Staff Report

Even as states and cities slowly allow more businesses to reopen, many entrepreneurs are anxious about doing so. 

Nearly half of small business owners worry they cannot afford to resume normal operations following mandated closures to slow the spread of COVID-19, according to LendingTree's latest survey of small business owners. 

Approximately 46 percent of small business owners cite funding as the primary obstacle to reopening, and that once open, increased health and safety measures could further stifle sales.

Key findings in the LendingTree survey:

• Almost 6 in 10 small business owners will reopen as soon as they're allowed. However, 15 percent said they'll wait a little longer to open and another 26 percent aren't sure when they'll ever reopen.
• Fewer customers and fewer sales are expected by 46 percent of small business owners upon reopening.
• Just 17 percent think they'll get the same number of customers spending the same amount as they did prior to the coronavirus pandemic.
• Not having the funds needed to reopen is the primary reason small business owners would not reopen once stay-at-home orders are lifted. They wonder if profits would warrant reopening as they also worry about the safety of themselves and employees who may not want to return.
• About 63 percent of small business owners surveyed have applied for funding through the Paycheck Protection Program.
• Of those who applied for a PPP loan, 44 percent have received funding. This is a significant jump from an April survey, when just 5 percent of those who applied were approved.
• However, more than half of business owners who received PPP funding are nervous they won't meet forgiveness criteria. Some are more worried than others: 24 percent are "very concerned," while 29 percent are "a little" concerned.

Small business owners have reservations about reopening

Although most small business owners are eager to reopen once their cities and states fully lift restrictions, some entrepreneurs worry about the lingering effects of the pandemic. Just 11 percent of respondents said they have no anxiety about reopening.

The biggest concern for 39 percent of small business owners is that they will not generate enough sales to make opening worthwhile. And 30 percent are nervous they would have to shut down again if there is another spike in coronavirus infections.

A smaller group is worried about complying with ongoing social distancing and health safety guidelines, as 8 percent said that was their main concern, while 5 percent are most troubled about employees not wanting to return to work.

Fortunately, 52 percent of survey respondents expect all of their employees to return to work when the business reopens. Nearly half — 48 percent — plan to bring back the same number of people at the same number of hours. And only 23 percent of business owners expect to employ fewer people for fewer hours when they reopen.

Despite promising PPP loan approvals, financial concerns remain

Among our survey respondents, 26 percent applied for a PPP loan from the U.S. Small Business Administration in the first round and 18 percent applied in the second round. The SBA opened applications on April 3rd, but funds ran out on April 16. 

Congress replenished the loan program which resumed April 27. Another 19 percent applied in both rounds. Of the 44 percent of business owners who were approved in either round, 3 percent returned their entire PPP loan. More than half of business owners aren't confident they will meet the criteria for PPP loan forgiveness.

The SBA released its PPP loan forgiveness application after weeks of confusion around the forgiveness process. 

Borrowers must spend at least 75 percent of PPP loan funds on payroll expenses and no more than 25 percent on mortgage interest, rent payments and utilities to qualify for forgiveness, spending those funds within eight weeks of receiving their loan. 

However, Congress could pass legislation that would extend that eight-week period, as well as upend the 75 percent rule.

Reopening Plans

For those moving full steam ahead, 54 percent of business owners plan to inform customers of their reopening through email. To encourage business, 43 percent of respondents are going to offer special promotions or sales. 

About 31 percent plan to use paid social media ads to promote their business in the first month after reopening, while 35 percent expect to take advantage of unpaid organic social media content. 

Approximately 9 percent of business owners don't have any plans to promote their business after reopening.

Methodology
LendingTree conducted an online survey of 1,260 small business owners who had previously applied for funding through LendingTree's small business lending database. Of the total respondents, 757 business owners had applied for a PPP loan. Participants were emailed a link to participate in the survey, which was fielded using Qualtrics from April 16-19, 2020.

Meanwhile, economists with Wells Fargo Securities said small business optimism showed surprising resilience in April.

The economists said the NFIB Small Business Optimism index held up better than expected, with the headline index falling just 5.5 points to 90.9. Owners, however, are worried about sales and are looking to cut costs and reduce inventories, the economists said.

And about 55 percent of those polled in Inc.'s first monthly small-business survey said their top priority when reopening is securing the health and safety of employees. Meanwhile, another 90 percent said their business has seen a negative or significantly negative effect as a result of the coronavirus pandemic. Around 28 percent of those surveyed said they have already pivoted their businesses.

Roughly a third of those surveyed estimated they would need more than $150,000 in capital to weather the country's current conditions. A quarter of those surveyed said they'd need between $10,000 and $49,999 to withstand the ongoing effects of the crisis.