In August, there were 23.7% fewer businesses open relative to January. This represents an increase in small business closures of 1.2%age points since July. A spike in daily COVID-19 cases in July led many policy makers to re-impose more stringent restrictions, forcing many small businesses to shut their doors again.
Small business revenues edged higher by 2 percentage points from July to August, ending the month 20.6% below January’s level. This improvement was mostly due to a large rebound in both education services as schools began to reopen and healthcare services as a result of an increase in new COVID cases.
For the second consecutive month, small business employment remained virtually unchanged at -8.2% year-over-year (YoY) relative to July (-8.4% YoY). Until COVID containment shows consistent success, the lifting of restrictions and small business employment will remain stagnant.
Among small businesses, 96.7% of firms did not miss a loan payment, up 1.4 percentage points from June to August. Despite widespread accommodation programs that would allow small businesses to miss payments without consequences, they appear to be staying current on their loans. In August, nine out of 10 firms reported that they did not miss a non-loan payment, up 3.5%age points from June. Small businesses appear to be paying their mortgages/leases and other bills thanks in large part to federal aid programs aimed at helping small businesses weather the storm caused by the pandemic.
“The renewed shutdown orders and fear among many consumers about going back out due to COVID spikes in July had a negative impact on opens and employment in August. While small business revenues improved overall, the gains were mostly concentrated among education and health services firms,” said Travis Clark, Assoc. U.S. Economist.
“Despite increased uncertainty about how long their current cash on hand will cover expenses, the vast majority of small businesses reported that they are current on loan and other payments,” said Michael Brown, Principal U.S. Economist. “Federal stimulus programs have helped many small businesses stay afloat through these uncertain times.”