The NFIB Research Center's latest survey on the current impact of the COVID-19 outbreak on small business offers a stark contrast from the survey released 10 days ago. The magnitude of disruption now on the small business sector is profound. The full study is attached.
Currently, 76% of small businesses are negatively impacted by the outbreak of the coronavirus, a dramatic escalation from just under one-quarter of small businesses reporting the same earlier this month. About 5% are positively impacted. These firms are likely experiencing stronger sales due to a sharp rise in demand for certain products, goods, and services. This will presumably ease in the coming weeks as consumers feel more secure about their personal supply levels.
One-in-five (20%) small businesses are not currently affected by the outbreak, but 77% of them anticipate that changing if the outbreak spreads to or spreads more broadly in their immediate area over the next 3 months. This marks a sharp departure from the earlier survey where 43% of small businesses anticipated being impacted if the virus spread. Just 4% do not believe they will be impacted if the outbreak escalates and 18% are not sure.
Of those businesses negatively impacted, 23% are experiencing supply chain disruptions, 54% slower sales, and 9% sick employees. The 9% of owners citing sick employees likely responded out of heightened concern and precautions with sick employees showing some signs of cold or flu-like symptoms, but not necessarily because they have employees who have tested positive for the virus.
"The public health crisis is a main street economic crisis that has created unprecedented challenges for our small business owners and their employees," said Bill G. Smith, NFIB State Director, "as state and federal government responds to the spread of the COVID-19 virus, it is critically important programs and policies are structured in way that will truly lessen the economic hardship being experienced by our state's small business community," said Bill G. Smith, NFIB State Director in Wisconsin.
In Mercer, Matt Peter will run out of money at his automotive and diesel repair shop in 2-3 weeks. He started Southside Auto and Diesel Repair 17 years ago, but fears if Congress doesn't act quickly to pass some sort of relief for small businesses, he'll have to shut his doors. This pandemic couldn't have come at a worse time for Peter. Normally, he works on 3-6 cars per day. Today, he had zero appointments. He also has vehicles he's already serviced sitting in his lot that his customers don't want to pick up. That's because they aren't sure they'll have enough money to make it through the outbreak, so they're not paying their outstanding bills to Peter – which run as high as $1600 and $2300.
To make matters worse, Peter's wife was just indefinitely laid off from the child care center she worked at. Peter is trying to be proactive – he's already applied for the Small Business Administration's disaster loan program – but he's frustrated that Congress hasn't been able to agree on legislation that would ease some of the burdens on small business owners right now.
"I'm not asking for a bail out and I don't want a handout," said Peter. "I just need something so that I can restructure my debt so I can make it through this crisis. If I can pay off some of my bills, then I will be in a better position to ride this thing out. I need to feed my family and keep my doors open. Small business owners need some money freed up right now."
Almost all small business owners are taking some sort of action adjusting to their changing economic condition or to protect themselves from potential disruption. Just 6% of owners have not taken any action in response to the outbreak, a market departure from more than half (52%) not taking action two weeks ago.
The level of concern among small business owners about the coronavirus impacting their business has elevated significantly over the past two weeks. About 68% of small business owners are "very" concerned about its potential impact on their business compared to 16% in the earlier survey. Another 23% are somewhat concerned and 9% are slightly concerned. Just 1% are not at all concerned.
While many small businesses (47%) have not talked with their bank about financing needs, 30% are planning to do so soon. Another 13% have talked with their personal bank already, 9% with the SBA about their loan programs, and 1% with an online lender.
The vast majority of small businesses are now impacted by the COVID-19 outbreak and owners are taking the threat to their business seriously. Many owners have already sought out financial help and more are planning to do so in the near future. The outbreak will leave few, if any, owners unscathed. We know the economic impact will be immense, and now, the question is how long will it last and how quickly can the small business sector recover once on the other side. Small business owners are anxious to seek clarity to both questions.
This survey was conducted with a random sample of NFIB's membership database of about 300,000 small business owners. The survey was conducted by email on March 20, 2020. NFIB collected 700 usable responses, all small employers with 1-360 employees.