As many as 14% of small businesses may lay off workers when their PPP loans run out

Economic conditions have improved as US states reopen their economies. Still, "those businesses hardest hit by the crisis will likely need additional help," NFIB analysts wrote in the survey.
As many as 56% of small business owners said they will need less than $50,000 to support operations in the near-term, while one in four anticipates needing more than $100,000, according to the survey.
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A group of businesses that have received loans through the Small Business Administration's Paycheck Protection Program said they may have to lay off workers after using the loan, according to a new survey.

As many as 14% of PPP loan borrowers anticipate having to lay off employees after the funds run out, according to Tuesday survey from the National Federation of Independent Business.

Of those that may reduce their workforce, about half expect to lay off one or two employees, according to the report. About 12% said they will likely lay off 10 or more employees.

The survey findings suggest that more fiscal support may be needed to keep small businesses going as the economy recovers from the shock of the coronavirus pandemic. The PPP loans were designed to encourage owners to keep their staff on payroll the loan is forgivable if a majority is used to pay workers.

While economic conditions have improved as states have eased up on business restrictions and lifted stay-at-home orders, "those businesses hardest hit by the crisis will likely need additional help," NFIB analysts wrote in the survey.

For some small businesses, the end of their PPP funds may be swiftly arriving 41% are using the money in the original eight-week window, instead of the expanded 24-week period, according to the survey.

There have been some recent signs that the economy is improving and that small businesses are faring better than they were a month ago.

About 40% of small businesses said current sales volume is 75% or more of pre-crisis levels, up from 28% reporting the same volume a month earlier, the survey showed. And, retail sales rebounded in May following two months of record declines, signaling a recovery underway.

Still, there's uncertainty ahead for small businesses. Weak consumer spending and some restrictions on business operations will likely impact firms through the end of the year, NFIB said.

Nearly half of all businesses that've applied for a loan through PPP, the Economic Injury Disaster Loan program, or both said they anticipate needing additional fiscal support in some form over the next 12 months, the survey showed.

As many as 56% of small business owners said they will need less than $50,000 to support operations in the near-term, while one in four anticipates needing more than $100,000, according to the survey.

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