SMBs

Exile On Main Street: Six Months Into COVID, SMBs Signal Optimism

small business reopening

America is reopening, with consumers and businesses popping out like the buds of May, only five months late. As the COVID-19 summer turns to fall, a seasonal checkup is in order.

Pandenomics: Main Street’s Six-Month Checkpoint is the latest in PYMNTS’ survey series of U.S. consumers and businesses taken through the duration of this world-shaking crisis.

If you’re expecting the next few words to be more downer COVID news, think again.

New data collected on nearly 500 Main Street small and medium-sized business (SMB) respondents from across the U.S. from Aug. 6 through Aug. 10 suggests operators are more confident about chances of survival now than they were in spring, even though the pandemic is lasting far longer than almost anyone imagined.

It’s a welcome (if not somewhat confusing) sign that a recovery is slowly coming together.

“Main Street SMBs are generally more confident now than they were in March. Fifty-four percent of all SMBs now say they feel confident that they will be able to stay open through the end of the pandemic, yet just 42 percent felt the same in March,” per the new study.

It’s “more than a feeling,” in the words of classic rock band, Boston: “24 percent of all SMBs say their financial situation has improved since two weeks into the pandemic when it was declared in March. We found that 65 percent of SMBs say their finances have gone largely unchanged and 12 percent say their financial situations have deteriorated since then.”

Granted, many of those feeling upbeat now went into the pandemic on a better footing than the pessimists. Regardless, new data indicates that more Main Street SMBs are making it.

Don’t Count Them Out Just Yet

An unexpected finding from the August survey is a sense of resilience among businesses that were seen as being on the ropes as recently as two months ago. For example, “Sixty-one percent of all restaurants and 61 percent of all construction firms are confident they are not at risk of closing before the pandemic ends,” according to Main Street’s Six-Month Checkpoint.

Conversely, only 44 percent of professional service firms feel that positive. “Retail trade firms and manufacturing are also on less steady ground than restaurants and construction firms, with 53 percent saying they are sure they will be able to remain open through the end of the pandemic,” per the report.

There’s also the cash flow crisis, common to all SMBs in 2020, and nowhere more than on Main Street, with its heavy reliance on foot traffic, visual merchandising and in-store specials.

“This cash flow shortage is widespread, even among firms that do not feel as though they are at risk of closing before the pandemic is over,” the new study found, adding that “67.5 percent of these firms said they do not have enough funds to stay open for longer than a month if their cash flow is interrupted,” as did and 79.1 percent of Main Street SMBs.

More SMBs Paying Their Bills A Good Sign

Ambiguity still hangs over Main Street SMBs, thousands of which will be lost to the pandemic. And 62 percent of Main Street SMBs that are not at risk, whose financial stability has not changed dramatically, said the pandemic has nonetheless decreased revenues sharply.

That’s the bad news.

On the other hand, Main Street’s Six-Month Checkpoint found that even though estimates for how long the pandemic will last have grown considerably since March, many respondents report that the SMB situation on Main Street is dire, though not necessarily disastrous.

“One aspect of Main Street SMBs’ finances appears to have improved since March: their ability to pay their bills. The share of Main Street SMBs that have not paid their suppliers, rent or other monthly bills has decreased since May,” per the new report.

Finding that 8 percent of Main Street SMBs were not able to pay suppliers in August, that’s still 2 percentage points better than the 10 percent who said the same in May.

Additionally, “Main Street SMBs have also gotten better about paying their rent and other monthly bills. Only 8 percent of Main Street SMBs did not pay rent in August, whereas 13 percent did not pay rent in May. Only 6 percent of Main Street SMBs report not paying their other monthly bills now, yet 12 percent of Main Street SMBs did not pay their monthly bills back in May,” the report states.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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