Though many Americans eagerly returned to their favorite restaurants, shops, and entertainment venues over the summer, many small businesses aren’t seeing the strong economic growth for which many had hoped and held out. A recent Goldman Sachs business survey of over 1,100 small businesses revealed that 44 percent of independently owned establishments have less than three months of cash on reserve. The same survey also found that issue is even worse for businesses owned by people of color, with 51 percent having cash reserves that cannot stretch beyond three months. With strong consumer activity over the last few months, why are so proprietors and small establishments continuing to struggle?
Slow Recovery And Shaky Ground
Goldman Sachs’ “10,000 Small Business Voices” survey has shown that financial recovery has been anything but consistent over the last year. A slow recovery has compounded problems that have remained since the worst weeks of the pandemic, including inconsistent access to recovery programs and business loans and grants. Uneven distribution of aid has been a lingering problem especially for minority business owners, who have been able to secure federal coronavirus relief since the launch of the Paycheck Protection Program.
Debt Grows And Investments Stay On Hold
The rise in Delta variant case numbers, expectations that infection rates could worsen through the fall, and labor struggles rippling through the market, have many businesses owners feeling as though they’re standing on shaky ground. Worsening this sense of uncertainty for many is the amount of debt that small businesses have taken on since 2020. Federal loan programs made it possible for all types of small businesses to remain afloat until business could return to pre-Covid rates, but these low-interest safety nets are now adding to the pressure and curbing bigger plans and investments.
With the ability to acquire funds and manage increasing debt getting more difficult for small business owners, the path to a full recovery may be long and rocky. Are you or is someone you know struggling as a small business owner? Comment and share your experience.
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