Even as states and cities slowly allow more businesses to reopen, many entrepreneurs are anxious about doing so. Nearly half of small business owners worry they cannot afford to resume normal operations following mandated closures to slow the spread of COVID-19, according to LendingTree’s latest survey of small business owners. Approximately 46% of small business owners cite funding as the primary obstacle to reopening, and that once open, increased health and safety measures could further stifle sales.
Key findings:
Small business owners have reservations about reopening
Although most small business owners are eager to reopen once their cities and states fully lift restrictions, some entrepreneurs worry about the lingering effects of the pandemic. Just 11% of respondents said they have no anxiety about reopening.
The biggest concern for 39% of small business owners is that they will not generate enough sales to make opening worthwhile. And 30% are nervous they would have to shut down again if there is another spike in coronavirus infections. A smaller group is worried about complying with ongoing social distancing and health safety guidelines, as 8% said that was their main concern, while 5% are most troubled about employees not wanting to return to work.
Fortunately, 52% of survey respondents expect all their employees to return to work when the business reopens. Nearly half — 48% — plan to bring back the same number of people at the same number of hours. And only 23% of business owners expect to employ fewer people for fewer hours when they reopen.
Despite promising PPP loan approvals, financial concerns remain
Among our survey respondents, 26% applied for a PPP loan from the U.S. Small Business Administration in the first round and 18% applied in the second round. The SBA opened applications on April 3, but funds ran out on April 16. Congress replenished the loan program which resumed April 27. Another 19% applied in both rounds. Of the 44% of business owners who were approved in either round, 3% returned their entire PPP loan. More than half of business owners are not confident they will meet the criteria for PPP loan forgiveness.
The SBA released its PPP loan forgiveness application after weeks of confusion around the forgiveness process. Borrowers must spend at least 75% of PPP loan funds on payroll expenses and no more than 25% on mortgage interest, rent payments and utilities to qualify for forgiveness, spending those funds within eight weeks of receiving their loan. However, Congress could pass legislation that would extend that eight-week period, as well as upend the 75% rule.
Methodology
LendingTree conducted an online survey of 1,260 small business owners who had previously applied for funding through LendingTree’s small business lending database. Of the total respondents, 757 business owners had applied for a PPP loan. Participants were emailed a link to participate in the survey, which was fielded using Qualtrics from April 16 to 19, 2020.
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