More than 100,000 small businesses have been forced to permanently close their doors amid continued coronavirus-related lockdowns, according to a new survey.
The Federalist reports researchers at the University of Illinois, Harvard University, Harvard Business School, and University of Chicago conducted a survey of more than 5,800 companies between May 9-11 and extrapolated the information to determine the number of businesses lost to the coronavirus.
“The broad conclusion of our research is that a lot of small businesses which make up a big share of U.S. employment have daily limited resources and are under a fair amount of financial distress,” Illinois economist and study co-author Alexander Bartik said.
According to the survey, most small businesses did not have enough money in reserves to stay afloat.
While many major chain stores have remained open through this time, small business owners have been ordered by state and local governments to stay closed.
Only two states have mostly reopened and many other states have begun to move forward with plans to reopen in stages.
The reopenings are just coming too late for some of these businesses that have been unable to generate any revenue over the past two months.
The Federalist reports some of these business leaders have been forced to compete with bolstered unemployment benefits so those individuals that are able to work are instead opting for the government check.
From the report:
Limited cash and limited time for conditions to change, Bartik told The Federalist, could drive up that number significantly in the days to come. The team of economists found that the median small business with expenses exceeding $10,000 a month had only enough resources to stay afloat for two weeks. About 75 percent of those surveyed, said they didn’t have the resources to last more than two months.
— Advertisement —
The researchers’ findings line largely consistent with a March poll by the U.S. Chamber of
Commerce with MetLife showing one in four small businesses were preparing for permanent closure within about eight weeks absent of reopenings or new federal relief. Even after Congress replenished the depleted small business forgivable loan fund in the Payment Protection Program (PPP), complicated and cumbersome requirements to qualify for loan forgiveness made securing federal relief impractical.
On top of a wide array of tedious conditions to avoid having to pay back the low-interest loans, businesses became forced to compete with beefed up federal unemployment insurance with a flat $600 a week on top of state benefits that offer furloughed workers more money than full-time employment. Businesses under the PPP are required to rehire laid off staff resistant to remain eligible for loan forgiveness putting employers in a tough spot that need to bring back workers but don’t want to cut their pay.