The Partnership’s second Business Impact Survey reveals an increasing number of businesses are feeling negative effects from the economic shocks caused by the COVID-19 pandemic.
Changes from Survey 1
The Partnership’s second Business Impact Survey reveals an increasing number of businesses are feeling negative effects from the economic shocks caused by the COVID-19 pandemic. Of the 214 Central Florida businesses surveyed, 87 percent indicated they have been negatively impacted by the global crisis. This is an increase of 13 percentage points from the first survey where 74 percent of businesses said the same. Similarly, 86 percent of companies surveyed are experiencing a decline in profits, up from 76 percent in survey one.
This increase was expected as impacts from the economic shock come in waves. While restaurants, bars, the event industry etc. felt the immediate consequences of necessary social distancing policies, national data is beginning to reveal a second wave of effects as business services such as lawyers, contractors, health workers not fighting the virus, have fewer projects and less work.
The results of the business impact survey follow these same trends. Survey one, open for responses in mid-March, indicated that 22 percent of businesses were still uncertain as to the impacts of the crisis on their business. This number dwindled to eight percent for survey two, which was open for responses in early April. As the number of business negatively affected by the virus increases, so too have the number of strategies taken by companies to combat lessened spending and investment. In survey one, the most often selected strategy for dealing with impacts was layoffs or reduced hours. More than half of businesses surveyed (55 percent) selected this option, with the next highest tactic being delayed investment projects at 40 percent (respondents could select more than one strategy). In survey two, these were still the top strategies utilized, but with much closer margins. Now, 48 percent of companies surveyed say they have laid off or reduced hours and 46 percent indicated they have delayed an investment project.
|Survey Release||Open Date||Close Date||Negatively Impacted||Decline in Profits||Exhausted Cash Reserves||Layoffs or Reduced Hours|
|No. 1||March 19||March 25||74%||76%||3%||55%|
|No. 2||April 9||April 15||87%||86%||9%||48%|
Lastly the number of businesses who had exhausted their cash reserves increased from three percent to nine percent during the three weeks between the close of survey one and close of survey two. Considering only small businesses that employ between two and 99 people, the percent of respondents who had depleted cash on-hand increased from four to 12 percent, further emphasizing the drastic toll this pandemic has taken on small businesses.
This second installment of the Business Impact Survey included new questions related to recovery needs. Overwhelmingly, the most critical expense respondents must cover to maintain their business is labor costs, with 57 percent selecting payroll and operating expenses coming in second place with 22 percent. This falls in line with the most utilized relief program, the Paycheck Protection Program (PPP), passed by the Federal Government as part of the CARES act. Just under half (49 percent) of respondents surveyed indicated that they had applied for relief through the PPP. However, on April 16, the day after survey two closed, the U.S. Small Business Administration (SBA) announced that the $349 billion set aside for the PPP program had been exhausted. Some banks are still taking applications, so that the business may be entered into a que for funds once Congress approves additional funding. For more information and a list of SBA lenders still accepting applications, visit the Partnership’s COVID-19 Resource Center.
Approximately 36 percent of businesses surveyed indicated that they had not applied for any form of relief, but not because they are immune from the economic shocks. These businesses were still experiencing declines and engaging in layoffs, according to the survey data. However, they have more cash on hand, 72% have cash reserves to sustain their business for 13+ weeks, and 40 percent of these respondents employ more than 500 people in Central Florida. In order to apply for the PPP, the company must employ less than 500 people.
More research is needed to understand the barriers Central Florida businesses are facing when it comes to applying for and receiving funds, this will be a focus of the third Impact Survey, set to open for responses on April 30.