The coronavirus pandemic is putting America’s small businesses to the test of a lifetime. Millions might not survive — and many of the tens of millions of jobs they support could evaporate, Courtenay Brown writes.

The big picture: None of the rescues that have emerged — including federal government loans and grants, states offering their own support programs, and even some in the private sector stepping up to help — has made the future look particularly bright.

The suffering is already having devastating ripple effects on the U.S. economy.

• Small businesses shed more than 11 million jobs in April — making up more than half of the 20 million lost in the private sector last month, according to payments processor ADP.

The long term fallout will be harsh:

The big are getting bigger while the smallest shrink — or disappear. It was hard enough to compete before the pandemic. But now, their giant competitors — some of which kept operating as essential or have huge online presences and more resources — are thriving, as corporate earnings reports showed this week.

Half-capacity and tighter margins. Among restaurants, for example, "distance eating" will require pouring a lot of money into keeping diners away from one another and from the waitstaff, as Axios' Jennifer A. Kingson reported this week. Small stores may not be allowed to let in as many shoppers at a time as they had before.

• Joanne Chang, who runs Boston-based restaurants, says she hopes business returns to the point where she needs all of her employees back.
• “But realistically with social distancing we don’t think that’s going to be the case,” Chang said at an event hosted by the Federal Reserve this week.

Less demand. Businesses that rely on foot traffic during the workday, for example, will see demand dry up as bigger corporations tell their workers to stay home (possibly forever).

• And high levels of unemployment are expected to persist even as the economy reopens, which will crimp consumer spending that small businesses rely on.

The bottom line: Post-pandemic America will have fewer of the neighborhood shops, restaurants and bars that we've grown up with, relied on, worked for, and viewed as pillars of our communities. Holly Wade, head of research at the National Federation of Independent Business warns of "a fine line" between surviving temporary closures or reduced business during lockdowns and insolvency.

• "I don’t think it would be overstating to say a large number of small businesses are likely not to make it to the other side," Wade says.

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While large businesses can generally borrow the money they need to get through the crisis, small businesses cannot, Felix Salmon writes.

Why it matters: Small businesses are the main engine of employment growth and account for roughly half of all private-sector jobs. If they fail en masse, the whole U.S. economy will collapse.

By the numbers: As Axios' Dion Rabouin has reported, America's largest companies have borrowed more than $1 trillion so far this year, with seemingly no limit on how much more they can borrow if they need it.

• The Federal Reserve has ensured that nearly all companies with access to capital markets can borrow as much money as they need, with confidence that they will continue to be able to borrow and refinance as those debts become due.

The catch: Small businesses, by contrast, cannot borrow what they need. They're far too small to be able to access capital markets, and banks don't want to lend to them either.

Most help for small businesses so far has come from the Paycheck Protection Program (PPP), which, as its name implies, was designed primarily to protect employees' paychecks.

• Be smart: Think of the PPP as a way for the federal government to subsidize employment — it funnels cash through employers as an alternative to paying out $600 per week in unemployment checks. The PPP is good for small-business employees, but provides much less help than is needed for business owners.

Driving the news: There's no private-sector solution to this problem. While a bipartisan Senate proposal to support small businesses directly does exist, Sen. Chuck Grassley told reporters this week that negotiations over further coronavirus relief won’t start in earnest until the end of June, and Sen. Roy Blunt said passing another relief bill by July is “optimistic.”

The bottom line: Without substantial direct support from the government, millions of small businesses will never be able to find the cash they need to survive this crisis.

• Go deeper: What's next for small business relief?

Felix's thought bubble: The PPP is aimed less at small businesses than at the employees of small businesses. If what you care about is employment — the stated aim of the program — then it makes sense for more money to go to bigger firms with more workers.

New research suggests that many small businesses owned by people of color are struggling particularly hard to survive the pandemic-induced financial crisis, Naomi Shavin reports.

Why it matters: Structural barriers and narrower cash buffers had put many minority-owned small businesses at a disadvantage heading into the pandemic. Now, as the situation unfolds, experts say that entrepreneurs of color are having a harder time accessing pandemic-specific lending and relief programs.

Research conducted by Global Strategy Group and published this week by two civil rights advocacy groups — UnidosUS and Color of Change — offers an early signal that minority small business owners are struggling to connect with the resources available to them, including but not limited to the PPP.

• According to the survey, 1 in 5 small businesses owned by people of color applied for federal aid, and of those who applied, only 12% said they received it; 21% said they were still waiting to hear.
• Of those who applied, just over half requested a very small amount — less than $20,00o.
• Among respondents, 15% said they had closed permanently. Of the remainder, 45% said they did not expect to get through six or more months if current circumstances continue.

Research from Goldman Sachs published in late April found that there were particularly stark disparities for black business owners in terms of accessing aid, compared with other small business owners.

Read the full story.

New findings from a weekly U.S. Census survey show that things might be slowly looking up for small businesses — or at least steadying, Stef Kight reports.

The big picture: The number of companies reporting severe problems from COVID-19 — or temporary closings or having to cut employee hours — has been dropping. At the same time, far more said they had received aid through the Paycheck Protection Program (PPP).

By the numbers: The Census Bureau has surveyed tens of thousands of small businesses over the last several weeks and has released three weeks of results.

• In the first batch of results, 38% of all respondents said they had received PPP money vs. 67% in the third batch.
• In the most recent survey, 62% had seen revenues decline in the past week, but that was down from 74% in the first week.

Yes, but: It's still bad. And a third of small business owners say they don't expect to be back to normal operations for more than 6 months.

See the data.

The average small business had just 15 days of cash before the coronavirus pandemic.

• Axios' Dan Primack dug into what that means for small businesses, in a conversation last week with Chris Wheat of the JPMorgan Chase Institute.

Listen in.

Sole proprietors and the self-employed faced an even more uphill battle in benefiting from government assistance, Kia Kokalitcheva writes.

Why it matters: The vast majority of U.S. small businesses — 25.7 million in 2017, according to census data — are “nonemployer” companies that are mostly one-person shops.

The hurdles for sole proprietorships:

• They couldn’t apply for the Paycheck Protection Program (PPP) until April 1 — a week after everyone else, and just four business days before the first round ran out of funds.
• They were limited to $1,000 (instead of $10,000) in instant money from the Economic Injury Disaster Loan (EIDL) program in the bill.
• Many banks, including the largest, only processed applications (at least at first) from existing business banking customers. A lot of sole proprietors use a second personal bank account for their business, which effectively kept them from being able to apply.

Go deeper: Gig workers faced challenges too.

Familiar chains that look like giant corporations are often independently owned small businesses that are getting wrecked by the pandemic alongside local mom-and-pops, Joann Muller reports.

The big picture: Franchising has exploded in recent decades, with 733,000 franchise establishments employing more than 7.6 million Americans. The coronavirus closed 74% of them, according to a survey by the International Franchising Association.

Be smart: Fewer than half of all franchises are restaurants. The rest are in sectors like home health care, business services, hotels, auto repair, child care, dry cleaning, gyms, salons and spas.

What they're saying: “We like to think that franchisees have these huge war chests of money, but they’re boot-strapping it. They’re small businesses that don’t have a lot of money,” Jania Bailey, CEO of franchise consultant group FranNet, told Restaurant Dive.

• “Many [franchisees] will put everything on the line — they do a 401(k) rollover, they invest their retirement fund, take second mortgages on their homes — anything and everything to get that business open. And they scrape together to get it up and operational and get cash flowing positive, and they’re starting to see a little bit of profit, and then something like this happens, and it just wipes them out.”

Craftsy entrepreneurs are doing brisk business in the new cottage industry of selling artisanal face masks, Naomi Shavin writes.

What's happening: Online stores are selling out of face masks within minutes of listing new stock — in some cases, after being featured in an article from the likes of GQ, Vogue or the lifestyle blog Man Repeller.

• Etsy, long seen as a purveyor of artisan-made goods, reported in a recent earnings call that in April, the platform saw $133 million in sales of fabric face masks.

Adrienne Antonson, founder of STATE the Label in Athens, Ga., says that from the moment her small-batch, hand-painted clothing company started offering masks, it could barely keep up with demand.

• "We sold out of 25 masks within minutes." says Antonson. "We said, 'Let’s restock.' By the end of the day, we had sold 200 masks within 14 minutes."
• The company is selling and donating masks, and published a pattern for others to use.

Naomi Mishkin, the Brooklyn-based designer behind made-to-order clothing line Naomi Nomi, had a similar experience. (Her company is donating a mask for every one sold.)

• At first — specifically, on Friday, April 3, at 5:50 p.m. — her company had about 500 requests to be on a waitlist for masks.
• Ten minutes later, the New York Times blasted out an alert saying the CDC had officially recommended wearing face masks. Minutes later — at 6:05 p.m. — "GQ dropped an article saying 'here are 5 brands that are selling them,'" Mishkin recalls.
• "We were #3. By the end of the weekend, we had requests for 10,000 masks."

Designers largely aren't profiting on mask sales — but they're keeping their businesses alive and their employees on payroll, and in some cases expanding their customer base.