Data Dialogue: The Economic Impacts of COVID-19 on Small Business

May 29, 2020

On May 13, 2020, the JPMorgan Chase Institute held a virtual panel discussion on the economic impacts of COVID-19 on U.S. small businesses. The Data Dialogue convened experts from the National Federation of Independent Business (NFIB), Harvard Business School, and Accion to discuss how small businesses are faring in the current environment, the continually evolving policy response, and what can be done to promote and accelerate small business recovery.

Diana Farrell, President and CEO of the JPMC Institute, opened the conversation by sharing insights from Institute research, including that most businesses have irregular cash flows and limited cash liquidity, which are critical predictors of small business survival. Fifty percent of small businesses pre-COVID were operating with fewer than 15 cash buffer days – the number of days of typical outflows a business could pay out of its cash balance in the event of a disruption to inflows.  Chris Wheat, Director of Business Research at the JPMC Institute, moderated the panel discussion and raised questions regarding short and long-term small business assistance, programs and policies that would be most helpful to small businesses, and equitable recovery and opportunities for targeting relief, including to minority-owned small businesses. 

Holly Wade, Director of Research and Policy Analysis at NFIB, discussed results of the organization’s Small Business Economic Trends data. The most recent survey showed optimism fell to one of the lowest levels in years, close to numbers of the Great Recession, and sales expectations for the next three months hit a historic survey low. In comparison, during a 2019 panel hosted by the Institute, Wade highlighted 2018 as the highest average optimism year in the history of the survey and noted that optimism in 2019 remained above the survey’s historical average. Among NFIB members, current concerns include making sure they are equipped to operate in compliance with state and local regulations, finding ways to connect with new customers while maintaining existing relationships, and communicating effectively with their employees. In terms of policy solutions, Wade proposed increasing the flexibility around the use of Paycheck Protection Program (PPP) loan dollars for small businesses to best meet their unique operational needs.

Holly Wade

Executive Director, NFIB Research Center at National Federation of Independent Business (NFIB)

Karen Mills, Senior Fellow at Harvard Business School and former Administrator of the U.S. Small Business Administration noted how JPMC Institute research has shown very low cash buffers among small businesses. Mills highlighted how the one million small businesses in America’s supply chain have fared differently than mainstream customer-facing establishments and that ensuring these businesses are paid on time is important. Additionally, small businesses previously hesitant about technological changes are giving more thought to long-term investments and also reflecting on business inefficiencies. Mills noted that these learnings may promote opportunities for some acceleration in small business recovery. Regarding the heterogeneity among small businesses, she highlighted the importance of understanding each segment of the sector in order to pinpoint problems and craft more effective policies.


Karen Mills

Harvard University

Brad McConnell, CEO of Accion Serving Illinois and Indiana, highlighted how the organization is currently addressing the needs of thousands of small businesses through grants and loans. He noted the average small business served by Accion has three to four employees, so the focus of relief has been sized based on revenue as opposed to payroll, and that disaggregating the multiple problems facing small businesses right now helps the organization develop better solutions. McConnell added that the overwhelming majority of small business owners must operate with a “crisis mentality” right now, focused less on longer-term investments and more on survival by finding ways to increase revenue, reduce expenses, and manage cash efficiently. He advocated for sizing the delivery of more capital to business owners based on revenue, and for helping to cover the costs of occupancy since that is often one of the largest contractual expenses for small business who are struggling.

Brad McConnell

CEO, Accion Serving Illinois & Indiana

We thank all of the presenters and attendees who participated in the Institute’s Data Dialogue event and look forward to continued engagement.

Viewpoints of our panelists are their own and not representative of their organizations.

This event is part of the Institute’s “Data Dialogue” engagements, an ongoing series of conversations with leading experts, policymakers, business and nonprofit leaders linking research with important policy topics of the day.