The majority of small businesses in the U.S. faced financial challenges amid the coronavirus pandemic, with minority-owned businesses facing the biggest hurdles, according to a Federal Reserve survey.
Among the nearly 10,000 small businesses surveyed by Fed Small Business, 95% said the pandemic had impacted their business and 88% said sales had not returned to pre-pandemic levels.
Minority-owned businesses faced the greatest hurdles over the past 11 months, with Black-owned firms citing credit availability as the top expected challenge, while Asian-owned firms disproportionately cited weak demand.
While 57% of firms overall characterized their financial condition as “fair” or “poor,” this figure jumped to substantially for minority-owned businesses.
The survey, conducted in September and October, showed 39% of small businesses worried they would not survive without government aid. The Biden administration allocated $440 billion of its proposed $1.9 trillion stimulus package to communities, including grants and loans for small businesses, but the plan has yet to be voted on by Congress.
Sixty-four percent of the survey respondents said they would apply for another round of government funding if it was offered.
The percentage of firms carrying debt increased year-over-year to 79%, as did the number of firms with a debt load of more than $100,000. Sixty-two percent of owners whose firms experienced financial challenges used personal funds to help keep their businesses afloat. Others downsized operations and/or obtained funds through grants, crowdfunding, and donations.
The landscape for the pandemic and the U.S. economy have changed since the Fed conducted the survey in the fall. COVID-19 cases surged to new heights over the winter, leading to fresh shutdowns and restrictions. However, states are starting to lift bans as cases slowly decline and vaccine distribution is underway. The U.S. reported 26.3 million total infections and 445,264 total deaths as of Feb. 3, according to the CDC. Meanwhile, 33.89 million doses have been distributed nationwide.