The Effect of the Coronavirus on Small Businesses

This article was originally published on June 7, 2020. The primary author of this article is Kashvi Vijay, but it is to be noted that all research mentioned has been collected by Ananya Nair.

COVID-19 has affected everything from medical care to the economy. Even small businesses have been affected drastically. In fact, small businesses are what create the personality of a city. They provide jobs for local residents who are overlooked by big corporations, and they care about the local economy. Often called the backbone of urban economies, small businesses give back to the community, through charity or some other form.

When COVID-19 hit, many small businesses were forced to shut down due to social distancing guidelines. As of June 6, 2020, all small businesses are only allowed to operate at a 50% capacity. Due to the low number of customers, many small businesses are not making a profit. In the last few months, small businesses have faced problems such as rent, staffing problems, social distancing, and supply chain interruptions.

According to a survey taken on April 29, personal service businesses (beauty, pet care, dry cleaning, etc.), hospitality businesses (lodging, travel/transportation, casino, etc.), and manufacturing businesses (automobile, electronic equipment) have been the hardest hit by COVID-19. Unsurprisingly, health care businesses have been the least hard hit by the pandemic.

Many small businesses have already suffered many setbacks. In fact, 96% of small business owners claim that COVID-19 has had an effect on their business. In order to relieve some of the stress on business owners, Trump passed the CARES Act on March 27. The bill contained 376 billion dollars, which was distributed to small businesses and individual employees.

However, big corporations got millions of dollars in relief, while small businesses only got a few thousand dollars. So how did big companies get so much money? Simple. They found a loophole in the CARES Act and took advantage of it. In fact, many small business owners got their checks very late.

Despite the CARES Act, 70% of small business owners have had to apply for a loan due to insufficient profits. In order to make up for the lack of cash flow, small businesses have had to fire some of their staff, which only adds more to the already high unemployment rate. A National Small Business Association survey found that 75% small business owners are concerned about the economic impact of the virus. Many owners are afraid that they’ll be driven out of business, which is something that is not too far from a sad reality.

However, many small businesses have been adapting to the current situation. Some retailers started opening websites, so people could shop online. Small restaurants started utilizing their takeout option. Even at a 50% occupancy rate, small businesses are still making money. Many owners have been making money through other forms such as stocks or investment properties.

Overall, small businesses have been affected a lot due to the coronavirus. Some have been driven out of business, while others have managed to stay afloat. However, one thing is for certain: small businesses shape our community, and it is important that we help them during times of crisis.