As businesses across the nation are gearing up to reopen, they are worried about doing so. This according to a survey by LendingTree. Nearly half of small business owners (46%) worry they cannot afford to resume normal operations following mandated closures to slow the spread of COVID-19.
A key challenge they say that might hinder them from opening is a lack of funding to maintain operations. Some 39% of small business owners say they fear they would not generate enough sales to make opening worthwhile.
LendingTree Reopening Small Business Survey
Their fears stem from adhering to safety guidelines that would limit their capacity to 25% or 50%. This they say would affect their bottom line. In addition, fears their staff might not return (5%) will also limit their ability to serve enough customers to turn a decent profit. Though a majority (52%) expect their entire workforce to return when they open, close to a quarter (23%) say they will do so with less staff working for fewer hours.
Those planning to get all engines up and running (54%) plan to inform customers of their reopening through email. To further encourage business, 43% plan to offer special promotions or sales. A further 31% plan to use paid social media ads to promote their business in the first month after reopening. Another 35% expect to take advantage of unpaid organic social media content. Less than 9% of businesses say they are going to opt-out of promoting their business after reopening.
Concerns Over a Second Wave
Despite the optimism towards reopening there are concerns of a second wave of infections. Over a quarter of the respondents (30%) are nervous they may have to shut down again if there is another spike in infections.
Despite this, almost six in ten small businesses are set to reopen as soon as they are allowed. With 15% saying they are willing to wait and see before opening while another 26% are not sure whether they will ever open.
Only 17% of small businesses say they will get the same number of customers spending the same amount they did prior to the outbreak of the coronavirus. Even more surprising, only 11% of the respondents say they have no anxiety about reopening.
Challenges of Reopening for Small Business Owners
As the outbreak unfolded companies were forced to shutter as global supply chains collapsed and shutdowns were imposed. In a bid to help businesses withstand the impact of the covid19 pandemic support for businesses came through the Small Business Administration’s Paycheck Protection Program (PPP) and the Federal Pandemic Unemployment program.
The nation also saw its unemployment rate reach 14.7 % in April. With some states seeing high unprecedented unemployment records. Nevada had the highest unemployment rate of 28.2 percent, followed by Michigan, 22.7 percent, and Hawaii, 22.3 percent. Some hope that reopening quickly would help get people back to work, but will need to deal with the difficulty of many businesses operating at partial capacity.
This led to some 63% of small businesses applying for funding through the Paycheck Protection Program (PPP). Of those surveyed only 44% have received funding while 28% are still waiting to hear back on whether their applications have been approved.
Even those who have received PPP funding say that they still face challenges before reopening and would require additional cash injections. Further, still there are fears on whether they would be eligible for the PPP forgiveness.
Anxiety Over PPP Forgiveness
As per the Program, borrowers are required to spend at least 75% of PPP loan funds on payroll expenses and no more than 25% on mortgage interest, rent payments and utilities to qualify for forgiveness. Requirements for forgiveness rests on their ability to spend those funds within eight weeks of receiving their loan.
Furthermore, any reductions in the employees during the eight-week period; reduction in pay for any employee beyond 25% of compensation year; compensations exceeding $100,000 in wages for individual employees could also affect forgiveness.
Unless Congress passes legislation that would extend that eight-week period many fear they may not meet the requirement given the uncertainty of the business environment.
Despite the financial concerns and the lifting of restrictions. Businesses will still have to placate concerns of both customers and employees being inside their places of business.
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