Most Small Businesses Lost Sales Due to Pandemic: Fed Survey

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The vast majority of U.S. small businesses took a hit to their revenue last year because of the coronavirus pandemic, with minority-owned businesses struggling the most and worrying more about accessing credit, according to a Federal Reserve survey released on Feb. 3.

The survey, which was conducted in September and October — after the first two rounds of the Paycheck Protection Program had closed to new applicants and before Congress had finalized a nearly $900 billion aid package — showed many small businesses worried they would not survive without government help.

Of the nearly 10,000 small businesses surveyed by the Fed, 95% said their business was impacted by the pandemic. Some 78% reported a decline in revenue and 46% said they had to shrink their staff.

Nearly 90% of small businesses said sales had not returned to pre-pandemic levels by the time of the Small Business Credit Survey. Of those companies, about a third said it was unlikely that the business would survive until sales recovered without more government help. Some 53% of businesses expected their total sales revenue to drop by more than 25% in 2020.

Outcomes varied widely by race and ethnicity. Some 54% of firms overall described their financial condition as “fair” or “poor.” But that share rose to 79% for Asian-owned businesses, to 77% for Black-owned firms and to 66% for Hispanic-owned businesses.

Minority-owned businesses overall were concerned about accessing credit. Credit availability was the top concern for Black-owned firms, cited by 30% of businesses in that group. Some 20% of Hispanic-owned businesses and 14% of Asian-owned businesses said they were worried about credit availability, compared to 12% of white-owned businesses.

The U.S. central bank heard from 9,693 U.S. businesses with fewer than 500 employees. It summarized findings from businesses that were operating or temporarily closed; it did not include companies that had permanently shut down.