Revealed: business horrors of the first six months of the pandemic

A look back at what the first six months of the pandemic did the business community, while in some ways not surprising, reveals several startling examples of how destructive the crisis was.

The details come from the 2021 Small Business Credit Survey, a collaboration from all 12 Federal Reserve Banks. The survey queried more than 15,000 small business owners and entrepreneurs, focusing on business performance and credit conditions. “The timing of the survey is important to the interpretation of the results,” the survey states. “At the time of the survey PPP loans authorized by the CARES Act had recently closed, and prospects for additional stimulus funding were uncertain. Additionally, many government-mandated business closures had been lifted as the number of new COVID-19 cases plateaued…”

That plateau, of course, has since cratered, courtesy of the Delta variant that has partially led to a surge of COVID-19 cases statewide. With that has a backdrop, the survey paints a grim picture of business life six months into the pandemic. Results include:

• Nearly eight of 10 companies, 78%, reported a revenue decrease.

• Almost half, 46%, cut the payroll.

• More than half, 57%, of survey respondents characterized their company’s financial condition as “fair” or “poor.” That jumps to 79% for Asian-owned firms and 77% for Black-owned firms.

• About one-fourth, 26%, of respondents closed their business temporarily, while 56% reduced their operations and 48% modified their operations. Of those that faced disruptions to operations, firms most commonly cited changes in demand (58%), government mandates (55%) or the need to adapt to health and safety guidelines (52%) as reasons their businesses were affected.

• Nearly 80% of firms had debt outstanding six months into the pandemic, an increase from 71% in 2019. The amount of firms with more than $100,000 in debt rose from 31% in 2019 to 44% in 2020.