According to a new survey in the last quarter of 2020, small businesses are less confident than ever in an economically difficult year.
The most recent quarterly survey by Survey Monkey and CNBC found that the index of confidence in small businesses has dropped to 48 out of a possible 100 points, the lowest level since the start of the tracking in 2017.
Over the next 12 months, more small business owners than at any earlier point in the past three years expect negative effects for their businesses.
Of more than 2,000 small business owners surveyed, 18 percent said that their company’s current situation was bad, less than the 23 percent in the third quarter and 40 percent in the second quarter. However, the majority expect that possible changes in policy could worsen the conditions.
Concerns about the economy, an issue on which President Donald Trump led president-elect Joe Biden in the pre-election polls, have increased among small business owners, a higher percentage of whom are Republicans. The setback in business confidence coincides with a shift in general consumer confidence, which also declined after the presidential elections.
The quarterly survey found that 55 percent of small business owners think the new Biden administration will be bad for business, compared to 34 percent who said the transition to president will be good for small businesses.
Small businesses believe that changes in tax policy will have the most negative impact on their businesses, with 53 percent predicting a negative impact. Almost half of the respondents expect changes in government regulation to have a negative impact, 33 percent said that changes in trade policy will have a negative impact on businesses, and 25 percent expect changes in immigration policy to have a negative impact on businesses.
However, 36 percent hope that changes in technological innovation will have a positive impact on their small businesses.
Small businesses are also eagerly awaiting action from Congress in view of the coronavirus pandemic. An overwhelming majority of those surveyed spoke out in favor of a new round of federal aid, with 83 percent in favor of a further economic aid package. Congress has been stalled since the summer due to partisan differences in the adoption of a new package.
The most popular form of support for small businesses would be direct payments to individuals, followed by rent and mortgage relief and an expansion of the Paycheck Protection Program (PPP), which provides loans to small businesses to keep employees on the payroll.
In the fourth quarter of the year, the survey found that 11 percent of small businesses had to lay off their employees, and 12 percent had to lay off employees due to the pandemic.
Only 22 percent reported that they had rehired all of these workers, while 35 percent rehired some but not all of them.
On Tuesday, bipartisan legislators unveiled a $908 billion aid package that includes support for small businesses. The proposal provides for $257.7 billion for the PPP, but no direct payments to individuals.
Although the Treasury Department’s PPP funds were supposed to be targeted at small businesses, new data released this week showed that more than half of the funds distributed through PPP loans went to just 5 percent of businesses, most of which were larger companies.