One-third of small businesses are relying on personal funds to stay afloat during the coronavirus pandemic and subsequent economic lockdown, according to new findings published Thursday.
A CreditCards.com report found that 35 percent of small business decision-makers said either they or their businesses’ owners have used their own money to help the business survive the crisis. That includes 24 percent who say they or the owners used a personal credit card and 21 percent who tapped a personal savings account since March.
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Still, small businesses also turned to other resources during the virus outbreak: About 30 percent of respondents said they applied for and received loans through the taxpayer-funded $670 billion Paycheck Protection Program. If at least 60 percent of the money goes toward maintaining payroll, the federal government will forgive it, essentially transforming it into a grant.
Another 24 percent said they accessed cash from a business savings card, while 20 percent used a business credit card for financing. Another 9 percent said they took out a different type of loan, the study found.
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But small businesses said they need more financial aid to ensure their survival: About 53 percent of small business decision-makers said they require more sales or another manner for assistance to remain in business through the end of the year. Nineteen percent of respondents said they want to see more government assistance.
“It’s such a tough time for small businesses,” said Ted Rossman, an industry analyst at CreditCards.com. “It’s commendable how far these dedicated business owners are willing to go in search of their dreams. I worry, however, about the debt they’re taking on, and how they’re potentially putting their personal finances at risk.”
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Democrats and Republicans are negotiating another round of virus relief, which will likely include additional assistance for hard-hit businesses. On Monday, Senate Majority Leader Mitch McConnell unveiled the Republicans’ HEALS Act, which, among other measures, would also the hardest-hit small business owners to receive a second PPP loan.
Under the plan, the aid would be limited to businesses with no more than 300 employees, down from the original 500-worker limit established in the CARES Act. A portion of the money would be set aside for businesses with fewer than 10 workers.
“We are now beginning to see that as the PPP funds are being exhausted, some companies are having to face once again the potential of having to lay off some of their workers. And so that’s why it is time for a second round of PPP assistance,” Sen. Marco Rubio, the Senate Finance Committee chairman, said Monday.
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