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  • Proceedings of the National Academy of Sciences

The Impact of COVID-19 on Small Business Outcomes and Expectations

By: Alexander Bartik, Marianne Bertrand, Zoë B. Cullen, Edward L. Glaeser, Michael Luca and Christopher Stanton
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Abstract

To explore the impact of COVID on small businesses, we conducted a survey of more than 5,800 small businesses between March 28 and April 4, 2020. Several themes emerged. First, mass layoffs and closures had already occurred—just a few weeks into the crisis. Second, the risk of closure was negatively associated with the expected length of the crisis. Moreover, businesses had widely varying beliefs about the likely duration of COVID-related disruptions. Third, many small businesses are financially fragile: the median business with more than $10,000 in monthly expenses had only about two weeks of cash on hand at the time of the survey. Fourth, the majority of businesses planned to seek funding through the CARES act. However, many anticipated problems with accessing the program, such as bureaucratic hassles and difficulties establishing eligibility. Using experimental variation, we also assess take-up rates and business resilience effects for loans relative to grants-based programs.

Keywords

COVID-19; Stimulus; CARES Act; Health Pandemics; Small Business; Surveys

Citation

Bartik, Alexander, Marianne Bertrand, Zoë B. Cullen, Edward L. Glaeser, Michael Luca, and Christopher Stanton. "The Impact of COVID-19 on Small Business Outcomes and Expectations." Proceedings of the National Academy of Sciences 117, no. 30 (July 28, 2020).
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About The Authors

Zoe B. Cullen

Entrepreneurial Management
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Michael Luca

Negotiation, Organizations & Markets
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Christopher T. Stanton

Entrepreneurial Management
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More from the Authors
  • How Much Does Your Boss Make? The Effects of Salary Comparisons By: Zoë B. Cullen and Ricardo Perez-Truglia
  • Employee Responses to Compensation Changes: Evidence from a Sales Firm By: Jason Sandvik, Richard Saouma, Nathan Seegert and Christopher Stanton
  • Leaders: Stop Confusing Correlation with Causation By: Michael Luca
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