How Badly are Small Businesses Being Hurt?
In an interesting study conducted by JPMorgan Chase, the financial giant determined that most small businesses rebounded by the end of April after a tough couple of months. It made this determination by assessing the average cash reserves of small businesses, noting that cash reserves, revenues and expenses are the equivalent of a human’s pulse, respiration and blood pressure vital signs.
JPMC ascertained the following:
Finding 1: Typical small business cash balances dropped 12.7 percent after the onset of COVID-19, but rebounded by the end of April.
Finding 2: Small business cash balances declined in every city, and most steeply in Atlanta, where balances decreased by 21 percent.
Finding 3: Small business cash balances and revenues declined across industries, with wide variation in the severity; restaurants and personal services were particularly hard hit.
Finding 4: Cash balances of Black-owned firms decreased by 26 percent, and revenues of Asian-owned firms declined by more than 60 percent.
The takeaway from this study appears clear. On the surface businesses generally have been able to stabilize themselves in what can most optimistically be described as a period of economic limbo. But how they’ve stabilized may have further negative consequences. And more so, a study like this is deaf to the anecdotal evidences of real, day to day hardships.
To read JMPC’s report on its study, click here.
