The Evolving Impacts of COVID-19 on Small Businesses Since the CARES Act

27 Pages Posted: 27 Apr 2020

See all articles by John Eric Humphries

John Eric Humphries

Yale University, Department of Economics

Christopher Neilson

New York University (NYU) - Leonard N. Stern School of Business; Princeton University - Woodrow Wilson School of Public and International Affairs

Gabriel Ulyssea

University of Oxford - Department of Economics

Date Written: April 26, 2020

Abstract

This note provides new evidence on how small business owners have been impacted by COVID-19, and how these effects have evolved since the passage of the CARES Act. As part of a broader and ongoing project, we collected survey data from more than 8,000 small business owners in the U.S. from March 28th, one day after the CARES Act was passed, through April 20th. The data include information on firm size, layoffs, beliefs about the future prospects of their businesses, as well as awareness of existing government relief programs. We provide three main findings. First, by the time the CARES Act was passed, surveyed small business owners were already severely impacted by COVID-19-related disruptions: 60% had already laid off at least one worker. Second, business owners’ expectations about the future are negative and have deteriorated throughout our study period, with 37% of respondents in the first week reporting that they did not expect to recover within 2 years, growing to 46% by the last week. Third, the smallest businesses had the least awareness of government assistance programs, the slowest growth in awareness after the passage of the CARES Act, and never caught up with larger businesses. The last finding indicates that small businesses may have missed out on initial Paycheck Protection Program funds because of low baseline awareness and differential access to information relative to larger firms.

Keywords: COVID-19, Small business, CARES Act

JEL Classification: J0, H0, H5

Suggested Citation

Humphries, John Eric and Neilson, Christopher and Ulyssea, Gabriel, The Evolving Impacts of COVID-19 on Small Businesses Since the CARES Act (April 26, 2020). Cowles Foundation Discussion Paper No. 2230, NYU Stern School of Business, Available at SSRN: https://ssrn.com/abstract=3584745 or http://dx.doi.org/10.2139/ssrn.3584745

John Eric Humphries (Contact Author)

Yale University, Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

HOME PAGE: http://www.johnerichumphries.com

Christopher Neilson

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Princeton University - Woodrow Wilson School of Public and International Affairs ( email )

Princeton University
Princeton, NJ 08544-1021
United States

Gabriel Ulyssea

University of Oxford - Department of Economics ( email )

10 Manor Rd
Oxford, OX1 3UQ
United Kingdom

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