A reveals a survey of LendingTree up to 40% of small businesses in major U.S. cities are likely to close. between 24% and 40% of businesses in the nation’s 50 metropolitan areas risk closure if businesses don’t return to normal.<!– –>

The analysis based on the US Census Bureau small business survey predicts a difficult summer for small businesses. The survey covered the nation’s 50 largest metropolitan areas based on the amount of money they were holding.

LendingTree Business Closure Survey

Sobering results reveal that small businesses don’t have enough liquidity to cover one month’s business expenses. This could lead to the closure of small businesses within a month. Furthermore, around 11% of the companies surveyed say they do not know how long their liquidity reserves will last. At the end of April, almost 6.8% of small businesses said they had no liquidity. Recent data show that the figure has dropped to 2.4%.

<!– –>On the other hand, the percentage of small businesses with cash reserves lasting more than three months went from 16.7% to 27.4%.

Among these Hartford (Connecticut), St Louis and Pittsburg are among the cities most vulnerable to closure.

As for the current three coronavirus hotspots, the Miami, Phoenix and Dallas businesses are in different financial positions. In Miami, 36% of companies say they have less than a month in cash. In Phoenix and Dallas, 29% and 27% of businesses respectively report the same.

How companies are doing in the coming months

The LendingTree study ranked cities based on the percentage of small businesses that had the least cash. Those who had liquidity reserves of less than a month were ranked from highest to lowest.

In Hartford, the most exposed major city, 40% of companies have less than a month’s worth of money in hand. Just over 9% say that their cash reserves would last only one to seven business days.<!– –>

While in St. Louis 38% of small businesses say they have less than a month of money. Nearly 11% say they have a week of cash available or less. According to the survey, 2.6% of businesses say they have nothing left, above the national average of 2.3%.

Likewise, about 37% of small businesses in Pittsburgh don’t have enough money to last more than a month. Almost 16% of companies in this state say they believe their cash reserves will last for one to two weeks. Other major cities that see gloomy forecasts include Philadelphia, Miami and Chicago.

<!– –>By contrast, the small businesses of Portland, Detroit and Austin had more money on hand. only 24% of small businesses in Portland, Detroit and Austin, Texas have less than a month of cash reserves. These cities are doing better with over 60% of businesses that have enough money to last over a month. less than a quarter of companies in these states have liquidity that lasts less than a month.

Support available

The survey comes after the announcement to extend the Paycheck Protection Program (PPP) to August 8th. PPP is the emergency of the government relief for small businesses following the COVID-19 epidemic. Through it, more than $ 520 billion has been provided as loan assistance to nearly five million businesses across the nation. The bailout has more than $ 130 billion available for small businesses.

With PPP no personal guarantee is required and it is not necessary to create guarantees with the government to support 100% of the loan. The loan is subject to total forgiveness if companies spend 60%. This will occur if companies use payroll loan; pay interest on mortgage, rent; and utilities Small businesses wishing to participate must first apply with a lender. A further requirement is that a company must have been operational on February 15, 2020. companies can only get one PPP loan.

The disastrous enterprises they find derive from them having to operate with reduced capacity or total closure. As the pandemic opened, blockades and social distances forced companies to operate with diminished capacity for months.

As cities work towards normalization, the speed with which others are reopening is being hindered by the resurgence of new cases. In order for companies to truly reach epidemic levels, they must strike a balance between public safety and openness. All that remains is for the companies to adopt solutions to achieve optimal levels of capacity while avoiding relapses. The inclusion of smart and effective practices can go far to start the road to recovery.

Image: Depositphotos.com
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