How are Small Businesses Adjusting to COVID-19? Early Evidence from a Survey

36 Pages Posted: 9 Jun 2020 Last revised: 10 Jun 2020

See all articles by Alexander Bartik

Alexander Bartik

University of Illinois at Urbana-Champaign - Department of Economics

Marianne Bertrand

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Zoe Cullen

Harvard University - Business School (HBS)

Edward L. Glaeser

Harvard University - Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER)

Michael Luca

Harvard University - Business School (HBS)

Christopher Stanton

Harvard University - Business School (HBS); National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: April 12, 2020

Abstract

In addition to its impact on public health, COVID-19 has had a major impact on the economy. To shed light on how COVID-19 is affecting small businesses – and on the likely impact of the recent stimulus bill, we conducted a survey of more than 5,800 small businesses. Several main themes emerge from the results. First, mass layoffs and closures have already occurred. In our sample, 43 percent of businesses are temporarily closed, and businesses have – on average – reduced their employee counts by 40 percent relative to January. Second, consistent with previous literature, we find that many small businesses are financially fragile. For example, the median business has more than $10,000 in monthly expenses and less than one month of cash on hand. Third, businesses have widely varying beliefs about the likely duration of COVID related disruptions. Fourth, the majority of businesses planned to seek funding through the CARES act. However, many anticipated problems with accessing the aid, such as bureaucratic hassles and difficulties establishing eligibility.

JEL Classification: E65, I120, L20

Suggested Citation

Bartik, Alexander and Bertrand, Marianne and Cullen, Zoe and Glaeser, Edward L. and Luca, Michael and Stanton, Christopher, How are Small Businesses Adjusting to COVID-19? Early Evidence from a Survey (April 12, 2020). HKS Working Paper No. RWP20-012, University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2020-42, Available at SSRN: https://ssrn.com/abstract=3574741 or http://dx.doi.org/10.2139/ssrn.3574741

Alexander Bartik

University of Illinois at Urbana-Champaign - Department of Economics ( email )

410 David Kinley Hall
1407 W. Gregory
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Marianne Bertrand (Contact Author)

University of Chicago - Booth School of Business ( email )

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Chicago, IL 60637
United States
773-834-5943 (Phone)

HOME PAGE: http://gsbwww.uchicago.edu/fac/marianne.bertrand/vita/cv_0604.pdf

National Bureau of Economic Research (NBER) ( email )

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Centre for Economic Policy Research (CEPR)

London
United Kingdom

Zoe Cullen

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

HOME PAGE: http://www.hbs.edu/faculty/Pages/profile.aspx?facId=879471

Edward L. Glaeser

Harvard University - Department of Economics ( email )

Littauer Center
Room 315A
Cambridge, MA 02138
United States
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617-496-1722 (Fax)

Brookings Institution

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National Bureau of Economic Research (NBER)

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Michael Luca

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Boston, MA 02163
United States

HOME PAGE: http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=ovr&facId=602417

Christopher Stanton

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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