Just under 40% of all American small businesses closed during the COVID-19 pandemic, with just over 50% of small businesses in the leisure and hospitality industries closing, according to data from Opportunity Insights, a nonpartisan, not-for-profit research and policy institute at Harvard University’s Department of Economics
The study found that 38.9% of small businesses were closed as of June 2, according to the most recent data. Fifty-two percent of small businesses in the leisure and hospitality industry closed since January of last year, while the number of open small businesses in the healthcare, retail, education and transportation sectors dropped by about one-third.
The institute notes in a summary of its research on the economic impacts of the pandemic that “Small businesses in the most affluent ZIP codes — which tend to cater to high-income customers — lost more than 50% of their revenue when COVID-19 hit, as compared with 30% in the least affluent (low rent) ZIP codes.”
They add that the Paycheck Protection Program likely “had little effect on small business employment to date,” and “each job saved through the PPP program cost taxpayers more than $370,000.”
Opportunity Insights also notes that their “findings show that it is the fear of COVID-19 itself, not executive orders restricting business activity, that are the primary cause of reduced economic activity and job loss.”
The Wall Street Journal reported on Thursday that the Small Business Administration was “overwhelmed” by the demand for assistance during the pandemic, “and left many entrepreneurs in limbo as they seek to recover.”
Former SBA Regional Administrator Robert Scott told the newspaper that “On the disaster side, we did a terrible job. The existing systems in place, the existing leadership in place, just have not adjusted to what is necessary to meet the demand right now.”
Sen. Ben Cardin, D-Md., who chairs the Senate Committee on Small Business and Entrepreneurship, told the Journal that part of the problem for the agency was former President Donald Trump’s administration giving priority to the PPP, saying that the program “suffered in the implementation speed, as well as the amount of resources small businesses should have been entitled to that they did not receive.”
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