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Small Business

Main Street business failure fears rise again amid whipsaw pandemic

Small business owners have faced a boost in the past year as Covid-19 swept the country, with restrictions resulting in closures, reopens and limited operations in markets across the country to the discretion of state and local leaders.

New data from the CNBC | SurveyMonkey Small Business Survey for the first quarter of 2021 reveals that the experiences of Main Street entrepreneurs reflect this period of unpredictability.

While just over half of small business owners say they were able to stay open throughout the pandemic, 20% of small business owners say their businesses have temporarily closed due to the pandemic and have since reopened, but only at limited capacity. In addition, 10% of small business owners say they have closed and not yet reopened. An additional 4% say they have closed, reopened and then closed again.

The back-and-forth dragged down sentiment among small business owners and led the Main Street community to voice strong support for President Biden’s $ 1.9 trillion Covid relief plan, according to the survey, which has was conducted among 2,111 small business owners nationwide from Jan. 25 to. 31 using the SurveyMonkey platform.

Je Donna Dinges relaunched her clothing and accessories boutique, Margaux & Max, in a new, larger location in early March 2020. Within days, Covid cases began to increase nationwide and the store based in Ferndale, Mich., Has closed.

She has yet to reopen her retail store for in-person business, a conscious choice for Dinges as she suffers from an autoimmune disease and wants to limit her exposure. But the entrepreneur is not discouraged. To stay afloat, she streams live streams of fashion shows she hosts from her store on Friday nights on Facebook, featuring her stylish models of all sizes with clothes and accessories. His customers log on, Dinges said, then shop and collect their curbside purchases during the week.

“I am very concerned about my own health… and I am also very concerned about my customers,” Dinges said. “I made the decision to stay closed, but not to go bankrupt.”

More generally, small business sentiment fell to a new low in the first quarter, according to the CNBC survey. Confidence fell from a score of 48 to 43 quarter over quarter, the lowest since CNBC and SurveyMonkey began tracking Main Street Confidence in 2017. Additionally, the number of small business owners companies that say they think they can continue to operate for more than a year fell from 67% in the fourth quarter to 55%.

Confidence levels varied depending on the race of business owners. CNBC survey finds fears of a permanent shutdown are high among black small business owners, with 37% saying they can survive for more than a year under current conditions, compared to 59% of owners of white small businesses and 55% of Hispanic small business owners.

Black-owned businesses that have yet to reopen after temporarily closing due to the pandemic (25%) compares to 8% of small white-owned businesses.

Despite the challenges, the survey’s Small Business Confidence Index reveals that black small business owners remain optimistic with an overall small business sentiment score higher than their peers.

The paycheck protection program has been a lifeline for some, but adjustments have been made to the program after outcry from some companies and last year said the P3 was not serving smaller, owned borrowers. to minorities. In January, when the $ 284 billion program relaunched, community-based financial institutions that typically serve small businesses or may be mission-based, were given first-time access to the portal.

So far, more than $ 103 billion has been approved for more than 1.4 million small business loans, according to the Small Business Administration. The SBA says 82% of all loans went to businesses asking for less than $ 100,000, indicating that small businesses were asking for help. In addition, almost a third of the loans went to businesses in rural communities. Approval times have been lengthened with the introduction of anti-fraud measures, with loans no longer approved on the same day as they were last year.

Small underserved businesses

Administration officials have said they believe the money for the PPP will not run out as happened in April 2020 when the program was first launched, and lawmakers continue to do so. pressure for transparency of demographic profiles of borrowing companies. President Biden has vowed to include aid to underserved small businesses in his $ 1.9 trillion pandemic program in the form of grants and funding, as the small business community is likely to need lifelines when the PPP will end in March.

“If the administration is really getting grants directly to businesses and business owners, it will actually help the capital and working capital of those businesses rather than just acting as a middleman for their employees, which, well. sure, was the intention of the PPP. It’s invaluable in its own way, ”says Brian Blake, director of public policy for the Community Development Bankers Association.

Dinges said she struggled to access PPP financing last year, eventually turning to Kabbage for a small business loan after previous refusals. She plans to apply for a second loan this year and feels optimistic for the future, despite the current challenges. Its sales are down almost 40%, but it could be a lot worse considering all that Main Street has gone through in the past year.

I really feel hopeful. As I was driving through my community, I look at empty storefronts, which is sad. But I look at the empty storefronts of large retailers, ”Dinges said. “And it just hit me that these big retailers are pulling back, and I’m still standing… the loyalty that I get from my customers really touches me.

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