April 26, 2021
Main Street Monday — Older Entrepreneurs Dip Into Personal Finances to Stay Open
According to a recent report published by the Federal Reserve Bank of New York, entrepreneurs over the age of 45 entered the pandemic with much stronger financial cushions than similar age employees and younger business owners. Nevertheless, older small business owners had difficulty accessing funds to stay open and experienced significant personal financial hardship during the pandemic. As a result, the number of small businesses owned and operated by entrepreneurs over the age of 45 remains 9% below pre-pandemic levels.
Here are some of the key findings from the Federal Reserve’s report:
- 62% of small business owners over 45 did not draw a salary from their firm in 2020.
- Half of the small business owners polled said that they had to dip into their personal funds to pay business expenses.
- 17% borrowed against their home or retirement in order to keep their business afloat.
- 82% of small businesses with owners over the age of 45 sought relief through the Paycheck Protection Program (PPP) and 62% said they would apply for additional government aid if it was available.
- The top 5 challenges facing older entrepreneurs are weak demand for products/services (59%), government-mandated restrictions or closures (52%), supply chain disruptions (37%), and limited credit availability (31%).
“As surviving firms adapt to changing business conditions, our analysis indicates that many will be looking to repair both their business and personal finances,” reads the report. “The experience of the pandemic creates opportunities for financial institutions to rethink how they can serve the financial needs of older entrepreneurs more effectively.”
Click here to read the full report.