A new report finds that the biggest casualty of Covid lockdowns across the nation was small businesses.
The report says that 26% of all small businesses in Missouri closed, with an unknown number stressed or near closing.
The data was revealed during a Missouri Department of Economic Development webinar.
“Small businesses were hit hard during COVID and they are struggling to recover,” said Jeff Pinkerton, director of economic research at the DED. “Revenues for small businesses in Missouri are down about 17% and we lost about 26% of small businesses, but these numbers are better here than nationally. … Despite those numbers being pretty alarming, we’re hoping we will see that turn around in the future as the economy continues to open up and people feel more confident.”
Economists at the Federal Reserve released a preliminary study in April revealing 200,000 business establishments in the U.S. closed permanently during the pandemic. Another study estimated the pandemic loss at 400,000.
Greg Tucker, state director of the Small Business Development Centers said it was startling news but saw hope on the horizon.
“The 26% loss is terrible news,” Tucker said during the webinar. “We are seeing a very high rate of new startups across the state. We are counting on them to fill some of those voids. One of the things we learned about Missouri’s entrepreneurs is that if they fail, they often come back and try something else. We are starting to see some of that.”
Tucker reviewed a 12-month timeline showing the development of programs and the distribution of billions of dollars of federal relief to Missouri’s small businesses. He said the Small Business Administration made more loans in the last year than during its previous 67-year history.
“Missourians are typically a little averse to taking on debts,” Tucker said. “Missouri small businesses don’t often take the lead in borrowing.”
Missouri – the country’s 18th most populous state – was 21st in the nation in the number of Paycheck Protection Program (PPP) forgivable loans (91,498) received and 26th for the dollar amount ($9.1 billion).
“As time passed, these programs became more accepted,” Tucker said.
Missouri now ranks 10th in the number of PPP loans and 19th in dollar amount. The average loan decreased from $150,000 to $40,000.
“That tells us the money is getting to small businesses in our communities,” Tucker said.
More federal funds are being considered for PPP and the Restaurant Revitalization Fund, which distributed $26.5 billion during the first 21 days of the program. Tucker encouraged small businesses to monitor the infrastructure bill in the U.S. Congress and be aware of any opportunities in the American Rescue Plan Act of 2021, passed in March.
Missouri is emerging from the pandemic economic recession faster than the rest of the nation. The state’s growth in gross domestic product was 5.6% in the fourth quarter of 2020, compared to the national rate of 4.3%. The annualized growth rate of 5.6% was 11th-highest in the nation.
“We hit an important turning point with the widespread availability of the vaccines,” Dixon said. “We didn’t really want to look back at the year that was. More importantly, let’s look at the year ahead and what is going to come.”