What is the real impact of COVID on small businesses? By Rahul Kollu
Over these past two years we have all dealt with a devastating pandemic that has forced us to quarantine at home and stay away from our loved ones. Outside of the personal impacts that many of us have experienced, many aspiring small businesses have been forced to close their doors.
A study that was performed by the National Academy of Sciences shows us that 41.3% of small businesses were temporarily closed. Various concerns were noted as towards this, with reduction of demand being the leading reason towards these closures. Another study conducted via data from the Paycheck Protection Program (PPP) that examined how much money a small business has lost during the pandemic on average, found that during Q2 of 2020 had dropped 52 percent on average. 15% of American adults lost their job to COVID-19 as reported by Pew Research Center.
Another huge problem that this epidemic has caused is the ongoing supply chain issues which are causing more expensive prices and empty shelves which is
still prominent today. According to the US Census Bureau’s Small Businesses Pulse Survey, approximately 38% of small businesses reported domestic supply chain issues. A factor leading to this is the cost of transporting goods is rising rapidly, An example of this is , “In August 2020, the cost to ship a standard 40-foot shipping container was approximately $4,300,” Minnesota small business owner Christine Lantinen said.
“By August 2021, that figure had exploded to nearly $30,000.” (10 Tampa Bay, 2021). During the pandemic nearly 80% of businesses had seen a drop in their supply chain efficiency.
The Government is trying to help small businesses through many initiatives and acts to get these struggling small businesses money during the pandemic. They started the Paycheck Protection Program to provide loans to businesses to maintain their payroll and if they used them for certain expenses, the loans would be forgiven. The United States government put 823 billion dollars to back this program. The United States government is using this program among others to support a substantial 44% of the United states economic activity.
But not all small businesses have been negatively impacted by the pandemic, as some products fit the new obstacles at hand, for example Instacart getting food to its customers, without making them go into a store. Many small businesses adapted to the challenges presented by COVID-19 and found ways around them such as offering curbside pickup for restaurants. Demand for companies such as Uber Eats exploded, which caused revenue to more than double the year previous at 1.2 billion dollars in 2020.
As we are inching closer to the end of the pandemic, small businesses are starting to pick up again with restrictions being lifted and mask mandates being dropped. Hopefully, we will get back to a sense of normalcy for these small businesses to create a consistent revenue of the backbone of our nation.