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New reports shed light on the long-lasting impacts the coronavirus outbreak could have on small businesses.
As many as one-third of New York City businesses could close permanently as a result of the coronavirus pandemic—with the hotel and restaurant industries hit particularly hard, a new report says.
Small businesses have shed more than 520,000 jobs in New York City since the start of the pandemic, while the city’s unemployment rate hit 18.3% in May, according to a report from the Partnership for New York City, a business group.
The report finds that the federal aid targeted to small businesses has been helpful for those that received it, but notes that only about 7% of small businesses loans have gone to New York businesses despite the city being the early epicenter of the pandemic.
Hotels in the city report that occupancy rates declined by 82% and spending related to travel in the state is down $19 billion from last year, the report states.
Business closures could have drastic impacts on city finances, as demonstrated by the drop in sales taxes and business fees collected in the first few months of the pandemic.
“Depending on how quickly the economy recovers and whether there is a recurrence of disease, these losses could be deeper,” the report states. “Federal reimbursement for state and city losses is anticipated, but deep cuts in expenses as well as possible tax increases will likely be needed to bridge what is expected to be a three-year trough in revenues.”
Across the country, an avalanche of permanent closures may be on the horizon.
Upwards of 132,000 businesses on the online review site Yelp were listed as closed due to the pandemic, according to a July 10 report from the company. About 55% of those businesses have closed permanently since March.
A recent survey by the National Federation of Independent Business found that 23% of small business owners believe they will have to close their doors in the next six months unless economic conditions improve. Another 22% of small business owners said they would not be able to stay operational for more than a year under current economic conditions.
The same survey found that of businesses that received the federal Paycheck Protection Program loans, 71% have already used the entire amount they received and about 46% of borrowers anticipate needing additional financial support within the next six months.
“Current economic conditions are putting significant stress on small business owners struggling to balance lower sales, expenses, and longer-term sustainability,” said Holly Wade, the director of research and policy analysis at NFIB. “Even for those owners who have exhausted their PPP loan, the economic conditions have not yet returned to levels that can support business activity for many.”
The latest federal aid package drafted by the Senate would include $100 billion in PPP loans targeted toward the businesses hit hardest by the pandemic that have seen revenues drop at least 50% this year.
Andrea Noble is a staff correspondent with Route Fifty.