Small Business During COVID-19: How Different Regions are Impacted and Responding to th...

As of May 28, 2021, the Paycheck Protection Program has run out of funding. You can learn more about the PPP with our COVID-19 resource hub.

See how businesses can get help from state and local governments

Anyone who watches the news and sees the ever-present color-coded maps knows the coronavirus pandemic has affected different states and cities across the United States in different ways at different times during the past eight months. One day a place is green and good to go. The next it’s red and dealing with a major healthcare crisis.

One thing most places have in common is that small businesses have been impacted by the coronavirus disease in BIG ways. Every type of business has been affected, including nonprofit organizations, independent contractors and mom and pop operations.

This has forced local governments and organizations to address the COVID-19 crisis by offering direct financial aid, loans, tax deferrals and other things to support the businesses their residents depend on. In many cases, they’ve had to step in when the federal government and national institutions fumbled their responses to the pandemic.

How small businesses have been impacted by the COVID-19 pandemic.

According to the Biz2X High Frequency Trends in Small Business Economic Health During COVID-19 report, there are some universal trends in how the pandemic and resulting economic crisis have impacted businesses.

• During the Pre-COVID period (from January 1 to February 25, 2020), small business revenue across the country was near normal and growing from week to week. The outlook was sunny for small businesses before the COVID-19 outbreak.
• During COVID Stage One (from February 26 to March 17), business owners and others were forced to address new realities, including dealing with child care issues and worrying about family members getting sick. Coronavirus preparedness became a big part of everyone’s life. Business revenue over the period was flat. The Families First Coronavirus Response Act was being negotiated and passed in Congress. Still, business owners were feeling less economic security then they had in more than a decade.
• During COVID Stage Two (from March 18 to April 14), small business owners were handling early phase COVID-19 response, facing limits on how they could conduct business because of stay at home orders issued by the Centers for Disease Controland Prevention (CDC) and their local department of health. They made steep cost cuts in response to massive declines in revenue.
• During COVID Stage Three (from April 15 to June 23), things started looking better. Businesses were slowly allowed to reopen and many took advantage of the Small Business Administration (SBA) Paycheck Protection Program (PPP), which was a part of the CARES Act that was passed at the time. It provided forgivable loans to small businesses. PPP loans supported employee retention, something businesses owners were worried about. They also had access to Economic Injury Disaster Loans (EIDLs), and the related bridge loan program, which provided immediate disaster assistance, along with other coronavirus aid. Because of this, revenue increased for many operations during this reopening period.
• During COVID Stage Four (from June 24 to September 1), small businesses experienced significant challenges. This included a big increase in coronavirus cases, the expiration of the supplemental $600 per week in unemployment insurance benefits the federal government had been providing people who were unemployed and the end of the PPP loan application period, despite the fact that there were remaining relief funds. Add to this the fact that businesses had to extra spend money on things like enforcing social distancing measures and enhanced sick leave programs. All this lead to a dramatic decrease in revenue for businesses, dropping them close to where they were during the height of the pandemic. President Trump tried to extend assistance programs like the additional unemployment benefits through executive order, but the effort wasn’t effective.

When it comes to regional differences:

• Stage One: Prior to the pandemic, small businesses in the northeast and south outperformed the rest of the country while the midwest underperformed.
• Stage Two: Revenue for small businesses across the country fell at the beginning of the coronavirus pandemic, with the northeast taking the biggest plunge. That’s because New York and other states in the region were among the first impacted by the public health crisis.
• Stage Three: Small businesses in the south, in states like Florida, saw their revenues increase the most during the recovery because they were among the first to reopen. Those in the northeast and west trailed behind because many states in those regions were slower to allow reopenings.
• Stage Four: Through most of this period, the west continued to trail other regions, but businesses across the country saw their revenues decline.

The study also shows that different business sectors performed in different ways during the pandemic. Food services has taken a hard hit throughout the crisis, as has retail. Healthcare, not surprisingly, outperformed through most of the pandemic, but it has leveled off as of late. Businesses that sell products and services to other businesses (B2B) have also done relatively well throughout the crisis.

Challenges faced by business owners in getting help from the federal government and financial institutions.

The bad news for small businesses continued into September and beyond. The possibilities for owners to get loans and other relief have declined as well.

According to the Biz2Credit Small Business Lending Index™, small business loan approval rates at all types of lending institutions are relatively flat month to month and down significantly year over year:

• Big banks: Down from 13.6 percent in August to 13.5 percent in September and from 27.9 percent to 13.5 percent year over year.
• Small banks: Flat at 18.5 percent from August to September and down from 50.3 percent to 18.5 percent year over year.
• Institutional lenders: Up slightly from 22.0 percent in August to 22.2 percent in September and down from 65.9 percent to 22.2 percent year over year.
• Alternative lenders: Up slightly from 23.0 percent in August to 23.1 percent in September and down from 65.9 percent to 22.2 percent year over year.
• Credit unions: Down from 21.1 percent in August to 21.0 percent in September and from 39.7 percent to 21.0 percent year over year.

Add to this the fact that fiscal stimulus talks between the Trump White House and Congress have stalled, which makes it unlikely that there will be any federal financial assistance or loan programs for businesses any time soon. The near-term picture for small businesses isn’t a good one. They could be facing a challenging fall and winter because they might be dealing with more government shutdowns to prevent the spread of COVID-19 in different parts of the country. The number of coronavirus cases is heading up in many places.

Local and state support for businesses.

So where can small business owners go for help during these challenging times? There are still some options available to them, mostly through local, regional and state programs. You have to work hard to find them, but there are dollars and other opportunities available that could help you get through challenging times now and in the months ahead.

• Grants and loans. Many state and local governments have been providing support to small businesses in their areas in the form of loans and grants. Some private organizations and philanthropies are doing so, as well. Check your governor’s website. Most have a special section that covers the state’s COVID-19 resources, including informative webinars, fact sheets and answers to frequently asked questions (faqs). Your city or state government websites and your local chamber of commerce or economic development agency could be helpful, as well. (Follow these agencies and organizations on social media so you always have the latest information.) They can guide you to programs that are right for your business. As different parts of the country become impacted by a second wave of the coronavirus, there’s a chance that more funding could come available and new programs launched at any time.
• Tax deferrals. Some cities and states are allowing businesses to defer tax payments. They’re also delaying collection of business license and permit fees. The American Institute of Certified Public Accountants (AICPA) is providing a list of these things on its website. There is additional information included on the list regularly and it is updated almost daily. While the document is more than 500 pages long and a bit complicated to read, it includes a LOT of valuable information that could make a big difference to the bottom line of your business. The Internal Revenue Service (IRS) website has information about federal tax deferrals.
• Eviction and foreclosure moratorium. Several states and cities have taken steps to prevent the evictions of — and foreclosures on — small businesses. Check your governor’s website and the websites of your local government agencies to find out if this applies to you. Experts at your chamber of commerce or community business development agency may be able to advise you as well. If you’re facing a real estate crisis, it could be a smart move to talk to someone at your bank or landlord. Many financial institutions have programs to help out small business owners. Some landlords are open to adjusting lease terms during this period of high business location vacancy rates.
• Utility shut off moratorium. Cities and counties across the United States have mandated that local utility companies keep the lights on, the water running and internet service supplied whether business owners are able to pay their bills during the pandemic or not. In some cases, utilities have been required to waive penalties and interest on late payments. Another option for businesses is to set up deferred payment plans, which will allow them to put off some of their utility payments until the pandemic is under control and the economic climate is more favorable. If you’re having problems paying your bills, reach out to your providers to find out what help is available to you during these challenging times.

Don’t give up!

Sure, this is a difficult period, but it isn’t time for small business owners to give up. You’ve already worked hard setting up your business, getting it running and making it successful. Don’t let the pandemic and resulting financial crisis break your spirit now. While waiting for the federal government to get its act together to provide fiscal stimulus and small business economic support, business owners can turn to local governments and agencies to help them get by now and make it to a better post-COVID future.