California small business owners report devastating impacts of COVID-19, need immediate cash assistance to survive

Publisher: 
Small Business Majority
Date: 
Tuesday, April 21, 2020

It’s no secret that California has been hard hit by the spread of COVID-19, with a vast 2.7 million applying for unemployment in the past four weeks, and the impacts have been particularly severe on small businesses that have seen their revenues take a nosedive overnight. With the economy on pause, Main Street has been left to cope with how to stay afloat during this unprecedented time. While Congress allocated $350 billion in small business lending in the CARES Act stimulus package last month, these loan programs are already out of funds, and millions of small businesses have been left to wonder if help will ever arrive. New scientific opinion polling reveals additional insight into the dismal state of California small businesses and what we stand to lose if Congress doesn’t act to provide the direct grant relief that small businesses overwhelmingly support. 

The poll, conducted by Chesapeake Beach Consulting for Small Business Majority, surveyed California small business owners between April 7 and 10, 2020. The survey sheds light on a shocking rate of business closures, as well as small business owners’ views on proposals that can help ensure they are able to reopen and recover once the crisis is over. 

An astounding 92% say the coronavirus has impacted their business, with nearly half (46%) who say it has had a severe negative impact. Similarly, 42% report their revenues have declined by more than 50% since the COVID-19 crisis has begun. And 44% of small businesses in California have already closed or are planning to do so in the next two months. 

Figure 1: Most small businesses report they’ve experienced negative impacts to their business as a result of the coronavirus crisis

Figure 1

Additionally, small businesses report widespread layoffs and furloughs. Thirty-one percent have permanently laid off their employees, roughly half (49%) have furloughed employees and most (71%) have reduced hours, salary or both for their employees as a result of the crisis. More than 4 in 10 (41%) have permanently laid off, furloughed or reduced the hours/salary of their entire workforce. Nearly 6 in 10 (58%) report that at least half of their workforce has been impacted by layoffs or reductions. 

Figure 2a: Small businesses report widespread reductions in workforce

Figure 2a

 

Figure 2b: Percentage of staff affected by temporary layoffs, reduced hours or reduced wages

Figure 2b

Fifty-seven percent of California small businesses say the CARES Act, the $2 trillion stimulus package passed by Congress last month, was a good first step to address the challenges they’re facing, but they believe more small business assistance is needed. It’s important to note that this survey was fielded before the small business loan program funded by the CARES Act was depleted of funds, leaving millions of small businesses behind.  

Most small businesses (93%) say what they need from the federal government to help them survive the crisis is direct grant assistance. Roughly two-thirds (65%) strongly support direct cash grants to help ensure small businesses can recover. 

Figure 3: Small businesses overwhelmingly support direct cash assistance to ensure they can recover from the crisis

Figure 3

Small businesses identified a number of additional solutions that would help the small business community have the relief it needs to make it through the crisis, including the following:

  • Financial assistance for rent, mortgage and utility payments, not tied to maintaining payroll (84% support).
  • Forbearance on all small business debt, not just current SBA loans as provided by the CARES Act (83% support).
  • Increasing funding for community development financial institutions, which provide loans to small businesses (82% support).
  • A moratorium on unemployment insurance taxes for two years (81% support).

As cases of COVID-19 rapidly rise throughout the country and here in California, the impacts on our small business community become even more dire each day. Thousands have closed up shop, experienced dramatic losses, and are being forced to make tough decisions on their own each day about whether or not they’ll ever reopen. While the small business loan programs funded by the CARES Act may have helped a select few small businesses before it ran out of funds, our economy will not recover if Congress doesn’t immediately provide direct grant assistance and other relief that small businesses desperately need. 

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