Business Owners Dip Into Their Own Pockets
Plenty has been written about the struggles small businesses in the US are experiencing as a result of the coronavirus. Despite attempts by the government to provide them assistance such as the Paycheck Protection Program, the funds largely went to businesses and individuals who didn’t need it as badly as many small business owners.
Desperate times calls for desperate measures and small business owners who are fighting to stay alive are doing just that as they’re increasingly reaching into their own pockets to keep their businesses running.
According to a survey of 500 small business owners in mid-July from CreditCards.com, about 35% of small business owners have used their own personal funds since the coronavirus shutdowns began. Overall, 70% of respondents said they have depended on other sources of funds to serve as a lifeline such as business savings, business credit cards and loans–including PPP loans.
“These are tough numbers,” CreditCards.com industry analyst Ted Rossman said. “They show just how dire this is for small businesses, and also how intertwined their personal and business finances are. You kind of have to worry about some of them compromising their own financial well-being.”
Looking at the survey results by funding source reveals 24% of small business owners used their own personal credit cards compared to 20% who used business credit cards. As for tapping into savings accounts, the survey found 21% of small business owners used funds from their personal savings account compared to 24% who tapped into business savings accounts. 30% of the respondents said they received PPP loans while 9% said they took out other loans.
A recent survey from the National Federation of Independent Business found that 71% of small businesses have already used all of the funds from their PPP loan. 46% of those small businesses that received a PPP loan anticipate needing additional assistance over the next twelve months. Their survey also found that 21% of the small businesses that received a PPP loan have already or anticipate having to lay off employees.
Elsewhere, searches for the term “restaurant” on Facebook Marketplace paint a dire picture of the state of small restaurants across the US. The results show countless restaurants across the country that are trying to liquidate equipment or the restaurant entirely.
With so many individuals and small businesses in such poor financial condition as a result of the coronavirus, Congress is still struggling to agree to an additional relief package.
The next time someone says they work in the best interests of Americans, just remember how little debate there is over actions such as the Fed buying bonds of companies like Apple (NASDAQ:AAPL), which does absolutely nothing to benefit the majority of Americans who need it most.