The COVID-19 pandemic has hit the small business sector particularly hard, and small business owners say more assistance is needed, though some programs have had unintended consequences. 

According to the most recent monthly survey from the National Federation of Independent Business (NFIB), one-fifth (21%) of small business owners report they will have to close their doors if current economic conditions do not improve over the next six months, yet nearly three-quarters anticipate it will take until sometime in 2021 (52%) or 2022 (20%) for conditions to return to normal. 

The CARES rescue package was a lifeline, but more assistance is needed. Almost half of PPP borrowers (47%) anticipate needing additional financial support over the next 12 months, and 84% of PPP borrowers saying they’ve now used their entire loan, up from 71% in July. If eligible, 44% of small businesses surveyed said they would apply or re-apply for a second PPP loan, with an additional 31% saying they would consider applying for one. 

Notably, 81% of PPP borrowers from the first iteration of the program reported applying for the loan through the financial institution they normally use for business purposes. 

Much less popular than PPP, 35% of respondents reported applying for an Economic Injury Disaster Loan (EIDL). Of those, nearly three-quarters (74%) were approved, 9% were denied, and 18% are waiting to hear the status of their application. Overall, the program has been well-received. Well over half of the small business owners who applied for an EIDL loan report being “very satisfied” (22%) or “satisfied” (44%) with the program. 

While funding assistance from the PPP and EIDL programs helped keep many small businesses’ doors open, some aspects of the CARES Act created significant challenges for small business owners. Nearly one-third (32%) reported that the extra $600 per week in unemployment insurance benefits made it harder to hire or re-hire workers, 3% said they had to offer a higher wage to encourage a worker to come back to their job, and 4% reported having an employee agree to continue working but only with reduced hours in order to also receive the increased benefit. Just 9% felt they benefited from the program putting more money in their customers’ pockets. 

The lack of safe harbor related to COVID-19 liability is also keeping business owners up at night. Over half said the threat of legal action against small business is a serious (21%) or moderate (34%) concern. 

The August survey is NFIB’s 11th Small Business COVID-10 survey assessing the health crisis impact on small business operations, economic conditions, and utilization of the targeted small business loan programs. The series was first published in early March 2020. The full August survey is available here. View the complete series here.