U.S Chamber Special Report: Coronavirus Causes Small Businesses to Shut Down, Seek Assistance

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The MetLife & U.S. Chamber of Commerce Small Business Index is issuing results from a special survey this month on the impact of COVID-19 on the U.S. small business community. This survey shows that sentiment is significantly diminished compared to last quarter,1 despite some longer term optimism.

With high levels of concern about COVID-19 reported in every sector and region of the country, one in four small businesses (24%) report having already temporarily shut down. Among those who haven’t shut down yet, 40% report it is likely they will shut temporarily within the next two weeks. Forty-three percent believe they have less than six months until a permanent shutdown is unavoidable. Nearly half of small businesses (46%) believe it will take the U.S. economy six months to a year to return to normal.

But even in the midst of this negativity, there is hope that small businesses will get the help they need to outlive this crisis. Small businesses are looking for relief in the form of direct cash payments (56%), Small Business Administration (SBA) disaster loans (30%), and temporary cancellation of business payroll taxes (21%). All of these are happening: direct cash payments will soon be going out to many Americans, most small businesses will be able to apply for SBA disaster loans due to the impact of the coronavirus on April 3, and business payroll tax cancellations are part of the CARES Act just passed by Congress.

Longer term, small businesses continue to be optimistic. Also, almost one in four (23%) say they expect to hire within the next year, while 57% feel positive about their overall business health.

Key findings this month include:

  • One in four (24%) small businesses have shut down temporarily in response to COVID-19.
  • Among those who haven’t temporarily shut down yet, 40% report it is likely they will do so within the next two weeks. This means a total of 54% of all small businesses report they are closed or could close within the coming weeks.
  • Small businesses are most favorable toward financial assistance in the form of direct cash payments (56%), but also prefer SBA disaster loans (30%).

Index Highlights

  • One quarter of small businesses already shut down. One in four (24%) small businesses have shut down temporarily in response to COVID-19. 
  • More temporary shutdowns likely in coming weeks. Among those who haven’t temporarily shut down yet, 40% report it is likely they will do so within the next two weeks. This means a total of 54% of all small businesses report they are closed or could close within the coming weeks.
  • Clock ticking on permanent shutdowns. Forty-three percent believe they have less than six months (including one in ten that say they have less than one month) until a permanent shutdown is unavoidable.
  • Seeking help. Small businesses are most favorable toward direct cash payments (56%), SBA disaster loans (30%), and temporary cancellation of business payroll taxes (21%).
  • Seeking guidance. Small business owners would like more guidance on how to keep their customers and employees safe (29%), how to respond to the crisis (26%), and how to understand the outbreak (25%).
  • Most concerned about virus. More than 8 in 10 small businesses are concerned about the impact of COVID-19 on their business. Fifty-eight percent are very concerned.
  • Sentiment on economy plunges. One in four believe the national economy is in good shape and 32% believe their local economy is doing well. Compared to last quarter2, these figures represent 35- and 20-percentage point drops, respectively.
  • Majority see poor national economy. Fifty-four percent of small businesses rate the overall health of the U.S. economy as “poor.”
  • Growing concern about cash flow. 59% feel comfortable with their current cash flow, compared to 80% in Q1.
  • Retailers give themselves six months. Fifty-one percent of retailers believe their business can continue operating for no more than six months without shutting down permanently.
  • Months before return to normalcy. Almost half (46%) of small businesses believe it will take the U.S. economy six months to a year to return to normal.