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September is here and change is in the air. But what should be a time of optimism for millions of small businesses as they prepare for the busiest shopping seasons of the year is turning to dread as COVID-19 persists, temporary government assistance runs out, and gridlock continues on Capitol Hill.
Even the most resilient small businesses are feeling the pressure.
“My 40-year old catering company has made it through ups and downs in business before, but I don’t see us surviving COVID-19 without additional help from our elected representatives in Washington,” said Maxine Turner, founder of Cuisine Unlimited based in Salt Lake City, Utah. “We desperately need another boost from the Paycheck Protection Program [PPP]. Time is of the essence as so many of us have exhausted our funds and have no additional resources to keep our companies afloat until this pandemic is under control.”
According to a July survey from Goldman Sachs, 84% of recipients expected to exhaust their PPP funds by August. That means approximately four million small business have likely already exhausted these funds, or almost 13% of America’s 31 million small businesses. Furthermore, only 7% of small businesses are very confident they will be able to maintain payroll if no further government help is provided.
The only way these struggling small businesses can receive additional assistance is if Congress and the administration come together and pass a relief package — soon.
“Unless Congress acts there is no opportunity for these small businesses to access another round of PPP funding or even the employee retention tax credit. We thought we were building them a bridge to survive this pandemic and instead we left them with a pier,” said U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley. “When Congress returns from recess after Labor Day, they must make it a top priority to pass legislation providing more funding for the PPP and other targeted assistance for America’s small businesses.”
Already, there are signs that economic stress is building. Consumer spending increased more slowly in July compared to earlier months according to the U.S. Department of Commerce as new coronavirus infections rose and consumers anticipated the expiration of unemployment insurance and other government assistance. This uncertainty for consumers is already having a very real ripple effect on small businesses.
Overall, the U.S. Small Business Administration has granted over 5.2 million loans averaging $101,000 totaling over $525 billion in approved lending through the PPP. If Congress does not approve more funding soon, small business pushed to the brink might have to make some very tough choices.