Economy

One-in-four small businesses expect to close if economic conditions don’t improve

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The National Federation of Independent Business (NFIB) Research Center released a new survey this week that should have lawmakers and chief executives across the country questioning their next moves as it relates to their state’s response to the pandemic. The survey assesses the impact of the pandemic on small business owners and their operations, general economic conditions and the utilization of small business relief programs.

According to the NFIB’s new survey, one-in-four small business owners expect they will close their doors within the next six months if economic conditions don’t improve. Further, 22% of small business owners anticipate they won’t be able to operate longer than 7 to 12 months under the current economic conditions.

Unfortunately, small businesses across the country are again becoming subject to arbitrary and capricious rules that severely impact their bottom lines and ability to serve their staff and patrons. As cases rise across the country during the traditional flu season, many governors are piling on new restrictions, often without scientific justification.

One of the most popular mandates governors are imposing throughout the nation, despite a lack of evidence on its effectiveness, is business curfew orders which require certain businesses close to the public at a specific time of day. This is particularly harmful to restaurants and the food service industry as a whole.

Many, but not all, businesses were able to withstand the lockdowns of the spring because their state and federal governments were offering financial assistance that helped offset the significant losses they incurred. That help has dried up, however, leaving business owners in the tough position of trying to keep their doors open while navigating the complex and ever-changing web of state-level virus restrictions.

“Many small businesses are facing additional challenges right now related to weather conditions and renewed business restrictions across the country,” said Holly Wade, executive director of the NFIB’s Research Center. “The next few months might prove to be the most difficult time for small businesses since the initial shutdown last spring. It is crucial that Congress provides financial relief for small businesses as we head into the winter months.”

The survey finds that most small business owners would apply or re-apply for a second round of financial relief if it were made available to them. Additionally, 91% of the small business owners who said they received assistance through the Paycheck Protection Program have spent the entirety of the loans they received.

More small business owners have submitted applications for PPP loan forgiveness than in previous NFIB surveys, with 44% of owners saying they’ve submitted an application in December, up from 28% last month. Half of those who submitted a forgiveness application have received final confirmation from the Small Business Administration and more than three-quarters of those businesses had their entire loans forgiven.

Despite the assistance they’ve received, some small businesses are still struggling to stay afloat. Sales levels are still at 50% or less of what they were before the pandemic for one-fifth of small businesses that responded to the survey. Twenty-nine percent of respondents said sales levels are between 51% and 75% of pre-crisis levels and 36% said sales levels are back to where they were before the start of the pandemic. Only 14% of respondents said their current sales levels exceed levels recorded before the pandemic.

The NFIB’s new survey was conducted by email between Dec. 6 and 11 with a random sample of 20,000 of its 300,000 members. The group collected 598 responses. It is the organizations’s 14th survey of small business owners related to the impacts of the pandemic.

About Jacob Posik

Jacob Posik, of Turner, is the director of communications at Maine Policy Institute and the editor of The Maine Wire. He formerly served as a policy analyst at Maine Policy. Posik can be reached at jposik@mainepolicy.org.

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