The Impact of COVID-19 on Small Businesses

August 8th, 2020

With the COVID-19 pandemic taking a toll on the entire world, small businesses are being severely impacted. All across America, small businesses have felt, and are still feeling, the financial crunch from the pandemic. According to a report from Main Street America, nearly 7.5 million small businesses have become at risk for closing permanently (New Report). Various owners of these small businesses are being forced to take drastic measures to continue operating, and about 35.7 million Americans are at risk of unemployment due to the pandemic.

The most affected business categories include hospitality, personal service, and retail, since they must adapt to a new stay at home environment (Price 3). In order to sustain their small businesses, retail owners who relied on in-store traffic have found new ways to get their product to customers, whether it be revamping their websites and/or switching the emphasis to online ordering. This, unfortunately, is not an option for small businesses who provide hands-on services, including home improvement and repair contractors, salons, and spas. Similarly, restaurants are also greatly impacted by the pandemic. Just a few months ago, almost all restaurants had to stop allowing sit-down customers and offered only delivery or takeout services for a certain period of time. Although businesses have started opening back up again in the United States (on a state to state basis), the number of COVID-19 cases keep increasing, leaving many people still wary of leaving their homes.

To help out the businesses who are unable to sustain themselves during this time, economic agencies and state governors have been working with the SBA to provide loans for nonprofits and small business owners who have been impacted by the pandemic. The SBA’s Economic Injury Disaster Loan program will provide up to $2 million of loans, which have up to 30 years repayment for affordability’s sake. The interest rate is only 2.75% for nonprofits and only 3.75% for small businesses. If you, or someone you know, are interested in applying, you can apply in-person at a disaster center, online, or by mail.If you would like to reach them by phone, call the SBA Customer Service Center at 800-659-2955 or visit the SBA website for Disaster Loan Assistance, https://disasterloan.sba.gov/ela. In addition, the coronavirus-related stimulus legislation that was signed by President Trump on March 27, 2020 offers small businesses SBA-backed loans to pay for basic expenses. The owners won’t have to repay portions that they spend on paying employees, utilities, a mortgage, or rent. This is possible because the banks lending the money will be repaid by the Treasury Department who is receiving $377 billion to fund the program, which will slightly relieve many businesses financially (Hannon).

Although many businesses, especially small businesses, are being negatively impacted by the COVID-19 pandemic, many business owners are adapting to the new environment and coming up with various ways to tackle the financial crisis. With the transitioning, many businesses have been relying on online ordering and delivery.

However, the key to succeeding for smaller businesses during the pandemic is thinking out of the box and attracting customers with a new and creative perspective.

Written by: Ioannes Salamanes

Edited by: Weiran Jiang

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