Small businesses are powerful engines of local economies, and they've been hit hard since the onset of COVID-19, according to a JPMorgan Chase Institute analysis of nearly 1.3 million de-identified small firms nationwide.
Why it matters: Cash balances provide liquidity that businesses need to get through a financial shock.
By the numbers: Overall, typical small business cash balances dropped 12.7% after the onset of COVID-19 and declined in every city and across industries.
- During the second half of April, some balances rebounded, likely due to CARES Act stimulus payments and declines in expenses. But revenues still lagged.
- By the end of March, the typical small firm saw revenues 50% less than the same period in 2019.
The steep drops seen in Las Vegas, Orlando and New York may be partly due to the sudden disappearance of tourists. In Atlanta, small businesses were already 10% lower than in 2019 before the national emergency declaration.
- Small businesses in Seattle, Indianapolis, Denver, Phoenix and Chicago saw smaller-than-average cash balance declines.
There are striking disparities: Cash balances for Black-owned firms decreased by 26%, compared to 10% declines for white-owned businesses.
- Revenues of Asian American-owned firms declined by more than 60%, possibly due to discrimination as well as the concentration in hard-hit industries such as restaurants and personal services.