After dispersing an initial $349 billion in emergency aid to small businesses, the U.S. Small Business Administration (SBA) re-launched its Paycheck Protection Program (PPP) this week to distribute another $310 billion in forgivable loans.

To help ensure small businesses aren’t crowded out by larger companies, the SBA developed stricter eligibility requirements for this new round of funding. Still, there are remaining concerns about whether these additional resources will be enough to help those businesses survive the coronavirus pandemic.

Key to understanding the prospects for small businesses recovery is hearing from small business owners themselves. This week, a team of researchers from Princeton, Yale, and Oxford released results from a survey with more than 50,000 small business owners in the U.S., Latin America, and the Caribbean—including 8,000 in the U.S. As part of a broader and ongoing project, the U.S. data was collected from March 28th, one day after the CARES Act was passed, through April 20th.[1]

In a summary of what they heard from U.S. small business owners specifically (PDF), the researchers document three key facts.

First, by the time the CARES Act was passed, surveyed small business owners were already severely impacted by COVID-19-related disruptions: 60% had already laid off at least one worker.

Second, business owners’ expectations about the future were negative and deteriorated over time, with 37% of respondents in the first week reporting that they did not expect to recover within 2 years. That number grew to 46% by April 19. The proportion reporting that they didn’t expect to ever recover decreased by 0.4 percentage points per day, with only half of respondents believing their business would never recover within two years by the final week of the survey. 

Will Your Business Recover Within Two Years?

Finally, the researchers found that the smallest businesses had the least awareness of government assistance programs, the slowest growth in awareness after the passage of the CARES Act, and never caught up with larger businesses. The last finding indicates that small businesses may have missed out on initial Paycheck Protection Program funds because of low baseline awareness and differential access to information relative to larger firms.

Voices of small business owners

The work is part of a broader project aimed at elevating the voices of small business owners. On the project website, the researchers highlight specific concerns expressed by survey participants.

One small business owner from Minnesota spoke to the difficulties of receiving funding: “I’ve reached out to programs asking how to apply. I get no response. I applied for an SBA loan. Again, no response, not even an acknowledgment that they have received my application. I’ve applied for grants and have received no response or financial help.”

Respondents were also asked what their state and federal governments can do to help their business moving forward. A business owner in Connecticut spoke about problems unique to new small businesses: “Everything that is offered is based on credit or giving a loan. The bridge loan Connecticut is offering is also only for businesses that have turned a profit. Being a brand new business I have not yet to turn a profit and I just took out a loan to open my business, 7 months ago. These programs are not helpful for new small businesses.”

Ultimately, the researchers hope to study how access to information about lending programs affects participation. To learn more, visit the project website.

[1] The sample draws largely on businesses with fewer than 10 employees in January 2020. While the researchers did not construct the survey to be representative of small firms in the U.S., the size distribution in the data is similar to the firm size distribution in the 2017 Census of U.S. Businesses.