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Small businesses are suddenly hanging on by a thread.
Forty-three percent of small businesses say they will have to permanently close within six months without some sort of quick cash infusion or fast improvement in economic conditions, according to a Friday survey that gives another look into the coronavirus outbreak’s swift and severe economic damage.
Coming the same day as a “devastating” jobs report revealing the loss of 701,000 jobs in March — which some economist said is only a glimpse of the carnage to come — a survey by the U.S. Chamber of Commerce and MetLife /zigman2/quotes/206319319/composite MET +0.72% revealed:
• 24% have already shut down on a temporary basis, and 40% of the small businesses that are still open say they will probably have to close temporarily close within the next two weeks.
• Though 43% of the 500 polled businesses say they can’t survive without some sort of government assistance and/or change in economic conditions, 46% say the economy needs between six months and a year to return to the way it was.
• 54% said the American economy is in “poor” health.
Friday’s poll results are a special edition of an ongoing index that the national business trade association and the insurer MetLife have been using since 2017 to gauge small-business attitudes and economic conditions.
The index reached a record high of 71.7 out of 100 when researchers talked to businesses about their confidence in local economies and other factors in December and January; those same results showed a record 60% of businesses saying they were optimistic about the national economy.
Friday’s survey arrives during a key date in the federal government’s effort to help the country’s approximately 30 million small businesses.
Friday is the first day it will start accepting applications for $350 billion in forgivable small-business loans. The loans are one part of a $2 trillion stimulus package that includes $1,200 direct checks to individuals and an extra $600 per week for unemployment claims.
More than half of the businesses (56%) said direct cash payments are the best way to help, and 30% favor Small Business Administration loans, the survey said.
Cash flow and customer foot traffic are grinding down as consumers stay indoors and states impose shelter-in-place orders that temporarily close “nonessential” business and require restaurants to operate only on a delivery and takeout basis.
Almost 460,000 of the 701,000 vanishing jobs in March were in the hotels, restaurants and the hospitality industry, according to Friday’s nonfarm-payrolls report from the Bureau of Labor Statistics.
Other observers say there’s a limited time to help small businesses because many small businesses only have cash buffers to last them several weeks.
Commercial bankruptcy filings could start increasing as soon as this month, according to a prediction by one bankruptcy expert.