Isabel Guzman is poised to take the reins of the Small Business Administration in an unprecedented landscape for small businesses devastated by the ongoing pandemic. A new report finds nearly every small business last fall said it had been impacted by the pandemic, with nearly 90% saying they had not returned to pre-pandemic levels nearly six months into the crisis.
At the time, more than 30% of small businesses said it was unlikely they could survive until sales recovered without government help. The Small Business Credit Survey by the Federal Reserve was conducted in September and October of last year, prior to the, but the report paints a grim picture of economic recovery for small businesses as government negotiations over additional aid continue.
Last fall, more than 90% of small businesses with employees reported applying for some form of emergency aid including 83% who applied for the Paycheck Protection Program. Of those, 77% of applicants received all the funding they sought.
But despite the funds provided, nearly 2 out of 3 small businesses surveyed said they would apply for another round of government aid if it were offered.
"Not surprisingly, many firms that have survived through the pandemic so far are still facing a lot of challenges," said the authors of the report. "And these are particularly heightened for firms owned by persons of color."
While 57% of businesses characterized their financial situations as "fair" or "poor" last fall, that grew to 79% among of Asian-owned businesses, 77% among Black-owned businesses and 66% among Hispanic-owned small businesses.
Expected challenges ahead also varied depending on race, with more Black-owned businesses reporting credit availability as their primary challenge over the next year as opposed to weak demand — which was viewed as the top challenge by White and Asian-owned businesses.
In December, Congress approved another $284 billion in aid through the, and the application process reopened last month with a more targeted approach including making funds first available with community lenders in an effort to ensure access to minority and underserved businesses.
This comes as the Senate Small Business Committee held a confirmation hearing Wednesday for Guzman, Biden's nominee to lead the Small Business Administration, the agency primarily responsible for administering COVID relief for small businesses. To date, SBA has helped provide more than $800 billion in aid.
"Small businesses across the country have been devastated by the pandemic and economic downturn," Guzman said during her opening remarks. "I feel a sense of urgency that we need to work harder than ever, think more creatively than ever and build more collaboration than ever to meet this moment."
According to the SBA, there are more than 30 million small businesses in the United States, which includes those who employ less than 500 employees.
"Small businesses power our economy. They represent vastly all of our nation's total businesses, and employ nearly half of the private workforce," said Guzman. "But they are facing an unprecedented crisis and need our support to survive and thrive again."
In his proposed American Rescue Plan, President Joe Biden isin grants for more than 1 million of the hardest-hit small businesses. It also called for $35 billion invested in small business financing programs. Meanwhile, the includes $40 billion for PPP.
While the Small Business Credit Survey shed new light on small businesses struggling, it did not include businesses that had permanently closed due to the pandemic and it's unclear just how many additional businesses surveyed have closed shop for good since last fall. The Yelp Economic Impact report released last year showed more than 97,000 businesses on Yelp had permanently closed from when the pandemic began through August 31, just before the Federal Reserve survey was conducted.