Half Of the Small Businesses Haven’t Paid Full April Rent, Early Poll Suggests
About half of U.S. small businesses hadn’t paid their April rent or mortgage in full by the third of the month as uncertainty spiked during the coronavirus pandemic shutdown, according to a Wall Street Journal survey.
More than 30 million small businesses in the U.S. employ 47.3 percent of the private workforce, according to the U.S. Small Business Administration.
Treasury Secretary Steven Mnuchin said that loans would be available for small businesses as part of the $2 trillion federal stimulus package. Applying is a “very simple process” Mnuchin said on March 25. Loans will be available by the end of next week that can be made and dispersed the same day.
However, the SBA website crashed under heavy usage and many users were unable to complete loan applications, New York Times reported. Those who did were told that they will take at least three weeks to process.
An estimated $20 billion in monthly retail real estate rents are due in April, according to Marcus & Millichap, a commercial real estate services and consulting firm.
About half of the 1,000-plus survey respondents in a Wall Street Journal survey, which included owners of restaurants, auto-repair, retail and other small businesses hiring up to 50 people, reported paying their entire April rent or mortgage payment.
Another 30 percent of the companies reported making no rent or mortgage payment and 20 percent said they had made a partial payment. The survey was conducted on Thursday, March 2 and Friday, March 3 for WSJ by Alignable, a small business social networking company.
By not paying rent, small businesses could set off a financial chain reaction that could inflict heavy damage on landlords, Will Parker wrote for WSJ.
Listen to GHOGH with Jamarlin Martin | Episode 70: Jamarlin Martin Jamarlin goes solo to discuss the COVID-19 crisis. He talks about the failed leadership of Trump, Andrew Cuomo, CDC Director Robert Redfield, Surgeon General Jerome Adams, and New York Mayor de Blasio.
In a 2018 survey conducted by software and business-services provider Womply, 21 percent of small businesses said they would fail after a month without any cash flow. An additional 34 percent said they couldn’t last more than one to three months.
Many types of businesses and mom-and-pop operations are at a standstill, with reduced foot traffic and orders to stay at home making it impossible to continue running.
The federal aid package’s $349 billion Paycheck Protection Program is administered by banks and the Small Business Administration. It offers bank loans that are forgiven and reimbursed if the participating business keeps workers on the payroll. The loan forgiveness includes the owners’ fixed costs such as rent, insurance and utilities, giving them a chance to weather the economic crisis and not close their doors forever, according to Governing.com.