How Are Small Businesses Adjusting to COVID-19? Early Evidence From a Survey

by Alexander Bartik, Marianne Bertrand, Zoë B. Cullen, Edward L. Glaeser, Michael Luca, and Christopher Stanton

This survey of 5,819 small businesses in the United States shows that the pandemic has already caused massive dislocation among small businesses. Many businesses think they will not be able to survive if the crisis persists for the coming months. The immediacy of new funding will likely impact medium-term outcomes.

Author Abstract

In addition to its impact on public health, COVID-19 has had a major impact on the economy. To shed light on how COVID-19 is affecting small businesses—and on the likely impact of the recent stimulus bill—we conducted a survey of more than 5,800 small businesses. Several main themes emerge from the results. First, mass layoffs and closures have already occurred. In our sample, 43% of businesses are temporarily closed, and businesses have—on average—reduced their employee counts by 40% relative to January. Second, consistent with previous literature, we find that many small businesses are financially fragile. For example, the median business has more than $10,000 in monthly expenses and less than one month of cash on hand. Third, businesses have widely varying beliefs about the likely duration of COVID-related disruptions. Fourth, the majority of businesses planned to seek funding through the CARES act. However, many anticipated problems with accessing the aid, such as bureaucratic hassles and difficulties establishing eligibility.