74% of Small Business Owners Took On Debt to Offset COVID-19 Financial Losses
CHARLOTTE, N.C., Sept. 30, 2020 — As small business owners continue to navigate the COVID-19 crisis, many are grappling with significant new challenges. According to a recent LendingTree survey of almost 1,400 small business owners, day-to-day business disruptions have spurred unexpected layoffs and financial concerns. In fact, nearly three-quarters of small business owners have taken on debt to make up for financial losses. And few businesses are again fully operational. But it isn’t all doom and gloom, the survey found. The majority of small business owners still feel optimistic about their future beyond the pandemic.
- About 74% of small business owners have taken on debt to cope with the financial losses due to the coronavirus crisis. Most notably, 37% took on credit card debt and 28% borrowed from friends or family.
- Only 10% of small business owners who received Paycheck Protection Program (PPP) funding said it relieved all the financial difficulties they’re facing. The majority (62%) said the funds helped somewhat, but 28% said the PPP funds didn’t relieve their difficulties at all.
- Of the 79% of small business owners who suspended or reduced operations, only 13% have since been able to completely resume operations. Most (63%) have been able to somewhat resume, while 23% haven’t been able to resume operations at all.
- Furthermore, 43% of small business owners said their gross revenue has decreased by 51% or more due to the pandemic.
“Only 13% of our respondents have been able to completely resume operations, which means that almost 9 out of 10 aren’t there yet,” said Hunter Stunzi, senior vice president of small business and investments at LendingTree. “That’s a real drag on revenue and on their ability to keep and pay their employees.”
Of small business owners who applied for PPP funding, our survey found that 55% received the funds they were seeking. It’s worth noting that this is far better than the 5% who received financial relief during the first round back in early April. Be that as it may, Stunzi likened the program to a temporary Band-Aid.
“It was really sort of a one-time shot in the arm for a few months of payroll, utilities or rent,” he said. “But now that they’ve worked through that and the government has not been able to get its act together and provide more stimulus to these Main Street businesses, many are never going to return and are simply going to go out of business.”
To view the full report, visit: https://www.lendingtree.com/business/small/debt-covid-19-financial-losses-survey/.
LendingTree conducted an online survey of 1,397 small business owners who had previously applied for funding through LendingTree’s small business lending database. Participants were emailed a link to participate in the survey, which was fielded using Qualtrics from Sept. 4-11, 2020.
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