Then the virus hit. After the store closed to walk-in customers, she said sales dropped and she couldn’t cover rent. She emptied the shop around mid-May, moved her jewelry cases into storage, and dismissed her part-time employee. She’s making minimum payments on nearly $50,000 in loans.
“What if I want to have a mobile boutique and go buy a vehicle for that? Would I be able to get a loan?” Schner said.
To be sure, small business attrition is high even in normal times. Only about half of all establishments survive for at least five years, according to the SBA. But the swiftness of the pandemic and the huge drop in economic activity is hitting hard among typically upbeat entrepreneurs. About 58% of small business owners say they’re worried about permanently closing, according to a July U.S. Chamber of Commerce survey.
In a June 2020 NFIB survey, a net 31% of owners reported lower sales in the past three months, while 7% reported higher sales a year earlier. In the same survey, only 13% of business owners said it was a good time to expand, a dip from 24% a year earlier.
Jose Gamiz, 45, and Leticia Gamiz, 52, closed their restaurant in Glendale, Arizona on July 31. The bills started piling up, and while thousands in government loans helped, they weren’t taking in enough cash. They had four part-time employees.
It was too much of a gamble to keep Mi Vegana Madre open, Jose Gamiz said. The couple knew the dangers of taking risks after they lost the first house they bought during the 2008 crisis.
“We wanted to take that as a lesson,” Jose Gamiz said. “Sometimes it’s okay to let it go and not expend every penny.”
This article was provided by Bloomberg News.