(PatrioticPost.Com)- There has been a lot of talk about how the coronavirus pandemic is negatively affecting large companies in important industries across the United States.
But the largest short- and long-term impact may be on small businesses, those that are defined as having 500 or fewer employees.
A recent survey conducted by the National Bureau of Economic Research found that the coronavirus outbreak could force the permanent closure of two in three small businesses in America.
State restrictions have already forced nearly half of all small businesses to close on a temporary basis, but that could turn into permanent closures for many if restrictions aren’t lifted relatively soon.
Among the hardest hit businesses are those in the entertainment and restaurant industry. Owners of these types of businesses fear that even with a complete removal of restrictions, it may take months for them to come back, if they’re even ever able to do so.
The survey polled 5,800 small businesses across the United States. One grim finding is that these businesses have already shed an average of 40% of their workforce, when compared to what it was as recently as January 31. Even more workers are expected to be furloughed or laid off entirely, as businesses do all they can to avoid shuttering for good.
The biggest issue for small businesses is the cash they have in reserve. The survey found one in four of these small businesses don’t have enough to cover one month’s expenses, while nearly half could only cover one or two months’ worth.
The report found that:
“These limited levels of cash on hand readily explain why layoffs and shutdowns have been so prevalent. Absent these actions, it is hard to understand how these firms could have met payroll. Moreover, it is hard to imagine how the firms that are still open are going to survive without laying off their existing workers, at least without an infusion of more credit.”
How long the shutdown lasts is obviously a huge factor in the long-term outlook of small business owners. If the shutdown lasts only another month, 70% of those surveyed said they could remain operational. But if the shutdown extends to six months, only 38% said they could survive.
Federal programs such as the Paycheck Protection Program will help some of these businesses survive in the short term. Businesses with fewer than 500 employees can apply for and receive forgivable loans that can cover payroll, rent and other expenses that are urgent. Those polled in the survey said this program would help them reduce their reductions in payroll from 40% to only 6%.
This would be only a temporary stop-gap, though. The real concern is what the long-term effect of the shutdowns, and of the coronavirus pandemic in general, will be.
Many small business owners, and leaders in their fields, believe a stronger cash infusion will be necessary to help small businesses survive in the long run. While Republicans have proposed another relief bill that would include more money to help small businesses, Democrats in the Senate initially balked at the idea.
