Even With PPP Loans, Small Businesses Face a Tough Road Ahead
A new report from Biz2Credit shows that small businesses took a substantial hit to their revenues during COVID-19.
Even with assistance from the Paycheck Protection Program (PPP), it appears that many small businesses and restaurants were hit hard by the COVID-19 pandemic. A new Small Business Financial Health Survey published earlier this week by Biz2Credit indicated that those enterprises will likely continue to have a rough road ahead of them as they adapt to the lingering virus.
Most businesses have already suffered a steep toll in the battle against COVID-19. Among the 300 small business owners surveyed who received funding from the PPP, 60% indicated that they were closed for part of 2020 due to the pandemic. Those same businesses experienced an 87% drop in revenue compared to 2019. Companies who remained open, on the other hand, only saw an average decline of 13%.
Adding to the financial strain, only 20% of businesses that were closed by government order were offered the opportunity to make deferred payments by their landlord or mortgage company.
“A lot of small business owners were caught between a rock and a hard place; they had little money coming in, yet they had obligations to pay,” Rohit Arora, CEO of Biz2Credit, said in a press release. “Everyone suffered. After all, many times the landlords themselves do not have deep pockets and rely on their rental income to survive.”
The restaurant industry in particular has struggled during COVID-19. Even with takeout orders, revenue was down 38% from 2019. Furthermore, second quarter revenues for 2020 were down 72% from 2019 among restaurants surveyed.
“Donors were extremely generous and eager to help, but those types of orders have tailed off as the COVID-19 numbers improved in New Jersey,” Greg Kowalczyk, owner of Fabio’s Bistro in New Jersey, said in a press release. “The big catering orders for the health care workers went on longer than anticipated, but now have tailed off.”
While some states have begun easing restrictions around indoor dining, restaurants are likely still looking at some financial hardships ahead. Per the report, restaurants will pay an average of $52,106 on average to supply employees with personal protective equipment, which is approximately 78% higher than the same costs faced by businesses in other industries. Those non-restaurant small businesses are expected to spend approximately $29,230 on PPE and renovations needed to accommodate social distancing.
Some public figures — including the owners of major corporations like Starbucks, Microsoft and Mastercard — are calling upon Congress to continue granting small businesses federally guaranteed loans into 2021.
“Funds must flow to all small business(es) in need, particularly those run by people of color,” Howard Schultz, former Starbucks chairman and CEO, said in a press release.