It will be years before we fully understand the economic impact of the coronavirus, but one thing is painfully clear right now: Small businesses across the country are facing an existential threat. Businesses with fewer than 500 employees account for 48% of American jobs and 43.5% of GDP. Yet while these smaller firms are an essential part of the U.S. economy, they’re often financially fragile, with little cash on hand or resources to buffer even a minor financial shock. In the throes of the sweeping disruptions caused by the coronavirus, businesses around the country have closed temporarily. Many have ongoing expenses and little or no revenue and face the prospect that they may never reopen.
For these small businesses to come back after the pandemic abates, and once again serve as an engine of American innovation, they need aid. The Coronavirus Aid, Relief and Economic Security (or CARES) Act set aside $349 billion in loans and assistance for small businesses and there may be more to come. But business owners also need to make the best possible decisions to get them through this difficult period.
Over the past few weeks, we’ve been exploring the economic effects of the coronavirus on small business and ways to mitigate the economic damage they face. To assess the current landscape, we conducted a survey of roughly 5,800 small businesses from across the United States in partnership with Alignable, a small business network. The sample includes firms from most major industry groups, states, and firm-size categories, and the share of survey responses from the largest states matches up well with the share of businesses in each of those states. While it is not fully representative of the U.S. economy as a whole, it does capture the intense distress being experienced by smaller, retail-oriented firms — a snapshot of the crisis, collected over a week at the very end of March.