SMALL BUSINESS MAJORITY SURVEY: 3 IN 10 SMALL BUSINESSES WILL CLOSE IN THE NEXT 3 MONTHS; 91% SUPPORT DIRECT AID
A new survey by Small Business Majority reveals that three in 10 small businesses won’t survive the next three months. That number is higher among Black and Latinx small business owners, 36% of whom report they will be forced to shut their doors within three months.
“While PPP has been helpful to some small businesses, it is still leaving many in under-resourced communities behind”
76% of small business owners applied for PPP loans, but 36% did not receive the full amount they applied for — including nearly all of the self-employed Black entrepreneurs surveyed
“Most respondents (91%) say Congress should pass legislation to provide direct grants to small businesses”
As Congress advances the American Rescue Plan, a $1.9 trillion stimulus relief package intended to combat the ongoing COVID-19 public health and economic crisis, Small Business Majority’s new survey reveals the current state of small business and how they’ve been served by previous stimulus programs.
Importantly, the survey finds that without additional funding, 3 in 10 small businesses will not survive past the next three months. The number is even higher for small business owners of color: 36% of Black and Latino-owned businesses report they can’t survey beyond three months.
The survey also explores how many small businesses accessed the Paycheck Protection Program (PPP) during the first rounds of funding. The bottom line is that, while PPP has been helpful to some small businesses, it is still leaving many in under-resourced communities behind. The survey found more than 3 in 4 (76%) have applied for PPP, but more than 1 in 3 of those (36%) did not receive the full loan amount they requested—including nearly all of the Black self-employed entrepreneurs we surveyed. Of those who did not apply for PPP, more than half (55%) say they did not do so because they were ineligible or they were told they were ineligible for the program. Twenty-two percent did not have the information needed to apply and 13% were concerned the loan would not be forgiven. Only 8% report they did not apply because they didn’t need the funds.
When asked about their experiences with PPP, small businesses report the following:
• Half (49%) say the amount of PPP they qualified for was low because their business doesn’t have a lot of employees or because of how their business is organized.
• One in 3 say the process of applying for PPP was challenging due to the calculations and paperwork involved.
• One in 5 did not qualify because their business was too new or they didn’t have enough employees.
• Twenty-three percent say finding a lender willing to accept their application was challenging.
• Eleven percent struggled to spend at least 60% of funds on payroll to qualify for full forgiveness.
• Roughly 1 in 10 (9%) were told there were issues with their credit when they applied, even though credit requirements were waived for the program.
Three in 10 say PPP was helpful, but less restrictive capital is needed to support their businesses and 15% say PPP was not helpful for their business. Given these numbers, it’s clear that small businesses need more flexible assistance, and most respondents (91%) say Congress should pass legislation to provide direct grants to small businesses.
While many small businesses have applied for the Economic Injury Disaster Loan program (EIDL) and some have received the advance grant, these funds likely did not scratch the surface of what small businesses need to survive the crisis. Three in 4 small businesses (76%) have applied for EIDL, and 61% of those who applied have received the EIDL advance grant. Only 1 in 3 (34%) of those who have received the grant were allocated the full $10,000 available. More than half received $5,000 or less, and nearly 1 in 4 (23%) received just $1,000.
Small businesses desperately need more financial relief, but the stimulus package faces challenges due to a measure to raise the federal minimum wage. While this has become a hot button issue, it may not be as controversial within the small business community as some claim: 62% of respondents say they support raising the federal minimum wage to $15 over five years, with 44% strongly supporting the proposal.
What policymakers must focus on is the alarming rate of closures that small businesses continue to face nearly a year into this crisis. While PPP and EIDL have helped some who had the resources to apply, it’s clear that small business owners need help in the form of direct grants in order to sustain their businesses, and they need it quickly.
Read the full poll here.