The vast majority of U.S. small businesses took a hit in their sales last year because of the coronavirus pandemic, with minority-owned businesses struggling the most and more concerned about access to credit, according to a Federal Reserve study that Wednesday is released.
The survey, conducted in September and October – after the first two rounds of the Paycheck Protection Program closed to new applicants and before Congress finalized a nearly $ 900 billion aid package – showed that many small businesses feared they could would not survive without government help. .
Of the nearly 10,000 small businesses surveyed by the Fed, 95% said their businesses were affected by the pandemic. About 78% reported a drop in sales and 46% said they had to downsize their staff.
Nearly 90% of small businesses said sales had not returned to pre-pandemic levels at the time of the survey. Of those companies, about a third said it would be unlikely that the company would survive until sales recovered without more help from the government. About 53% of companies expected their total sales revenue to decline by more than 25% by 2020.
The results varied widely by race and ethnicity. About 54% of companies in general described their financial condition as & # 39; fair & # 39; or & # 39; bad & # 39 ;. But that share rose to 79% for Asian-owned companies, to 77% for black-owned companies and to 66% for Spanish-owned companies.
In general, minority businesses were concerned about getting credit in the coming year. The availability of credit was the number one concern for black-owned businesses, mentioned by 30% of the companies in that group. About 20% of Spanish-owned companies and 14% of Asian-owned companies said they were concerned about the availability of credit, compared to 12% of white companies.
The US central bank heard from 9,693 companies across the country with fewer than 500 employees. The Small Business Credit Survey summarizes the findings of businesses that were active or temporarily closed, but did not include businesses that were permanently closed.
The majority of companies surveyed, or over 90%, sought some sort of emergency financing during the pandemic, the most common being the PPP, which provided loans that could be converted into grants under certain conditions. About 82% of the small employers applied for money from the PPP and 77% of the applicants received all the funding they were looking for.
Companies that received PPP funds were more likely to keep or re-hire their employees, but the assistance was not enough to avoid all staff cuts. For example, 46% of companies that received all requested PPP funds reduced their workforce. But that share rose to 71% for companies that did not receive PPP funding.
(Reporting by Jonnelle Marte Edit by Paul Simao)
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