The Impact of Shutdowns on Small Businesses

During the 2020 global shutdown, approximately 100,000 U.S. small businesses permanently closed. This unforeseen permanency highlights the fragile nature of small-scale operations against prolonged inactivity.

Small businesses typically have less than one month of cash flow reserve. Shutdowns disrupt revenue streams crucial for rent, wages, and inventory, leading to a rapid depletion of these limited reserves.

Small businesses employ 47.1% of the private workforce in the U.S. Shutdowns have caused significant unemployment, with 9.6 million U.S. workers losing jobs by the end of 2020.

Owners face immense stress during shutdowns, with implications for mental health. The uncertainty of the future, responsibility towards employees, and personal financial risk contribute to a high-stress environment.

Shutdowns disproportionately affect minority and women-owned businesses, with a 41% drop in Black-owned, 32% in Latino-owned, 26% in Asian-owned, and 25% in women-owned businesses active during early 2020.

Many small businesses pivoted to online models or diversified their services. For example, restaurants started offering meal kits for home preparation, showcasing resilience and adaptability.

The U.S. government provided over $659 billion in Paycheck Protection Program loans to help small businesses. Yet, the distribution has faced criticism for not adequately reaching the smallest and most vulnerable businesses.