Small businesses are the backbone of the US economy. They don’t get as much respect, attention, and federal support as large corporations. But they employ nearly half of the US workforce. Small businesses across the country are in distress due to the COVID-19 pandemic. They have been forced to temporarily shut their doors. Small businesses in some states have been more affected than others. Here we take a look at the top ten states where small businesses are hurt the most due to the coronavirus pandemic.
Many small businesses have adapted to the new reality by getting their employees to work from home. But that’s not possible for a wide variety of businesses such as mom and pop retailers and gas stations. A large number of small businesses have been forced to lay off their employees. The total number of unemployment claims in the US has skyrocketed to 22 million.
President Trump had announced a $350 billion emergency loan program for small businesses as part of the $2 trillion economic relief package. The massive loans were supposed to help small businesses keep their employees on payrolls. The $350 billion package was a first-come, first-served Paycheck Protection Program.
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However, the US Small Business Administration said Thursday that the emergency loan program has run out of funds. By Wednesday, April 15th, the SBA had approved 1.3 million loans worth $296 billion. It exhausted the funds on Thursday while thousands of small businesses across the country still hadn’t received emergency loans.
It shows how badly the small businesses are hurt due to the lockdown. The government has urged the Congress to approve an additional $250 billion for small businesses.
According to a survey conducted by personal finance website WalletHub, a staggering 87% small business owners said their business was hurting from the COVID-19 pandemic. More than one-third of small business owners said their business wouldn’t last more than three months in the current health and economic conditions.
To rank states where small businesses are hurt the most, WalletHub compared all the 50 states and the District of Columbia based on 12 metrics such as small business credit conditions, the percentage of small businesses engaged in high-risk sectors, and the state’s small business friendliness.
Ranked: States where small businesses are hurt the most
10- North Dakota
The number of confirmed coronavirus cases in North Dakota is not as high as in many other states. It has only 393 cases, of whom 163 have recovered. But the state gets ridiculously low amount of federal funding for small businesses. North Dakota received a total score of 56.52. It ranked 12th for business environment & workforce support conditions, and 18th for impact and access to resources.
9- North Carolina
North Carolina recorded a 6064.54% jump in unemployment claims in March 2020 compared to March 2019. It received a score of 56.67 in WalletHub’s study. North Carolina ranked 11th for business environment & workforce support conditions, 13th for small business financial conditions, and 21st for impact and access to resources.
Nebraska has 1,066 confirmed COVID-19 cases. The economic crisis caused by the coronavirus pandemic is a wonderful buying opportunity for Nebraska’s richest resident Warren Buffett. But small businesses in the state are badly hurt. Nebraska has the second lowest share of small businesses with online sales activity.
The Southwestern state of Arizona was rapidly becoming a land of opportunities for entrepreneurs and job-seekers. But the coronavirus pandemic has hit the small businesses hard. According to WalletHub, Arizona has the 5th highest share of small businesses engaged in high-risk industries. Arizona received a total score of 56.96.
Louisiana has witnessed a record jump in unemployment rates. William Rodgers of Rutgers University expects Louisiana’s unemployment rate to skyrocket from 5.3% to 44.9% in the weeks ahead. Louisiana has the worst small business financial conditions and 5th worst small business credit conditions in the country. Louisiana received a score of 57.68.
5- South Carolina
The Palmetto State received a score of 59.63. It ranked 7th for impact and access to resources, and 5th for small business financial conditions. South Carolina has 3,319 confirmed coronavirus cases. It has also registered a huge jump in unemployment claims.
With a score of 60.72, Mississippi has also found itself among states where small businesses are hurt the most. It ranked 9th for small business financial conditions, and 10th for impact and access to resources. Mississippi receives the lowest average federal funding for small businesses relative to GDP.
3- South Dakota
The Midwestern state is sparsely populated. Tourism is a major contributor to the state’s economy, generating income for thousands of individuals and small businesses. Tourism all over the country has come to a halt. South Dakota received a score of 62.93. It ranked 5th for impact and access to resources, and 14th for business environment & workforce support conditions.
Thousands of small businesses in the Silver State cater to tourists. Business has virtually stopped due to the coronavirus pandemic. Nevada ranked 3rd for impact & access to resources, and 9th for business environment & workforce support conditions. It received a total score of 64.86.
With a total score of 69.87, Small businesses in Hawaii are hurt the most due to the COVID-19 pandemic. Hawaii ranked 2nd for impact & access to resources, 2nd for business environment & workforce support conditions, and 22nd for small business financial conditions. Just like Nevada, Hawaii relies heavily on tourism.