It’s been an incredibly difficult year to be a small business owner in America. The coronavirus pandemic has put business owners in the impossible position of balancing the health and safety of themselves, their employees, and their customers with their financial obligations and livelihoods.
On top of all that, federal government support has virtually dried up now that the Paycheck Protection Program (PPP) is, as of this writing, closed. And according to our latest survey, the vast majority of small businesses haven’t received enough financial support from their state and local governments.
State and local governments do not have the financial latitude that the federal government does when it comes to providing aid or bailouts to their communities, including businesses. That being said, four in five business owners feel that their state or local governments haven’t done enough to help them survive the pandemic. And that’s in addition to the fact that most business owners feel that the PPP wasn’t enough to keep them afloat in the long term.
We surveyed business owners about how much state or local government support they’ve received this year. Here’s what they said.
Hundreds of thousands of businesses across the country took advantage of the federal government’s Paycheck Protection Program, which provided forgivable loans that covered a few months of payroll and other essential costs. But participation in the program did not generally preclude those businesses from applying for or receiving aid from other sources.
And yet, a whopping 86.3% of respondents to our survey said they haven’t received any financial aid from either their state or local government. That means they haven’t taken out loans and have not received small business grants or payroll or rent relief.
The reason small business owners aren’t taking aid from their area governments isn’t necessarily because that aid isn’t available. According to the U.S Chamber of Commerce, 24 states and the District of Columbia have financial aid programs for small businesses.
That aligns with the findings from our survey: 54.8% of respondents said they were aware of state government financial aid, and 43.8% said they were aware of local government aid.
As we’ll get into below, some business owners did accept state resources and/or local government aid. But if they didn’t, why not?
We gave small business owners the option to explain their decision. The top selection (23.5% of respondents) was that the terms of that aid were unclear. Another 21.2% said they were uninterested in taking on debt. Rounding out the top three at 12.9% was “distrust of government-backed financial programs.”
As we saw with the Paycheck Protection Program, most (if not all) small business owners wanted financial help to save their businesses—but not if that meant assuming debt in the form of an interest-bearing loan. To many, it’s unclear why they should have to take on debt if it was government restrictions that forced them to restrict or close their business in the first place—even if it was in the name of public safety.
Of the businesses that did accept aid, the majority of them (55.3%) took a grant from their state or local government. Just 34.2% took out a loan, while another 7.9% accepted rent relief and 5.3% accepted tax relief.
In all, whether business owners took financial aid or not, the vast majority feel their area governments have left them out in the cold as winter approaches. Over 80% of respondents said the local government hadn’t done enough to help them; only 8.6% said they didn’t need that support.
When we asked business owners to explain what else their governments could be doing to help them, the results were varied. Some gave basic responses, such as “grants” or “a small loan” or “a loan with at least 10 years to pay back.”
Some business owners were more specific:
And still others were lost entirely. “Honestly, I don’t know. This is so far out of my experience, I’m not even sure what would help,” said one business owner.
There will be no easy way for the nation’s small business owners to outlast the pandemic, especially as COVID-19 cases continue to surge across the country. But as the federal government remains at an impasse on a pandemic stimulus package, state and local governments will increasingly hear from their small business communities that they need financial aid.
Local governments should consider revamping or tweaking existing aid programs to better fit ongoing needs, or find ways to roll out programs, if they don’t have them already. There will be no one-size-fits-all answer, but if the current offerings are leaving over 80% of business owners feeling an undue burden, anything else may be better than the status quo.
This survey took in responses from 280 business owners from October 13 to November 4, 2020.
Eric Goldschein is the partnerships editor at Fundera.
Eric has nearly a decade of experience in digital media, writing and reporting on entrepreneurship, finance, business lending, marketing, and small business trends.