The National Federation of Independent Business (NFIB) released a new survey Monday of small businesses that shows some are struggling to find workers and may close their doors permanently if economic conditions do not improve soon.
The survey asked owners questions about the impact the COVID-19 pandemic, the Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDL) and unemployment insurance have had on their businesses.
Of the 562 respondents, 78% said they submitted an application for a PPP loan, and of those who did, 96% were approved and nearly all recipients have had the funds deposited into their bank accounts. The survey shows 84% of businesses that received PPP loans have spent all of their loan funds and, despite this support, 23% anticipate having to lay off employees in the next six months.
Nearly half of the survey’s respondents signaled they will need more help in the months ahead to stay afloat, with 47% responding they anticipate needing additional financial support over the next 12 months. If Congress were to extend the PPP through the end of 2020, 44% of respondents said they would apply for a second loan through the program if eligible to participate.
On PPP satisfaction, responses were overwhelmingly positive. A combined 76% said they were satisfied or very satisfied with the program while 24% said they were only somewhat satisfied or not satisfied at all.
A smaller number of small businesses applied for and received an EIDL through the Small Business Administration as a result of the pandemic. Only 35% of respondents submitted an application for this loan and 74% were approved, with 9% being denied and 18% not yet receiving a determination. Satisfaction with the EIDL was lower than that of the PPP, with 66% of respondents saying they were satisfied or very satisfied with the loan while 37% said they were somewhat satisfied or not satisfied.
The survey also asked respondents how their business was impacted by the $600 per week supplemental unemployment insurance payments made available by the federal government in response to the pandemic.
Among those surveyed, 69% said the supplemental payments have had no impact on their business while 10% said that furloughed employees declined a job offer to return to work because they wanted to stay on unemployment insurance for the additional $600 weekly payments. A combined 7% of respondents said their employees agreed to keep working if their hours were reduced enough to ensure they remained eligible for supplemental unemployment insurance payments, or if they offered higher wages upon their return.
Most businesses responding to the survey also signaled that their sales volumes have not returned to pre-COVID levels. A combined 50% said their business is currently closed or only operating up to 75% of pre-COVID sales levels while 36% said they were between 76-100% of pre-crisis sales and 14% saying they are at more than 100% pre-crisis sales levels.
Alarmingly, most businesses do not expect the economy to rebound for another year or two. About 72% of respondents said they don’t think their local communities will be back to a normal level of economic activity until sometime in 2021 or 2022.
Fortunately, most businesses surveyed expect to be around long enough to recover. When asked how long owners will be able to operate their business under the current economic condition, 61% said more than 12 months while 40% said they can only remain viable for another month to one year. Roughly 21 percent, or one in five respondents said they can only remain open for 6 months if conditions do not improve.
“The job is not finished and continued help is urgently needed as Maine small businesses struggle to cope with this epic pandemic economic situation,” said NFIB’s Maine State Director, David Clough. “While Maine has been fortunate to have a very low loss of lives due to the coronavirus, it does have a high and mounting loss of small businesses. We want both grim statistics to be as low as possible.”
The survey was conducted by email on August 17-18 using a random sample of 20,000 NFIB members from the federation’s 300,000 membership database, to which 562 business owners responded. The survey can be found here.