COVID-19 Surge Leaves Small Businesses On Edge

The new surge in COVID-19 cases nationwide raises concerns about the survival of small businesses.

As the omicron variant causes infections and hospitalizations to soar, President Joe Biden and a number of governors and mayors have vowed to avoid another shutdown.

In August, 57% of small businesses surveyed told Digital.com they expect to close permanently if faced with new shutdowns; 62% of those business owners said they were “barely hanging on” after the financial devastation of the first shutdowns.

Oklahoma reported a record 6,280 new COVID-19 cases on Thursday and rising hospitalizations, but small businesses are doing well.

“There was an immediate hit (with the onset of the pandemic), there was an immediate struggle, but we reopened rather quickly,” Kiley Raper, CEO of the Oklahoma Retail Merchants Association, said this week. “A lot of small businesses are telling me this was the best Christmas in a long time.”

Policies in other states that hamstrung businesses and kept them from reopening weren’t enacted in Oklahoma, she said.

“Our business owners are able to do what’s right for their business. Closures have been at a minimum,” Raper said. “Things are really looking up. A lot of these retailers who stayed engaged with their customers through online and curbside service are doing as well as ever.”

The biggest problem business owners have is finding quality people to hire, she said.

The current workforce shortage also is a challenge for restaurants, but even more problematic are supply chain issues and the cost of goods, said Jim Hopper, president and CEO of the Oklahoma Restaurant Association.

“Sales are up all over the state, but that doesn’t mean their profits are up,” Hopper said. “The cost of goods are up tremendously.”

If a case of chicken wings goes from $70 to $170, restaurants cannot raise their prices that much, he said.

“Every new variant creates a new uncertainty and people cancel reservations,” Hopper said. Fixed costs like rent, utilities, insurance and payroll stay the same no matter how many seats are filled.

The increase in carry-out business is probably here to stay, he said, which means restaurants with items that don’t travel well have to change their menu or risk losing business.

The U.S. has more than 6 million small businesses that collectively employ more than 61 million people, according to an October report from Business.org. If 10% closed, more than 6 million people would lose their jobs.

The report shows 715,603 people in Oklahoma are employed by small businesses, or 51.66% of the workforce. If 10% of those businesses close, 71,560 people would be out of work.

The U.S. Small Business Administration reported in November it had overseen the distribution of nearly $416.3 billion in emergency relief aid to more than 6 million affected small businesses, yet many continue to face uncertainty due to the pandemic.

Larry Weatherford with the SBA’s district office said in Oklahoma the Paycheck Protection Program provided 90,821 forgivable loans totaling $2.9 billion and 33,714 Economic injury Disaster Loans totaling $2.77 billion in 2021.

A report the Federal Reserve issued in April estimates the pandemic resulted in the permanent closure of 200,000 U.S. small businesses above historical normal levels during the first year of the outbreak, or about one-quarter to one-third more.

The report shows the smallest businesses closed at rates well above other size classes. These included full-service restaurants, personal care services, automotive repair and certain retailers.

A comparison in the report showed more than 30% of sit-down restaurants in New York City may have permanently closed during the 12-month period following the start of the pandemic. Oklahoma’s number is considerably lower – less than 5% – and even appears to be lower than the national rate of closure in a typical year, the report noted.