underserved households and communities across the country. The spread of COVID-19 is having an impact on communities nationwide. To best respond to this crisis, information is needed about the scope and scale of the pandemic’s challenges. Throughout 2020, all 12 Reserve Banks and the Fed Board of Governors are surveying representatives of nonprofit organizations, financial institutions, government agencies, and other community organizations to understand the effects of COVID-19 on low- to moderate-income communities and the entities serving them. The results of each survey will be released as a downloadable report.
Impact of PPP on Small Businesses
To determine the initial effectiveness of government relief efforts, Gusto analyzed data from nearly 27,000 of our small business customers who reported receiving PPP loans and compared it to platform data from our 100,000-plus small business customers nationwide[1]. The report below shows that PPP aid has helped to provide stabilization from the initial free fall in March ‘20, with strong increases in hiring and rehiring beginning in the second half of April ‘20.