Small business is the lifeblood of the American economy, and when turbulent times hit, it is important to get a pulse on small business sentiment, reactions, and bottom-line impacts. Lendio commissioned an independent market research firm to survey a random sample of 525 double-screened small business owners on March 12th, 2020, after the World Health Organization labeled coronavirus a pandemic, organizers canceled numerous major events, heads of states declared emergencies, and President Trump delivered an Oval Office address.
This report is released on the heels of another independently researched survey of 531 double-screened small business owners the week of February 17, 2020, before the coronavirus was declared a pandemic.
Coronavirus’ Negative Effect on Small Business
The rise of the novel coronavirus has impacted nearly every aspect of life, and small businesses are not immune. Of those surveyed, 43% of small business owners say coronavirus has had a negative impact on their business.
Additionally, business owners in urban areas are nearly two times more likely than owners in suburban and rural areas to say the outbreak has definitely had a negative impact on their business. Minority-owned businesses are also two times more likely to say it has had a negative impact on their business.
One of the main impacts has been to business revenue, which has been significantly impacted, with 38% of small businesses reporting a decline in revenue due to the pandemic.
Small business owners say the top three negative effects of coronavirus on business are:
- Fewer customers are visiting a physical location
- Customers are more reluctant to buy
- Customers have less disposable income
Small Business Owners Are Optimistic, Though Slightly Less Than Before the Coronavirus Pandemic
Overall, 74% of small business owners are optimistic about their business today, compared to 82% who were optimistic just before the outbreak.
Things aren’t as cut and dry regarding small business owner optimism in the short term compared to the long term. Of the 525 small business owner respondents, 81% said they are optimistic about their business in the long term compared to 67% who are optimistic about the short term.
Two weeks ago, 52% of small business owners said they did not expect the U.S. to go into recession in 2020. Now, 57% of small business owners say they expect the U.S. to go into recession in 2020. Only 18% of respondents said they don’t expect a recession this year.
The majority of businesses fortunately aren’t facing the prospect of having to lay off workers. However, most say a loan would help them in avoiding that fate.
During his Oval Office address, President Trump recommended $50 billion in emergency relief funding be approved for small businesses.
Small business owners show a strong interest in applying for those low-interest loans. Of those surveyed, 41% said they intend on applying for loans provided in response to Coronavirus. Many others are undecided, with 23% saying they are unsure if they will or won’t.
The good news is that small businesses are optimistic about their chances of getting through any potential recession. More than half (52%) expect they could survive a recession without a loan, and 23% expect they could survive a recession with a loan.
Coronavirus jumped to the number two spot on the top issues for small business owners, displacing consumer disposable income. Taxes remain the number one issue.
On the political side of the spectrum, business owners are close to split on their opinion of Trump’s handling of the coronavirus outbreak (44.87% approve and 41.64% disapprove).