Estelle Colored Glass owner Stephanie Summerson says there has been a “significant increase” in sales since her business was launched online.
Without a new round of COVID-19 aid from the federal government, about a third of small businesses hit by the country’s pandemic are warning 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 have not yet returned to pre-crisis levels. About one in three – about 30% – of companies said they hoped they would not be able to survive without further government assistance, according to the report by the US central bank’s 12 regional offices.
The Small Business Credit Survey was conducted in September and October last year, before Congress passed the latest $ 900 billion coronavirus relief package and relaunched the Paycheck Protection Program. But the report, based on responses from about 10,000 companies with fewer than 500 employees, highlights the extent of pain inflicted on small businesses by the pandemic and blocking measures in place to stem the spread of the virus.
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“At the time our survey was conducted, six months after the start of the pandemic, closings, layoffs, depressed earnings and uncertainties continued to plague small businesses across the country,” said the report. “Small business debts have increased and homeowners have invested their personal savings in their businesses to keep them afloat.”
At the time, more than 90% of small businesses said they had asked for help, including 83% who sought a forgivable loan through the Pay Check Protection Program. About three quarters, or 77%, said they received the help they wanted.
But the report also highlighted the uneven number of the pandemic in companies belonging to minorities. While 57% of companies said their financial situation was “reasonable” or “bad” in the fall, this increased to 77% for companies owned by blacks and 66% for companies owned by Latinos.
Congress established the $ 670 billion Paycheck Protection Program last year with the approval of the CARES Act in late March. Lawmakers authorized another $ 284 billion in December to provide a second round of forgiving loans to small businesses as part of their more comprehensive $ 900 billion COVID relief plan.
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At least $ 40 billion has been set aside for companies with 10 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, which will be limited to $ 2 million. Borrowers also need to prove that they saw a 25% reduction in gross revenues during a quarter in 2020 compared to the same quarter in 2019.
During the first round, companies with fewer than 500 employees could receive up to $ 10 million.
Congressional Democrats are also moving forward with the approval of President Biden’s $ 1.9 trillion coronavirus relief plan, which is expected to establish a new $ 15 billion program separate from the PPP for small businesses. The measure would also represent an investment of $ 35 billion in some state, local, tribal and nonprofit financing programs that can provide low-interest loans and venture capital to help small businesses.
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