Small Business Owner’s Guide to COVID-19: Before, During, and After

Business owner with mask

Introduction: COVID-19’s Impact on the Overall US Economy

Personal, financial, emotional, professional. COVID-19 has impacted each of our lives in a multitude of ways. No doubt, this global pandemic has left an indelible imprint on lives, communities, economies, and of course—small businesses. 

As a small business lender, we’ve witnessed firsthand how difficult the economic crisis has been on this particular community. And if you’re reading this, we’re willing to bet it’s because you are a small business owner. Over the past year and a half, Pursuit has been on a mission to support you and your peers with COVID-related actionable advice, straightforward guidance, and of course—flexible lending products tailored to your business’s needs and goals during these unprecedented times.  

Thanks to the vaccine, the economy is making a slow, but sure comeback to pre-COVID days. As the world has little choice but to sit and wait, Pursuit continues to offer insight and support to help business owners rebuild and recover from this unprecedented situation. 

The Impact of COVID-19 on Small Business Outcomes and Expectations

There are many organizations leading the COVID-19 research charge. One such organization is PNAS—Proceedings of the National Academy of Sciences in the United States. The research paper, titled The Impact of COVID-19 on Small Business Outcomes and Expectations, details the results of a survey conducted of more than 5,800 small businesses between March 28 and April 4, 2020. While still early on in the pandemic, the findings were—and still are—surprising. 

Just weeks into the now years-long crisis, PNAS found that mass business closures and layoffs had already occurred. This—coupled with the finding that the average business (with more than $10,000 in monthly expenses) only had two weeks of cash flow on hand—gave early insight into just how damning the economic shutdown would be on America’s small businesses. New York was hit especially hard, with 54% of surveyed businesses closed, and 47% reporting a reduction in active employment. 

The same survey revealed that small business owners weren’t just hopeful for government relief, they were depending on it. As we sit on the other side of history, we can report that unfortunately, “need” doesn’t always translate into “gets.” 

PNAS wasn’t the only agency conducting important research around COVID’s impact on small business outcomes. On June 8, 2020, The National Bureau of Economic Research (NBER) announced that the US had officially entered a recession as of March 2020. Other government agencies, most notably the US Census Bureau, also focused its efforts on collecting and analyzing data regarding the pandemic’s economic impact. 

But regardless of which study is referenced, the consensus remains largely the same: the small business community was the hardest hit by the economic shutdowns resulting from the coronavirus pandemic.

Small Business Shutdowns: Industries Hardest Hit

Up to this point, any declaration of when the pandemic will no longer have an impact on the global economy is pure speculation—and each research study draws its own conclusions. McKinsey & Company, for example, predicted that the economy could take more than five years to fully recover. The research firm defined “recovery” as a time when “the most affected sectors get back to 2019-level contributions to GDP.” The sectors predicted to take the longest to recover consist of businesses that are inherently difficult to practice social distancing—a practice that has been paramount in helping curb the spread of the disease. These industries aren’t predicted to make a full recovery (as defined above) until 2025 or later: 

  • Arts, entertainment, and recreation
  • Accommodation and food services
  • Mining, quarry, and oil/gas extraction

While the third category takes up just 27% of the small business share of sector GDP, arts, entertainment and recreation sits at 68%, while accommodation and food services ranks in the middle at 53%. 

The Silver Lining: How Businesses Benefited from the Shutdown

As rough as these past couple of years have been on the small business community, we’d be remiss not to mention the incredible resiliency and creative thinking that has emerged as a result of the economic shutdown. 

While some businesses pivoted to meet consumer demands online instead of in-person, others were busy revolutionizing products to better serve customer needs. Grocery stores became shopping fulfillment centers instead of in-shopping experiences. Some restaurants even began selling fresh groceries as a way to salvage product they were unable to use due to national shutdowns. 

There are countless inspiring stories (just like the few mentioned above) that have come out of a very dark time in our nation’s history. And if there’s one thing the COVID-19 pandemic has taught us, it’s to always look for the silver lining.  

Government Help for Small Businesses

Please note that the programs highlighted below are no longer available and this information is being provided for reference only.

In addition to stepping up to help individuals with more robust unemployment benefits, stimulus checks, and tax cuts—the United States Government has put programs in place meant to revitalize small businesses throughout the country.  

Paycheck Protection Program (PPP)

Perhaps the most widely known government support for small businesses during COVID was announced as part of the Trump Administration’s Coronavirus Aid, Relief, and Economic Security (CARES) Act. The economic stimulus bill—which included the Paycheck Protection Program (PPP)— was signed into law on March 27, 2020 as relief for individuals, families, and businesses impacted by the pandemic. 

The PPP, a $953-billion SBA-backed business loan program, allowed businesses to apply for private, low-interest loans to cover payroll and other related costs incurred during the shutdown such as rent, interest, and utilities. Perhaps the most enticing part of the Paycheck Protection Program was/is partial or full loan forgiveness for businesses that keep employee numbers and wages stable (see more in “PPP Loan Forgiveness” section below). Businesses were initially only able to apply for and receive funds once (“First Draw”), until the program was amended to allow for a second PPP loan (“Second Draw”).

Businesses that met the requirements for a PPP loan applied for the program through eligible lenders such as:

As of May 10, 2021, close to 11 million PPP loans were approved by 5,471 lenders for a total net dollar amount of $782,242,932,526. The program expired as of May 31, 2021. 

PPP Loan Forgiveness

As previously mentioned, one of the most compelling aspects of the Paycheck Protection Program was the prospect of Loan Forgiveness. When the CARES Act was signed into law and the PPP was announced, so was the potential for loan forgiveness. Small business owners who met certain terms, were not required to pay back PPP funds. 

To qualify for first- or Second-draw PPP loan forgiveness, borrowers were required to meet the following terms within 8-24 weeks following loan disbursement:

  • Employment numbers and compensation levels remain the same
  • All loan proceeds are used for payroll and other eligible expenses
  • A minimum of 60-percent of funds are spent on payroll costs 

In most instances, small business borrowers who sought PPP loan forgiveness applied for and received it through their original PPP lender. 

SBA COVID-19 Economic Injury Disaster Loan (EIDL)

Outside of the Paycheck Protection Program, low-interest disaster loans are available to qualifying businesses through the government’s Small Business Administration (SBA). These types of loans have always been available to the individuals and businesses that need them, but the agency’s COVID-19 EIDL program was created specifically to help during the coronavirus pandemic. 

According to, COVID-19 Economic Injury Disaster Loans “provide economic relief to small businesses and nonprofit organizations that are currently experiencing a temporary loss of revenue.”

Funding through the EIDL program is available in amounts up to $500,000 with the following terms:

  • 3.75% fixed for businesses
  • 2.75% fixed for nonprofits
  • 30 year repayment terms
  • No prepayment fees or penalties 

Unlike loans granted under the PPP, EIDL funds can be used for a variety of expenses including working capital and normal operating expenses. The program expired on December 31, 2021 for new applicants, and as of May 6, 2022 you can no longer request additional funds or application reconsiderations.

COVID-19 Targeted EIDL Advance

The Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act was signed into law on December 27, 2020. Part of that law included the COVID-19 Targeted EIDL Advance—a program that provided advanced funds up to $10,000 to applicants in low-income communities. The purpose of this program was to, “…provide businesses in low-income communities with additional funds to ensure small business continuity, adaptation, and resiliency.” 

New York Forward Loan Fund (NYFLF)

Depending on where your business operates, there are other government supported loan programs available to aid in the economic recovery process. For those residing in the state of New York, the New York Forward Loan Fund is a low-interest COVID relief loan program aimed at supporting New York State small businesses, nonprofits, and small landlords as they reopen during COVID-19.

Funding through the NYFLF can be used to cover expenses to help businesses stay open and fully functional throughout the pandemic. Examples of approved loan use include:

  • Working capital
  • Inventory
  • Marketing
  • Refitting to follow social distancing mandates
  • And more

Small businesses located in New York can apply for and receive NYFLF funding through a certified lender. According to the state’s website, 

“These loans are available to small businesses and nonprofits that did not receive a U.S. Small Business Administration Paycheck Protection Program of greater than $500,000 or an Economic Injury Disaster Loan (EIDL) for COVID-19 of greater than $150,000, and small landlords. The loans are not forgivable in part or whole. The loans will need to be paid back over a 5-year term with interest.” 

This iteration of the New York Forward Loan Fund is no longer available. If you own a New York-based business and meet the above-outlined qualifications, you can read more about the New York Forward Loan Fund here.

Finding Local Resources

While there are many government funding programs and grants available for COVID relief, you’ll also find support in your local area. Many county and city governments have offered relief funding for small businesses that can help you keep moving forward. Here’s how you can find local resources:

Talk to your chamber of commerce

Your local chamber of commerce is an excellent resource for new and available relief programs. Check out the website for your chamber of commerce to see what’s available, and consider becoming a member to stay up-to-date on the latest news and information.

Get in touch with your county

Find your local county’s website to see what information they have available for small businesses. If they’re offering any special programs or grant opportunities, you’ll like find this information on the website.

Talk to other small business owners

Your network of local small business owners are looking for the same information as you! Ask them about any new programs that are available or funding opportunities that they’ve found that could also help your business.

Search for online resource centers

Small business development centers (SBDCs), small business coaches, and even small business lenders, like Pursuit, have created COVID relief resource centers that list out programs available now. You can browse Pursuit’s COVID-19 Resource Center to find the latest programs and support to help you through this challenge.

Planning a Way Forward

No one can predict when a full “return to normal” will happen, or even if it will happen. What we do know? Small businesses are the lifeblood of America, and they have suffered the most direct impact from the COVID-19 pandemic and the resulting economic downturn. 

As a small business lender, we’ve worked closely with small business owners throughout this pandemic. We’ve seen firsthand how hard some of your businesses were hit, and have watched countless others shut their doors for good. 

For the businesses who survive this pandemic, three phases will be key to their long-term, continued success:

  • Respond: Dealing with the current situation and managing for continuity
  • Recover: Reflecting on and learning from what happened; and using those lessons to emerge stronger
  • Thrive: Preparing for what success looks and feels like in the “new normal.”

According to Deloitte, these phases will be paramount for any business to achieve full recovery from the impact of COVID-19. At this time in the evolution of its impact, the majority of businesses are in the “Recover” phase of this process. 

Even if recovery seems far off, there are steps you can be taking now:

  • ReflectWhere do you stand today? Take inventory of what’s happened over the last couple of years. You’ve likely had to pivot to accommodate the changing landscape, but what does that look like long-term? How has your day-to-day been impacted, and what are the implications across your entire workforce?
  • Restart — What can you do now? Now that you’ve taken a step back, it’s time to plan on managing your business going forward. Perhaps, most importantly at this stage, is figuring out if you need additional monetary assistance. For example, if you know cashflow is/has been an issue, create a list of priorities to help maximize it. This might mean seeking funding, such as an SBA Microloan, to get your business cash flow back on track. 
  • Revitalize — How can you shape your future? Things like sustainable growth, financial support, business efficiency, and long-term improvements should be analyzed at this stage. You should be identifying your next steps for growth, how you’ll secure financial support needed to meet your goals, how to increase operational efficiency, and where/how to improve your business in the short- and long-term.

Lessons Learned

The world’s collective struggle over the past few years has resulted in countless lessons learned. Businesses forced to pivot or shut down entirely. Business owners tasked with adapting in an ever-evolving economic situation.

For every story about a business having to shutter, is a story about recovery and hope. While we still have a long way to go, we can navigate the uncertainty of COVID-19’s remaining impact on the small business community together. 

To learn more about how Pursuit can help you and your business overcome these challenges, please visit our website or reach out for more information.

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