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.
Paper Information
- Full Working Paper Text
- Working Paper Publication Date: April 2020
- HBS Working Paper Number: HBS Working Paper #20-102
- Faculty Unit(s): Negotiation, Organizations & Markets; Entrepreneurial Management
