- In Goldman Sachs survey, 79 percent of small business owners say they are still concerned about the impact of COVID-19 and 82 percent said they support additional relief funds for businesses
- COVID-19 aid through the U.S. Small Business Administration expired at the end of 2021, though disruptions from the Omicron variant have spurred calls for a renewal of assistance
- A majority of respondents said they are also facing challenges from broader economic pressures such as labor shortages, inflation, and supply chain issues
Summary by Dirk Langeveld
About four in five small business owners say they have suffered a negative impact from the recent Omicron wave of COVID-19 infections, with a similar share calling for further relief efforts from the federal government to help address these disruptions.
In a January survey of 1,466 Goldman Sachs 10,000 Small Business participants, 79 percent said they were concerned about the impact of the Omicron variant and COVID-19. Seventy-one percent said the recent surge has hurt their revenues, with 37 percent saying it has forced them to scale back their business or temporarily close.
Eighty-two percent said they were in support of Congress passing additional aid to support small businesses. Eighty-six percent were in favor of reauthorizing the COVID Economic Injury Disaster Loan program.
COVID EIDL, the final COVID-19 relief program under the U.S. Small Business Administration, expired at the end of 2021. Other relief programs, including the forgivable loans offered by the Paycheck Protection Program, the Restaurant Revitalization Fund to provide grants to food and beverage businesses, and the Shuttered Venue Operators Grant program to assist live venues and other cultural organizations, ceased earlier in the year.
Although the Omicron surge is on the wane, it created significant disruptions due to a pullback in consumer demand and illnesses in the workforce. The latest report from the payroll services provider ADP shows that the United States economy lost 301,000 private payroll positions in January, including 144,000 at small businesses. The report blamed Omicron for this reversal after several months of job growth, but said the impact from Omicron is likely to be short-lived.
These effects have fueled further calls for new or revived COVID-19 relief. The National Restaurant Association is asking for the Restaurant Revitalization Fund to be replenished due to the effect of Omicron and because the program had insufficient funds to meet demand. Two lawmakers are calling on the SBA to improve the SVOG program to provide further aid, as about $2 billion remains unspent.
There have been some congressional efforts to provide additional targeted aid to businesses that have been disproportionately affected by the COVID-19 pandemic. However, some officials have expressed reticence about providing further assistance during signs of a strengthening economy, including improved GDP and falling unemployment.
Some state and local governments have responded to business pleas by establishing their own COVID-19 relief programs. Rhode Island recently opened a grant program offering qualifying small businesses up to $5,000 to address financial disruptions created by COVID-19. Boston Mayor Michelle Wu is calling for $5 million in federal funds to expand a small business relief fund.
The Goldman Sachs survey found 86 percent of respondents saying broader economic trends are also straining their business, with two-thirds saying they were not satisfied with the federal government’s response to these issues. Half said that finding and retaining qualified workers is the most significant issue they are facing; about one in five named supply chain issues as their top concern, with a similar share citing inflation.
Sixty-seven percent said they were currently looking to hire workers, with 87 percent of these respondents saying it was difficult to find qualified candidates. Nearly all of those who were facing difficulties (97 percent) said the shortage of workers was affecting their bottom line.
One challenge facing small businesses is keeping pace with larger competitors who can more readily offer pay increases. This has sometimes led smaller companies to pursue other options to make a position more attractive, such as better flexibility or benefits.
Eighty-four percent said inflationary pressures have increased since September, with 76 percent saying it has negatively affected their company’s financial health in the past six months. Inflation has often forced companies to decide whether to increase prices or absorb a profit loss, with some taking steps such as incurring additional debt or reducing staff.
Sixty-nine percent said supply chain issues have affected their bottom line, with two-thirds considering that suppliers favor larger businesses over smaller ones. Few respondents expect supply chain problems to ease anytime soon, with just 13 percent thinking they will subside within the next six months.
Just 24 percent said they thought the nation’s economy was on the right track. This was down sharply from last June, when nearly three-quarters said they thought the economy was on the right track.
Thirty-six percent described 2021 as a more challenging year than 2020. However, 73 percent said they were optimistic about the financial trajectory of their business this year.