It’s been a very difficult year for many small businesses. But, according to data collected weekly by the Census Bureau, conditions are improving.
This comes from the bureau’s weekly Small Business Pulse data, which collects information surveyed by email and other means based on requests sent to about 885,000 unique small businesses with a target population of non-farm, single-location employer businesses that employed 499 or fewer people and had and receipts of $1,000 or more.
According to its most recent survey, which covered the weekly period through 5 September, things are getting better for many small businesses around the country. How much better? It’s looking hopeful, but there are still major issues.
For starters the number of small businesses who said they were “largely and negatively affected” by the Covid-19 crisis has declined from more than 50% at the end of April to about 31%. Roughly 24% of businesses recently said they saw either no effect, or even a positive effect from the crisis compared with 10% at the beginning of the ordeal. More small businesses than ever are now confident of recovery.
Even the state data has improved. At the beginning of the crisis, businesses in New York, Pennsylvania, Massachusetts, Michigan, Washington and California were among the hardest hit by economic shutdowns. But whereas, for example, 56% of businesses were negatively affected in California back in April, that number has decreased to 36% by September. In New York state 62% of small businesses were negatively affected during the worst of the pandemic but now that number has declined to 40%. That’s because as governments are slowly reopening, the number of businesses that were forced to close for at least one day a week has decreased from 41% to 18%.
But many small businesses are still having a significant cashflow problem. At the beginning of the crisis, approximately 56% said it would take less than six months for their businesses to recover. That number is now down to about 20%, which means that more business owners believe the recovery period will be much longer. Also, 28% of small businesses said they had less than a month of cash on hand to operate their companies compared with 41% at the beginning of the crisis. That’s not a good trend.
Almost a quarter of all businesses said they would need more financial assistance or capital, which is only slightly down from the numbers recorded at the beginning of the crisis. And the number of business owners who said they may need to permanently close their business is still hovering around 5%.
The Census Bureau believes that the results from its weekly survey “will be particularly useful to policymakers as they seek to address some of the challenges faced by small businesses”. My concern is that lawmakers will look at this data and conclude that because small businesses are recovering, additional stimulus funding may not be necessary.
Last week, a scaled-back bill to provide more stimulus – which included another round of money for the paycheck protection program – failed to pass the Republican-controlled Senate, mainly because it fell short of the funding that many Democrats believe is still necessary.
Both parties are right. More funding is necessary. But maybe not as much for small businesses as originally intended. Many small businesses – particularly in certain industries like restaurants, retail, fitness and travel and in hard-hit regions like New York City – still need help. A stimulus program targeted directly at these and other businesses that continue to suffer under the impact of the pandemic is still needed. Forgiving the existing paycheck protection loans for smaller companies, as well as allowing them to deduct those forgivable expenses, would provide a welcome relief for many.
The good news is that the prospects for most small businesses are improving, finally. More companies than previously thought are surviving. Barring a resurgence of the virus, there appears to be light at the end of the tunnel. But the numbers still aren’t great and for some more help is needed.