US: Coronavirus crisis ravages America's small businesses
Small businesses in the US have been hit hard due to COVID-19 which has infected over a million people in the country so far. According to a report in The Washington Post, the outbreak is emerging as an existential threat to small businesses in the country even though Congress last month approved USD 700 billion to support them.
According to a new study, more than 100,000 small businesses have closed since March, when the coronavirus crisis escalated. The study was conducted by economists at the University of Illinois, Harvard Business School, Harvard University and the University of Chicago.
The Washington Post reported that their latest data suggests at least 2 per cent of small businesses are gone, according to a survey conducted May 9 to 11. The restaurant industry has been hit harder with 3 per cent restaurant operators going out of business, according to National Restaurant Association even as analysts warn that this is just the start of "small-business bankruptcies and closures since the Great Depression".
"We are going to see a level of bankruptcy activity that nobody in business has seen in their lifetime," James Hammond, chief executive of New Generation Research, which tracks bankruptcy trends, was quoted as saying.
"This will hit everyone, but it will be harder for small businesses since they don't have a lot of spare cash." Only 4.2 million of 30 million small firms in the US have received loans from Small Business Administration with many small-business owners complaining that Congress' financial rescue is not designed well to help very small businesses.
American private-sector shed around 20.2 million jobs in April, the worst month on record, as per the report of Automatic Data Processing (ADP) National Employment earlier this month. According to the latest data from the Johns Hopkins University, US has so far reported 1,390,361 coronavirus cases while the death toll has surged past 80,000.
Worldwide, severe restrictions have been put in place to curb the spread of coronavirus, taking a toll on the economy. Last month, the International Monetary Fund (IMF) projected that the world economy is likely to contract sharply by "minus three per cent" due to coronavirus pandemic.