- Members of the U.S. small business community say they are highly concerned about the financial impact of the COVID-19 pandemic, but millennial or Gen X business owners are particularly hopeful they will get the help they need to outlive the crisis, according to research released April 3. The MetLife & U.S. Chamber of Commerce Small Business Index includes a survey of about 500 U.S. small business owners conducted between March 25-28 gauging their perception of the economy. recent
- One in four small businesses surveyed (24%) have temporarily shut down. Among businesses that are still operating, 40% said they will most likely close temporarily in the next two weeks. The survey found that 43% of small businesses said a permanent shutdown is unavoidable, and almost half (46%) said it will take the U.S. economy six months to a year to return to normal. Businesses with younger leadership are more "bullish" about the future, the survey stated. Almost 6 in 10 millennial or Gen X-owned businesses (59%) expect 2021 revenues to increase, compared to 38% of businesses owned by baby boomers or anyone older.
- The small businesses surveyed seek relief in the form of direct cash payments (56%), Small Business Administration disaster loans (30%) and temporary cancellation of business payroll taxes (21%), according to the survey. Small business owners would also like more guidance on how to keep their customers and employees safe, how to respond to the crisis and how to understand the COVID-19 outbreak.
Research has shown that small businesses are an anchor in the U.S. economy.
A 2017 study by Deloitte found that about 29 million businesses with fewer than 500 employees in the U.S., represented 99.7% of all U.S. businesses and almost half of total private sector employment. Small businesses employed 59.9 million people in the U.S., or 47.3% of the private workforce in 2016, according to the U.S. Small Business Administration (SBA) Office of Advocacy's report. In response, legislation by Congress has focused on providing economic relief to these businesses struggling amid the COVID-19 pandemic.
The $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law March 27. Under the CARES Act, many Americans are to receive direct cash payments, and small businesses and nonprofits with 500 or fewer employees are eligible for almost $350 billion in partially forgivable loans through the Paycheck Protection Program. The SBA issued the ground rules for the program April 2. It offers loans of as much as $10 million with payments deferred for six months, reported Banking Dive, HR Dive's sister publication.
If small businesses use the funds for payroll costs, mortgage interest, rent and utility payments for two months and retain and rehire employees, the loans will not require collateral and will be forgiven. However, one of the biggest worries about the program is whether banks will be able to keep up with the overwhelming demand.
Tax credits are also available to small businesses that must provide emergency paid leave under the Families First Coronavirus Response Act. The IRS and U.S. the Department of Labor announced March 20 employers will be eligible for two new refundable payroll tax credits. The IRS published April 1 an updated FAQ document further detailing the requirements for the tax credits.