Survey: Business conditions improving for some small businesses, but 1 in 4 still facing closure in the next three months
Across the country, more Americans are being vaccinated every day and many are ready and eager to “get back to normal.” At the same time, consumer demand is still down as parts of the country grapple with a new wave of COVID-19 cases and continued public health orders, and nearly 10 million Americans remain out of work. A new survey of Small Business Majority’s network sheds light on the current economic climate, revealing that while business conditions are starting to improve for some small businesses, a significant number are still facing setbacks that may force them to close for good in the next few months.
Specifically, the survey finds that 36% of small businesses say conditions are somewhat improving for their businesses compared to one month ago, and 5% say they are greatly improving. Women were less likely than men to report a decline in business conditions (20% compared to 33%, respectively). However, 1 in 4 (25%) small business owners say they may not survive the next three months without additional funding or other market changes, and the same percentage report business conditions are somewhat or greatly declining compared to one month ago. Notably, the survey finds that Black-owned small businesses continue to experience disproportionate setbacks, with 35% of Black entrepreneurs reporting that business conditions are worsening, and 37% say they may not survive the next three months.
Additionally, 11% of small business owners report their business is temporarily closed. More Latino (15%) and Black (13%) entrepreneurs say their business is temporarily closed, compared to white business owners (6%).
The survey also explores how self-employed entrepreneurs have been served by the federal Paycheck Protection Program (PPP). Nearly half (48%) did not apply for PPP last year. Of those who did apply, 36% did not receive a loan. White self-employed business owners were more likely to have applied for PPP last year (57%) compared to Black business owners (48%) and Latino business owners (36%).
In late February, the White House announced new rules concerning self-employed individuals, sole proprietors and independent contractors, allowing them to calculate their loan amount based on their gross revenue, rather than their net profit, on their Schedule C. However, roughly 1 in 3 small business owners in Small Business Majority’s network were unaware of this change to make PPP eligibility more generous for solo business owners and independent contractors.
When asked about how the new PPP rule changes may impact their business, 1 in 3 (34%) said they have applied for PPP using the new calculation. Meanwhile, nearly 1 in 5 (18%) reported they applied under the old rules and are not eligible to reapply, and 25% said they need more time to apply under these new rules now that they are aware of them. Four percent said they have a pending PPP application and are trying to change their application or have changed it to take advantage of the new calculation. Sixty-eight percent support allowing those who applied previously based on their net profit to retroactively reapply based on their gross income.
This survey shows that small business owners are facing a long road to recovery, and optimism about economies reopening is not translating into improved business conditions for many entrepreneurs. If Congress does not keep small business front and center in its policymaking, we will see even more businesses close their doors for good in the weeks to come.
This is the seventh in a series of COVID-19 related surveys Small Business Majority has released of its network. Over time Small Business Majority has tracked the economic conditions facing small businesses, how well federal stimulus programs have served its network, the small business owners' views of proposed stimulus provisions, and other issues of importance.
