Roughly 22% of businesses that received a loan from the federal government expect to lay off one or more workers once the money has been spent, according to a new survey.
“Small businesses have been using the [pandemic relief] loan program to help keep their doors open and keep staff on payroll,” said Holly Wade, the director of research and policy analysis at the National Federation of Independent Research which published the survey. “However, many small businesses are telling us this won’t last forever and anticipate having to lay off employees once they’ve used their loan.”
The program in question, the Payroll Protection Program enacted as part of the March CARES Act, provides forgivable loans to businesses that were either forced to shut down temporarily or severely curtail their activities to help slow the spread of the coronavirus.
The NFIB survey states that 56% of PPP borrowers have spent their loans and the remaining 44% are “not far behind.”
It also states that owners are finding that economic conditions are making them unable to support current staffing levels.
Owners can have their PPP loan completely forgiven if they used at least 75% of the proceeds to cover payroll, but they have been slow in applying for loan forgiveness, according to the survey.
The survey says that just 6% of borrowers have applied for forgiveness. Over half of the borrowers, 55%, have not submitted their application, and the remaining 38% have been told by their lender that they are not accepting the forgiveness applications yet.
Recent spikes in the coronavirus have left many business owners unsure about their economic futures, and the NFIB survey found that 46% of respondents expect they will need additional financial support in some form over the next 12 months.
Owners are also having trouble maintaining daily operations because customers are reluctant to return. The poll found that 11% of owners find attracting customers very difficult, with another 29% saying that it’s moderately difficult.
They also find it difficult to manage employees’ and customers’ health and safety concerns. One area that is most troubling is locating enough hand sanitizer to keep the business open. The survey found that nearly 60% of respondents are having difficulty stocking up on the product.
