Survey Assesses the Impact of the Pandemic on Small Businesses

A survey by Main Street America shows the sobering reality of just how devastating COVID-19 has been for small business revenue and the millions of Americans employed by locally owned companies with fewer than 20 employees. The following highlights key finding from the 2020 survey.

Business interruption

Regarding the impact of business interruption (BI) due to the pandemic, 80% of the businesses surveyed indicated they had already had to close temporarily at least once since early March. When asked about the potential for a permanent closure if BI continues at the current rate, nearly two-thirds of businesses said they feel they are at risk of closing for good in the next five months and more than 30% indicated a possible permanent closure in the next two months.

Unfortunately, recovering COVID-19-related losses under a BI policy has become a challenge. In most policies, a qualifying BI loss is defined as having caused actual physical damage or a civil authority claim. A physical damage loss requires direct physical damage to property — something that doesn’t exist in most pandemic-related losses.

Loss of revenue

Since early March, nearly three-quarters of small businesses reported a 50% drop in revenue, with 57% reporting a 75% or more drop. As a result of this substantial reduction in income, businesses have been forced to lay off employees. For companies with five or fewer employees, 85% said they have or are planning to lay off between one to five workers. Before the end of the year, this could mean that approximately 35.7 million Americans employed by small businesses will be out of a job.

The assistance small businesses value most

When prompted to share what types of pandemic-related financial assistance small businesses would value the most, 70.17% said financial assistance for at least 90 days and 65.70% said penalty-free extensions on expenses such as rent, utilities, inventory and supplies. After citing financial assistance as a priority, 20.98% of businesses said they would like assistance with how to best protect their employees from contracting COVID-19 and 21.35% said they want to know how to best protect their customers.

Support for small-business America

The Small Business Majority has created a policy agenda that will promote a thriving economy and increase prosperity for local businesses. The agenda presents short- and long-term recommendations that can be enacted at the national, state and local levels and includes:

  • Adjusting repayment due dates on property taxes and commercial rent.
  • Ensuring the delay of payroll tax payments and grant/loan assistance.
  • Providing forbearance on all small business loans — including credit card debt — for at least six months.
  • Cash reimbursement in place of quarterly tax credits to employers that offer paid family medical and sick leave.
  • The passing of legislation to ensure that insurance companies provide coverage for revenue losses because of the COVID-19 pandemic.

Although this survey represents a snapshot of a point in time, there will naturally be more pandemic-related challenges that small businesses will be up against. As an insurance professional, your clients will be looking to you to help them understand how they can best mitigate their losses, identify potential gaps in coverage and facilitate the claims process.

The pandemic has made 2020 a difficult year for everyone. Now more than ever, your small business clients will be relying on you to keep them informed and to assist them with a challenging claims process. Don’t let continuing education requirements take valuable time away from your policyholders. At FastrackCE, we make it easy for you to get all of your CE credits completed in one place — including state-mandated courses such as ethics, flood, long-term care and annuity training. For more information, call 800-544-3605 or visit us at fastrackce.com.

*The Main Street America survey was conducted online, and more than 5,850 small-business owners responded, of which 91% reported having fewer than 20 employees.

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