One-third of small businesses say they won’t survive without more COVID help
Without a new round of COVID-19 help from the federal government, about a third of those affected by the country’s pandemic small enterprises warn that they will not be able to survive.
It is according to a new report released by the Federal Reserve, which found that sales of 88% of small businesses had not yet returned to pre-crisis levels. According to the report from the 12 regional offices of the US central bank, about one in three companies – around 30% – said they expected they could not stay afloat without additional help from the government.
The small business credit survey was conducted in September and October last year, before Congress passed the latest $ 900 billion coronavirus relief plan and relaunched the consumer protection program. paychecks. But the report, based on responses from nearly 10,000 companies with fewer than 500 employees, highlights the extent of the pain inflicted on small businesses by the pandemic and the lockdown measures implemented to curb the spread of the virus.
PROGRESS RETURNS AFTER BIDEN FORESTS MINIMUM WAGE INCREASE WILL NOT INCLUDE MINIMUM WAGE INCREASE
“At the time of our investigation, six months after the start of the pandemic, closures, layoffs, declining incomes and uncertainty continued to plague small businesses across the country,” the report said. “Small business debt has increased and business owners have invested their personal savings in their businesses to keep them afloat. “
At the time, over 90% of small businesses said they requested help, including 83% who applied for a forgivable loan through the Paycheck Protection Program. About three-quarters, or 77%, said they received the help they wanted.
But the report also highlighted the pandemic’s uneven toll on minority-owned businesses. While 57% of businesses said their financial situation was “fair” or “bad” in the fall, this figure rose to 77% for black-owned businesses and 66% for Latino-owned businesses. .
Congress established the $ 670 billion paycheck protection program last year with the passage of the CARES Act at the end of March. Lawmakers authorized an additional $ 284 billion in December to provide a second round of small business forgivable loans as part of its more comprehensive $ 900 billion COVID relief plan.
WHO WILL RECEIVE A THIRD STIMULUS CHECK? WHAT WE KNOW TO DATE
At least $ 40 billion has been set aside for businesses with 10 or fewer employees and for loans under $ 250,000 in low-income areas.
Only businesses with 300 or fewer employees are eligible for a second loan, which will be capped at $ 2 million. Borrowers must also prove that they saw their gross receipts drop by 25% in one quarter in 2020 compared to the same quarter in 2019.
In the first round, companies with fewer than 500 employees could receive up to $ 10 million.
Congressional Democrats are also moving forward with passage of President Biden’s $ 1.9 trillion coronavirus relief plan, which is expected to establish a new $ 15 billion program separate from PPP for small businesses. . The measure would also allow an investment of $ 35 billion in some state, local, tribal and nonprofit financing programs that can provide low-interest loans and venture capital to help small businesses.