The Impact of COVID-19 on Small Business Outcomes and Expectations
Harvard Business School NOM Unit Working Paper No. 20-102
Harvard Business School Entrepreneurial Management Working Paper No. 20-102
43 Pages Posted: 10 Apr 2020 Last revised: 29 May 2020
There are 3 versions of this paper
The Impact of COVID-19 on Small Business Outcomes and Expectations
How are Small Businesses Adjusting to COVID-19? Early Evidence from a Survey
How are Small Businesses Adjusting to Covid-19? Early Evidence from a Survey
Date Written: May 26, 2020
Abstract
To explore the impact of COVID on small businesses, we conducted a survey of more than 5,800 small businesses between March 28 and April 4, 2020. Several themes emerged. First, mass layoffs and closures had already occurred – just a few weeks into the crisis. Second, the risk of closure was negatively associated with the expected length of the crisis. Moreover, businesses had widely varying beliefs about the likely duration of COVID-related disruptions. Third, many small businesses are financially fragile: the median business with more than $10,000 in monthly expenses had only about two weeks of cash on hand at the time of the survey. Fourth, the majority of businesses planned to seek funding through the CARES act. However, many anticipated problems with accessing the program, such as bureaucratic hassles and difficulties establishing eligibility. Using experimental variation, we also assess take-up rates and business resilience effects for loans relative to grants-based programs.
Keywords: COVID, entrepreneurship, stimulus, insolvency, small business
JEL Classification: I12, E65, L20
Suggested Citation: Suggested Citation