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The evolving impacts of COVID-19 on small businesses since the CARES Act

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Abstract
This note provides new evidence on how small business owners have been impacted by COVID-19, and how these effects have evolved since the passage of the CARES Act. As part of a broader and ongoing project, we collected survey data from more than 8,000 small business owners in the U.S. from March 28th, one day after the CARES Act was passed, through April 20th. The data include information on firm size, layoffs, beliefs about the future prospects of their businesses, as well as awareness of existing government relief programs. We provide three main findings. First, by the time the CARES Act was passed, surveyed small business owners were already severely impacted by COVID-19-related disruptions: 60% had already laid off at least one worker. Second, business owners' expectations about the future are negative and have deteriorated throughout our study period, with 37% of respondents in the first week reporting that they did not expect to recover within 2 years, growing to 46% by the last week. Third, the smallest businesses had the least awareness of government assistance programs, the slowest growth in awareness after the passage of the CARES Act, and never caught up with larger businesses. The last finding indicates that small businesses may have missed out on initial Paycheck Protection Program funds because of low baseline awareness and differential access to information relative to larger firms.

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  • John Eric Humphries & Christopher Neilson & Gabriel Ulyssea, 2020. "The evolving impacts of COVID-19 on small businesses since the CARES Act," Cowles Foundation Discussion Papers 2230, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:2230
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    1. Béland, Louis-Philippe & Brodeur, Abel & Wright, Taylor, 2020. "The Short-Term Economic Consequences of COVID-19: Exposure to Disease, Remote Work and Government Response," IZA Discussion Papers 13159, Institute of Labor Economics (IZA).
    2. Adams-Prassl, Abi & Boneva, Teodora & Golin, Marta & Rauh, Christopher, 2020. "Inequality in the impact of the coronavirus shock: Evidence from real time surveys," Journal of Public Economics, Elsevier, vol. 189(C).
    3. Alexander W. Bartik & Marianne Bertrand & Zoë B. Cullen & Edward L. Glaeser & Michael Luca & Christopher T. Stanton, 2020. "How Are Small Businesses Adjusting to COVID-19? Early Evidence from a Survey," NBER Working Papers 26989, National Bureau of Economic Research, Inc.
    4. Cao, Shutao & Leung, Danny, 2020. "Credit constraints and productivity of SMEs: Evidence from Canada," Economic Modelling, Elsevier, vol. 88(C), pages 163-180.
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    As found on the RePEc Biblio, the curated bibliography for Economics:
    1. > Economics of Welfare > Health Economics > Economics of Pandemics > Specific pandemics > Covid-19 > Economic policy > Business support

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    Cited by:

    1. Alejandro Fernández-Cerezo & Beatriz Gonzalez & Mario Izquierdo Peinado & Enrique Moral-Benito, 2023. "Firm-level heterogeneity in the impact of the COVID-19 pandemic," Applied Economics, Taylor & Francis Journals, vol. 55(42), pages 4946-4974, September.
    2. Iva Gregurec & Martina Tomičić Furjan & Katarina Tomičić-Pupek, 2021. "The Impact of COVID-19 on Sustainable Business Models in SMEs," Sustainability, MDPI, vol. 13(3), pages 1-24, January.
    3. Nicola Acocella, 2022. "Rediscovering Economic Policy in Europe?," Review of Economics and Institutions, Università di Perugia, vol. 13(1-2).
    4. Muhammad Rehan & Jahanzaib Alvi & Süleyman Serdar Karaca, 2022. "Short Term Stress of Covid-19 on World Major Stock Indices," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 29(3), pages 527-568, September.
    5. Hewa-Wellalage, Nirosha & Boubaker, Sabri & Hunjra, Ahmed Imran & Verhoeven, Peter, 2022. "The gender gap in access to finance: Evidence from the COVID-19 pandemic," Finance Research Letters, Elsevier, vol. 46(PA).
    6. Magdalena Olczyk & Marta Ewa Kuc-Czarnecka, 2021. "Determinants of COVID-19 Impact on the Private Sector: A Multi-Country Analysis Based on Survey Data," Energies, MDPI, vol. 14(14), pages 1-17, July.
    7. Sumedha Gupta & Laura Montenovo & Thuy Nguyen & Felipe Lozano‐Rojas & Ian Schmutte & Kosali Simon & Bruce A. Weinberg & Coady Wing, 2023. "Effects of social distancing policy on labor market outcomes," Contemporary Economic Policy, Western Economic Association International, vol. 41(1), pages 166-193, January.
    8. Li, Meng, 2021. "Did the small business administration’s COVID-19 assistance go to the hard hit firms and bring the desired relief?," Journal of Economics and Business, Elsevier, vol. 115(C).
    9. Sabar, Parisa & Rasa, Mohammad Mirwais, 2021. "Impact of COVID-19 on Women-Led SMEs in Kabul: Linking and Understanding their Role in Trade and Empowerment," MPRA Paper 122511, University Library of Munich, Germany, revised 08 Oct 2024.
    10. Cirera, Xavi & Comin, Diego & Cruz, Marcio & Lee, Kyung Min & Torres, Jesica, 2022. "Technology and Resilience," CEPR Discussion Papers 16885, C.E.P.R. Discussion Papers.
    11. Ana Sequeira & Cristina Manteu & Nuno Monteiro, 2020. "O impacto de curto prazo da pandemia COVID-19 nas empresas portuguesas," Working Papers o202003, Banco de Portugal, Economics and Research Department.
    12. Anna Cororaton & Samuel Rosen, 2021. "Public Firm Borrowers of the U.S. Paycheck Protection Program [The risk of being a fallen angel and the corporate dash for cash in the midst of COVID]," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 10(4), pages 641-693.
    13. Cong, Lin William & Yang, Xiaohan & Zhang, Xiaobo, 2021. "SMEs Amidst the Pandemic and Reopening: Digital Edge and Transformation," Applied Economics and Policy Working Paper Series 317045, Cornell University, Department of Applied Economics and Management.
    14. John Gallemore & Stephan Hollander & Martin Jacob, 2020. "Who CARES? Evidence on the Corporate Tax Provisions of the Coronavirus Aid, Relief, and Economic Security Act from SEC Filings," Working Papers 2020-81, Becker Friedman Institute for Research In Economics.
    15. Onjewu, Adah-Kole Emmanuel & Olan, Femi & Nyuur, Richard Benon-be-isan & Paul, Salima & Nguyen, Ha Thanh Truc, 2023. "The effect of government support on Bureaucracy, COVID-19 resilience and export intensity: Evidence from North Africa," Journal of Business Research, Elsevier, vol. 156(C).
    16. Laura Alfaro & Oscar Becerra & Marcela Eslava, 2020. "EMEs and COVID-19 Shutting Down in a World of Informal and Tiny Firms Laura Alfaro, Oscar Becerra y Marcela Eslava," Documentos CEDE 18193, Universidad de los Andes, Facultad de Economía, CEDE.
    17. Olivia S. Kim & Jonathan A. Parker & Antoinette Schoar, 2020. "Revenue Collapses and the Consumption of Small Business Owners in the Early Stages of the COVID-19 Pandemic," NBER Working Papers 28151, National Bureau of Economic Research, Inc.
    18. Laura Alfaro & Oscar Becerra & Marcela Eslava, 2020. "Economías emergentes y COVID-19 Cierres en un mundo de empresas informales y pequenas," Documentos CEDE 18205, Universidad de los Andes, Facultad de Economía, CEDE.
    19. Laura Alfaro & Oscar Becerra & Marcela Eslava, 2020. "EMEs and COVID-19: Shutting Down in a World of Informal and Tiny Firms," NBER Working Papers 27360, National Bureau of Economic Research, Inc.
    20. Lei Li & Philip E. Strahan & Song Zhang, 2020. "Banks as Lenders of First Resort: Evidence from the COVID-19 Crisis," NBER Working Papers 27256, National Bureau of Economic Research, Inc.
    21. Victor Chidubem Iwuoha & Ernest Toochi Aniche & Charles Arinze Obiora & Uchenna T. Umeifekwem, 2021. "Citizens lack access to healthcare facilities: How COVID‐19 lockdown and social distancing policies boost roadside chemist businesses in South‐Eastern Nigeria," International Journal of Health Planning and Management, Wiley Blackwell, vol. 36(6), pages 2411-2423, November.
    22. Doniger, Cynthia L. & Kay, Benjamin, 2023. "Long-lived employment effects of delays in emergency financing for small businesses," Journal of Monetary Economics, Elsevier, vol. 140(C), pages 78-91.
    23. Robert P. Bartlett III & Adair Morse, 2020. "Small Business Survival Capabilities and Policy Effectiveness: Evidence from Oakland," NBER Working Papers 27629, National Bureau of Economic Research, Inc.
    24. Ayodotun Stephen Ibidunni & Adebanji William Adejuwon Ayeni & Oyedele Martins Ogundana & Bisayo Otokiti & Lerato Mohalajeng, 2022. "Survival during Times of Disruptions: Rethinking Strategies for Enabling Business Viability in the Developing Economy," Sustainability, MDPI, vol. 14(20), pages 1-14, October.

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    More about this item

    Keywords

    COVID-19; Small business; CARES Act;
    All these keywords.

    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • H0 - Public Economics - - General
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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