The Urban Labs Poverty Lab at the University of Chicago recently released a study regarding the impact of COVID-19 to small businesses in Chicago. The Poverty Lab reached out to IRMA for its input and help in encouraging members to respond to the survey. The Poverty Lab was most interested in determining the impact of grant and loan programs at both the federal and local level to the business. The study was actually conducted fairly early on during COVID, so it is a snapshot of what the immediate impact was of the virus. The state’s Stay-At-Home order went into effect just one month prior to the initiation of the study and the order ended a clear 30 days after the study was completed. The study reveals the devastating blow felt by employers all over the city who trimmed, on average, 50% of their workforce while at least 50% of small businesses closed completely during the order. By the end of the study, close to 40% of small businesses had already missed a rent payment for their business, and about the same number were expect to miss at least an additional payment. This not only shows the impact on the revenues of small business, but highlights the impact to the commercial finance industry.
Retail stores and restaurants and bars tended to fare worse than other categories of employers with those industries missing their rent payments by 51% and 53% respectively. Overall, regardless of industry, minority-owned businesses fared the absolute worst. They generally had less cash on hand for emergencies than their majority counterparts, they had to lay off more full-time workers, more of them missed rent payments and minority business owners had the most trouble applying for and securing federal PPP loans.
Moreover, employers indicated that they often didn’t know what financial help was available, which entities offered help, and how to apply for the help. This seems to make the case for the important role that trade associations like IRMA pay in helping their members find resources in times of crisis. We encourage you to tell other business owners about the everyday value of membership and the absolute importance of having a voice with government officials at this critical time in our economy.
You can link to the study here.