In the depths of despair: Lost income and recovery for small businesses during COVID-19

Abstract

This study examined how small business owners sought to keep their businesses operating during the harshest times of the COVID-19 pandemic. The goal of this study was to determine the association between business funding strategies and actions taken by the business to both percent lost income and length of recovery for small businesses in the United States. Businesses that were already experiencing cashflow problems before the COVID-19 pandemic experienced higher income losses. Changing how the business serves customers and being a homebased business were positively associated with percent lost income. Time to recovery was longer when household savings were used to cover business expenses but was shortened when the business owner was a minority. Results provide insights into factors that exacerbated income losses as well as insights into which funding strategies significantly reduced the time to recovery.