May 29, 2020

Many Small Business Owners Lack Funding to Re-Open

From the start of the COVID-19 emergency, it was clear the stay at home orders and forced business closures would have a punishing impact. The abrupt changes to operating rules combined with fear of virus transmission left many with dwindling demand for their products and services. Without a consistent source of revenue to pay employees and offset other expenses, very difficult decisions had to be made to ensure the business could survive. To help alleviate the pressure, Congress acted and passed important relief measures such as the CARES Act which provided needed relief in the form of the Paycheck Protection Program (PPP) and expanded the Economic Injury Disaster Loan program as well. While helpful there is still concern amongst business owners on how they will manage through re-opening. According to a new survey issued by LendingTree, 46% of small business owners cite funding as the biggest obstacles to reopening.  It was also uncovered that many businesses would be unable to reach profitability if forced to follow state safety guidelines. To help clients, prospects, and others, Wilson Lewis has provided a summary of key findings below.

About the Survey

The survey was conducted online and included 983 small business owners who had applied for funding through LendingTree’s small business lending database. Business owners were e-mailed a link and asked to participate between May 13, 2020, and May 20, 2020.

Key Findings

• Biggest Concern about Re-Opening – There are a number of new challenges businesses are facing as the re-opening process continues and the survey wanted to identify the topmost. According to the report, 39% of respondents indicated there will not be enough sales to make reopening worthwhile, 30% have concerns about having to shut down again if infections spike, 8% indicated difficulty complying with new guidelines and 5% identified staff not wanting to return to work as a concern. In contrast, it was also found that 11% of business owners do not have any concerns.
• Staffing Levels – As identified above some companies have concerns about maintaining staffing levels. To understand more these concerns the survey asked if businesses will be able to return to pre-COVID-19 staffing levels. According to the findings, 49% expect to have the same number of employees working the same hours, 23% expect to have fewer employees working fewer hours, 20% expect the same number of employees but working fewer hours and finally, only 9% expect to have fewer employees working the same amount of hours.
• PPP Loan Funding – To understand how the PPP loan program is helping businesses with funding, the survey inquired about whether businesses were able to receive this loan. According to the results, 44% received a PPP loan, 28% are still waiting to hear back and 28% did not receive a requested loan. Finally, 3% returned the loan due to concerns about meeting eligibility requirements.
• PPP Loan Forgiveness – A hot topic amongst approved borrowers, the survey wanted to gauge respondent attitudes on whether they will receive partial or full loan forgiveness. According to the study, more than half of respondents are very concerned they will not meet forgiveness criteria, 24% are very concerned and 29% are a little concerned. These findings reflect the continued uncertainty around PPP loan forgiveness.
• Promoting the Business – As reopening continues there is renewed focus on communications and advertising. According to the survey, 54% are sending emails to customers, 43% are running sales specials, 35% are using organic social media content, 13% earned media, 13% print or online advertising and 3% paid radio ads. What is interesting is that 9% have decided not to promote their business in the first month of reopening.

Contact Us

It is clear the COVID-19 emergency measures have dealt a damaging blow to many Atlanta area businesses. The survey findings provide important insights into the top concerns, issues, and challenges of small business owners. If you have questions about the information outlined above or need assistance with a PPP loan or tax issue, Wilson Lewis can help. For additional information please call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.