As COVID-19 keeps people at home and away from their enterprises, the number of small business owners who are at risk of closing up shop is at unprecedented levels. Although this sector is an integral part of the U.S. economy, non-essential businesses have been forced to modify or cease operations in attempts to slow the global health crisis. The financial strain on small business owners, however, is a crisis in its own right.
“Sorry, We’re Closed.”
Long before the COVID-19 outbreak, small businesses were a substantial part of the country’s economy, generating 44% of U.S. economic activity.⁵ Today, their output is waning precipitously:
- More than 8 in 10 small businesses are concerned about the impact of COVID-19 on their business, with 58% being very concerned²
- 54% of all small businesses are closed or expect to close within the coming weeks²
- 43% of small business owners believe they have less than six months until a permanent shutdown is unavoidable,² and one in ten have less than a month
Government Programs Provide Temporary Relief
In response to the economic impact caused by the pandemic, the federal government passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Among its many provisions is a stimulus package designed for small business recovery. The Small Business Association (SBA) and their partnership with the nation’s lenders have been tasked with delivering critically needed financial assistance, including:
- Paycheck Protection Program – a loan to keep employees working that doesn’t have to be repaid if the workers remain on the payroll for at least eight weeks
- Economic Injury Disaster Loan – an advance of up to $10,000 to make up for a temporary loss of revenue that doesn’t need to be repaid
- Express Bridge Loan Pilot Program – loans of up to $25,000 to small businesses that have an existing relationship with an SBA Express Lender
- Debt relief – six months of forgiven principal, interest, and any associated fees that borrowers owe for all eligible loans
Delays are anticipated, so small business owners are expected to turn to lines of credit to cover costs in the interim. Yet a small business owner’s lack of credit knowledge and no established credit history can be a handicap to obtaining what they need:
- 42% of small businesses have no credit file or credit history⁶
- 72% of business owners don’t know their business credit scores⁶
- 42% of business owners who apply for financing are denied due to insufficient credit⁶
Additionally, even before COVID-19, small businesses were increasingly targeted by cyber criminals. They have lots of valuable data but lack the robust security infrastructure that larger companies possess to protect that data. In fact, the FBI recently issued a warning about the increase in cyber threats and fraud amid the COVID-19 pandemic7.
Small business owners are actively seeking assistance at this crucial time:
- 29% would like more guidance on how to keep their customers and employees safe²
- 26% want help on how to respond to the crisis²
Small Business Solutions from Experian Can Help
This is an opportunity for firms to provide their small business clients with business credit and identity protection solutions that can help them gain access to credit and protect against fraud during this critical time. Firms that do will see increased engagement with those clients and improved retention over the long-term.
With Experian’s Small Business Solutions, clients will have access to essential resources:
- Experian and Dun & Bradstreet credit file creation
- Business credit monitoring, identity protection, and fraud restoration assistance
- Business credit education center, so clients can learn about the unique factors that power their business credit score
Experian also offers identity theft alerts and dark web internet surveillance technology. Experian’s Business CyberAgent® scours websites, messaging services, blogs, bulletin boards, peer-to-peer sharing networks and IRC chat rooms to identify the illegal trading and selling of business information. Live customer service experts are ready to help small business owners manage and understand their credit concerns, as well as resolve any identity theft issues that arise.
Giving small business clients valuable assistance to protect their financial health in this time of crisis can not only create additional touch points with brands, but can be a saving grace. This generates long-term goodwill and, ultimately, client loyalty. As COVID-19 continues to wreak havoc, small businesses can use all the help they can get.
¹ NSBA, Small Business Poll, March 2020
²US Chamber of Commerce, Special Report on Coronavirus and Small Business, April 2020
³ CBA, Statement on SBA Small Business Stimulus Program
⁴WSJ, Big Banks Favor Certain Customers in $350 Billion Small-Business Loan Program, April 2020
⁵SBA, Small Businesses Generate 44 Percent of US Economic Activity, January 2019