Main Street Monday – Over Half of Small Businesses Surveyed Say 2020 Revenues Were Down More Than 25%

February 8, 2021

Caity Roach

Main Street Monday – Over Half of Small Businesses Surveyed Say 2020 Revenues Were Down More Than 25%

According to the Federal Reserve’s latest Small Business Credit Survey, The vast majority of small businesses (95%) were impacted by the pandemic. 26% of the small businesses impacted closed temporarily, 56% reduced their operations, and 48% modified their operations. As a result, more than half (53%) of the small businesses polled said that their total sales revenues for 2020 were down by more than 25%, making them potentially eligible for a second draw PPP loan.

Here are some of the other findings from the Federal Reserve’s Small Business Credit Survey:

  • For the first time in the survey’s five-year history, more businesses reported decreases in revenues and employment than increases; 78% of firms reported a decrease in revenue, while 46% reported declines in employment.

  • 91% of small businesses applied for some type of emergency funding during the pandemic. 82% applied for a PPP loan and 77% received all of the funding they sought.

  • Of the businesses that did not seek a PPP loan, 23% did not apply because they found the process too confusing.

  • Firms that sought PPP funds most frequently submitted their applications through small (48%) and large (43%) banks rather than credit unions (5%) and fintechs (9%).

  • When applying for a PPP loan, small businesses were most satisfied with the service they received from CDFIs (70% satisfaction)  and Small Banks (61%). In contrast, only 18% of fintech customers were satisfied.

  • Access to PPP funds bolstered small businesses’ ability to retain or rehire employees. Only 46% of firms that received all of the PPP funding they sought reduced the number of employees on their payroll, compared to 71% percent of firms that did not receive PPP funding.

  • 80% of small businesses expect to receive full forgiveness for their first draw PPP loan and 10% expect partial forgiveness. 

The Small Business Credit Survey, an annual collaboration of all 12 Federal Reserve Banks, provides timely information about small business conditions to policymakers, service providers, and lenders. This year, the survey reached more than 15,000 small businesses, gathering valuable insights about the COVID-19 pandemic’s impact on small businesses.

Federal Reserve Credit Report