California small businesses face difficult decisions as pandemic continues and funding freezes

Publisher: 
Small Business Majority
Date: 
miércoles, diciembre 16, 2020

As the COVID-19 pandemic has raged across the country and resurges in California, small business owners continue grappling with the effects of state and local public health orders and a loss in consumer demand. Nine months into this crisis, California’s small business owners say their businesses have been diminished, leaving them with reduced revenue and operating capacity. They’re making difficult decisions that are impacting the workforce through reduced wages, working hours and employee benefits. A new statewide survey of California’s small business owners further sheds a light on the distressing effects of the nearly yearlong pandemic and what they anticipate in the future months, especially as funds that served as lifelines in the early phases of the pandemic run dry.

The poll, conducted by Lake Research Partners for Small Business Majority, surveyed 418 California small business owners (nearly evenly split between white entrepreneurs and business owners of color) in the state between Nov. 10 to Nov. 23, 2020. The survey was completed before the late-November public health orders were enacted by the California governor and local government officials. Even before some businesses were faced with another set of closures or capacity restrictions, 17% of entrepreneurs of color report they are likely to permanently close their business in the next three months, compared to 12% of white business owners.

Additionally, small business owners report they are operating at reduced capacity compared to the same time last year. Nearly half say operating capacity has decreased, with 16% reporting their capacity has decreased by more than 50%.

Despite efforts to cautiously reopen local economies and “get back to normal,” small business owners have had to resort to significant measures to keep the lights on. Of those employers who reduced their number of employees during the pandemic’s height and economic downturn through furloughs and/or layoffs, more than 60% report they have not restored their headcount to pre-pandemic levels.

Moreover, small business owners report they’ve struggled to navigate new funding programs, such as the Paycheck Protection Program (PPP). And they are experiencing operational impediments to ensure the health and safety of customers and employees—obtaining personal protection equipment (PPE), rearranging workspaces and retail floors to accommodate distancing, and transitioning to remote work.

While about half of small businesses say they applied for PPP loans, those who didn’t largely attributed their reasons to confusion about how to apply, fear over taking on debt, inability to secure a loan through their bank or thinking they were ineligible. These survey responses highlight ongoing concerns surrounding outreach and communication of PPP loans and the difficulty in getting funds to small businesses in need, who may lack relationships and knowledge to quickly work through the process.

As the year draws to a close, 28% of entrepreneurs of color report they may be forced to temporarily close their business in the next three months. Twenty-seven percent may lay off employees permanently, compared to 15% of white entrepreneurs who report the same.

Notably, small business entrepreneurs support government policies that would help them stay in business until the economy recovers. Federal funding assistance through grants and loans—programs that are supported by most small business owners—can help those on the edge. More than 80% of small business owners support providing direct grant assistance to small businesses, and 76% support another round of PPP loan dispersal.

While public health experts warn that the next few months will be dire as COVID-19 cases increase around the country and in California, they also forecast a slowdown in spread by mid-2021. Federal and state financial support, combined with significantly expanded technical assistance programs (a proposal supported by 75% of owners), can help small businesses survive and even grow in in the next few months.

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