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The top three issues affecting small businesses during the COVID-19 crisis are making payroll, cash flow, and paying rent or a mortgage.

1. Making Payroll

  • The top issue of 10,000 small business owners as identified by a Goldman Sachs survey and as measured by the number of small businesses that have applied for paycheck protection program (PPP) loans through the federal government is making payroll to pay its employees.
  • This survey found that 91% of small businesses in the United States have applied for a federal PPP loan, among which 68% of those approved stated the loans “would allow them to maintain 75% to 100% of their payroll.”
  • Additionally, 77% of small businesses need the federal government to extend the PPP loans past June 30 to continue assisting them with making payroll. More than half (53%) say they should be extended for three months.
  • A small business COVID-19 Relief Survey conducted by the NSBA found that in April, 25% of small businesses had to lay off employees, 38% had to reduce employee hours, and 24% had to temporarily close, all of which were either the result of not being able to make payroll (lay-offs and hour reductions) or the cause of not being able to make payroll (temporary closures).
  • The retail industry appears to be most impacted by payroll issues as approximately 25% would prefer to receive payroll tax relief over other types of relief.

2. Cash Flow

  • The Goldman Sachs survey found that 64% of small businesses say they only have cash reserves for less than three months.
  • Moreover, 68.6% of small businesses were “heavily restricted” in terms of operation during the COVID-19 outbreak, which severely impacted their cash flow. Eighty percent of small businesses said there had been “reduced customer demand” for their products and services, which further impacted their cash flow.
  • Only 59% of small businesses are currently comfortable with their cash flow compared to the 80% that were comfortable with their cash flow prior to the COVID-19 crisis.
  • The top issue for small defense contractors during the COVID-19 crisis as identified by a National Defense Industry Association survey is cash flow.
  • The survey found that 62% of small defense contractors reported “cash flow and financial disruptions related to the COVID-19 crisis and roughly the same share of respondents see those lasting for the long term.”
  • Additionally, 29% of these small businesses stated they are having “significant issues with access to capital.”
  • Of the companies surveyed for this report, 39% were focused on services and 24% on technology research, development, testing and evaluation.
  • A Facebook and Small Business Roundtable survey found that “SMB’s biggest challenges are access to capital and weak customer demand,” with 28% citing cash flow as the top issue and 20% citing demand.
  • In a survey conducted among Santa Rosa, California small businesses, 56% of respondents named cash flow as the biggest concern related to COVID-19 closures.
  • Manufacturing businesses appear to the most impacted by cash flow issues as approximately 30% would prefer access to disaster loans from the federal government over other types of relief. Disaster loans, including the PPP loans (up to 25%) can be used for cash flow and other business purposes.

3. Paying Rent/Mortgage

  • The Goldman Sachs survey revealed that 42% of small businesses have had to seek relief from their landlord or mortgage company for March and April payments.
  • In a poll conducted by Alignable, 34% of American small businesses said they would not be able to pay rent in full for May and 84% of those businesses would only be able to pay half or less of May’s rent.
  • The majority of small businesses in the U.S. have been successful at arranging for reduced or delayed rent payments with their landlords, but “36% can’t get their landlords to budge.”
  • Moreover, about half of the small businesses that were successful in making arrangements were “only able to delay rent by one month,” while 22% were successful in delaying rent payments for three months and 3% were able to negotiate a delay of six months.
  • Paying rent was the top concern of small businesses in New Mexico, according to a survey conducted by the WESST Enterprise Center, an Albuquerque small business development organization.
  • Manufacturing and retail businesses appear to be the most affected by rent or mortgage issues as these two industries would prefer access to disaster loans from the federal government over other types of relief. Disaster loans, including the PPP loans (up to 25%) can be used for rent or mortgage and other business purposes.
  • According to Alignable, the industries most impacted by the inability to pay rent are “retail, personal services, travel, and restaurants.”
  • Specifically, rent issues are disproportionately affecting “women-owned, minority-owned, and veteran-owned businesses.”
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