IN THIS ISSUE:
1. Overview: 20%-30% of Small Businesses Could Fail
2. Fast Facts Regarding Small Businesses & Role They Play
3. Another 6.6 Million Americans Filed For Unemployment
4. Half of Small Businesses Can’t Survive Past 1-3 Months
5. Goldman Sachs Now Says Stock Market Has Bottomed
Overview: 20%-30% of Small Businesses Could Fail
While this may not come as a surprise, many US small businesses that are shuttered right now face a financial disaster. Unfortunately, it is becoming increasingly clear that millions of small businesses may not be able to reopen their doors when the economic lockdown ends.
Karen Mills, the previous head of the US Small Business Administration (SBA), said on April 4 that “20%, even 30%, of small businesses could fail even in a good scenario.” She warned that without immediate support to buffer the cash flows of stalled businesses waiting for the economy to reopen, it is a matter of days until millions of companies begin to shut their doors permanently – driving unemployment up significantly and sending the economy into a tailspin.
Small businesses make up over 90% of US businesses, employ almost half of the American workforce (over 60 million people), create over 60% of new jobs and account for almost half of GDP. If 20%-30% of small businesses go under just ahead, we’re looking at a Depression!
It remains to be seen if the new “Paycheck Protection Program,” included in the latest $2.2 trillion stimulus bill, can ramp up fast enough and expand sufficiently to avert this small business crisis. Every American should be very concerned about this, so that’s what we’ll talk about today.
While today’s discussion about the financial crisis facing millions of small businesses is admittedly depressing, we all need to be aware what is happening and the possible ramifications. Fortunately, I’ll end today’s discussion on a positive note with a new prediction from Goldman Sachs.
Before we get to that discussion, I want to briefly discuss last Thursday’s huge unemployment claims report, and the announcement the same day by the Fed that it plans to inject another $2.3 trillion of stimulus into the economy just ahead.