Revenue at small businesses dropped by more than half in the second quarter, according to a Biz2Credit study.
The Small Business Financial Health Survey surveyed 300 small businesses owners who received funding through the Paycheck Protection Program. Respondents reported that average revenue declined by 52% in the second quarter from a year earlier, according to a press release. The respondents also said that they cut payroll by an average of 54% year over year.
“Until now, there [h]as been no attempt to quantify the effects of coronavirus among the businesses that applied for PPP money,” Biz2Credit CEO Rohit Arora said in the press release on Tuesday. “These figures tell us just how dramatically their fortunes fell from 2019 to 2020.”
The restaurant industry felt some of the hardest blows with second-quarter revenue dropping 72% compared to the same quarter last year. Even online and takeout orders dipped 38%.
On average, restaurants will need to invest $52,106 in personal protective equipment, according to the study. Compared to other sectors, that's roughly 78% more in PPE expenses.
“A lot of small business owners were caught between a rock and a hard place; they had little money coming in, yet they had obligations to pay,” Arora said. “Everyone suffered. After all, many times the landlords themselves do not have deep pockets and rely on their rental income to survive.”
Limited liability companies posted a 90% dip in revenue and a 62% drop in number of employees. Data from the Department of Labor shows that around 51 million Americans were unemployed in mid-July.
The survey’s findings illustrate the tough environment that small businesses are facing because of the coronavirus pandemic. Only one in five companies successfully secured rent deferrals or discounts with landlords, meaning that many small businesses were stuck paying full rent, the study found.
Five million small businesses have received more than $521 billion in PPP funding since the program was created in April.
