Estelle Colored Glass owner Stephanie Summerson claims there has been a ‘significant increase’ in sales since her business started online.
Without a new round of federal government COVID-19 assistance, about a third of the country’s pandemic – plagued small businesses warn that they will not be able to survive.
This is according to a new report published by the Federal Reserve, which found that sales for 88% of small businesses had not yet returned to pre-crisis levels. About one in three – about 30% – of businesses said they expected to not be able to stay afloat without further government assistance, according to the US Federal Reserve’s 12 regional offices.
The Small Business Credit Survey was conducted in September and October last year before Congress passed the latest $ 900 billion package for coronavirus relief and resumed the Paycheck protection program. But the report, based on responses from nearly 10,000 businesses with less than 500 employees, highlights the extent of the pain small businesses are causing by the pandemic and the closure measures implemented to curb the spread of the virus.
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“At the time our survey was presented, six months after the pandemic, closures, layoffs, depressed incomes and insecurity still plagued small businesses across the country,” the report said. “Small business debt has increased and business owners have plowed their personal savings into their businesses to keep it going.”
At the time, more than 90% of small businesses said they had applied for help, including 83% who sought a forgiving loan through the Paycheck protection program. About three-quarters, or 77%, said they receive the help they need.
But the report also highlights the unequal toll of the pandemic on minority businesses. While 57% of businesses said their financial situation in the autumn was ‘fair’ or ‘weak’, it increased to 77% for black-owned businesses and 66% for Latino companies.
Congress established the $ 670 billion paycheck protection program last year with the adoption of the CARES law at the end of March. Legislators authorized another $ 284 billion in December to offer a second round of forgiving loans to small businesses as part of the $ 900 billion more comprehensive COVID relief plan.
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At least $ 40 billion has been set aside for businesses with ten or fewer employees and for loans under $ 250,000 in low-income areas.
Only companies with 300 employees or less are eligible to receive a second loan, with a maximum of $ 2 million. Borrowers must also prove that they saw a 25% decrease in gross income during a quarter in 2020, compared to the same quarter in 2019.
During the first round, businesses with less than 500 employees could receive as much as $ 10 million.
Congress Democrats are also pushing for the approval of President Biden’s $ 1.9 billion coronavirus relief plan, which is expected to establish a new $ 15 billion program, separate from the PPP, for small businesses. The measure would also invest $ 35 billion in some government, local, tribal and non-profit financing programs that could provide low-interest, venture capital loans to help small businesses.
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