- Federal Reserve Bank of New York and AARP report looks at the challenges faced by business owners ages 45 and older during the COVID-19 pandemic
- Older entrepreneurs have been more likely than younger ones to depart from active business ownership
- Report also highlights greater difficulties among older entrepreneurs of color, including greater difficulty accessing federal relief programs
Summary by Dirk Langeveld
Older entrepreneurs, and especially those of color, have faced more difficulties accessing funding as well as greater financial challenges than their younger counterparts during the COVID-19 pandemic, according to a report by the AARP and Federal Reserve Bank of New York.
The research focused on business owners ages 45 and up, and was based on data collected in late 2020 as well as detailed interviews with 25 business owners. The report said the impact of the pandemic on older business owners is particularly important, as 80 percent of small businesses in the United States are owned by entrepreneurs in this age group.
The number of active businesses owned by older entrepreneurs in January 2021 was down 9 percent compared to a year earlier, while the number fell by just 2 percent among younger entrepreneurs. The number of older entrepreneurs shrank by 24 percent in the same period, while the number of younger entrepreneurs fell by 16 percent.
Although assets owned by older business owners were two to seven times greater than assets owned by traditionally employed people at the start of the pandemic, these entrepreneurs were also more likely to see their assets reduced during the pandemic. Sixty-two percent did not draw a salary or reduced their personal compensation, while 50 percent paid for business expenses with personal funds.
Seventy-eight percent of older entrepreneurs said their revenues declined in 2020. At the end of the year, 56 percent rated their condition as fair or poor.
Eighty-two percent of older entrepreneurs applied for a Paycheck Protection Program loan, with 81 percent receiving the full amount. While these business owners typically sought smaller loans, 62 percent said they would apply for further government relief if it became available. Fifty-nine percent said they expect weaker consumer demand in the coming year, while 52 percent said they thought government restrictions would impact their revenues and 37 percent expect supply chain disruptions to have a harmful effect.
People of color typically faced greater challenges, including a greater likelihood of experiencing revenue declines or reporting that their financial situation was poor. Older Asian entrepreneurs were most likely to leave active business ownership or report decreased revenues. Older Black entrepreneurs faced serious challenges acquiring a PPP loan, with only 46 percent receiving the full amount they sought and 17 percent receiving no funding at all.
