Seven In 10 Firms Sought Financial Help During The COVID-19 Crisis

from the Atlanta Fed

The coronavirus (COVID-19) pandemic has had a shockingly large and swift impact on the U.S. economy since mid-March. And the initial coordinated federal response to the virus was, perhaps, equally swift, as Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act by the end of March. Further evidence of the speed of this reaction is that one of its main programs - the Paycheck Protection Program (PPP) - began taking applications by the first week of April, and it took only 13 days to deplete the initial funding amount.

Some analysts have suggested that emergency financial assistance to firms may have had a hand in May's surprisingly strong employment report, although not all the feedback on the PPP has been uniformly positive.

To shed further light on firms' experiences seeking and obtaining financial assistance during the pandemic, we posed a battery of special questions to our Business Inflation Expectations (BIE) panel in June (the survey was fielded from June 8 to June 12).

We first posed two questions regarding whether firms have requested and received financial assistance since March 2020, and we actually borrowed these questions from the U.S. Census Bureau's Small Business Pulse Survey. We followed those questions up with two more questions asking what share of the financial assistance requested they eventually received and, of that, what share of the amount received did they expect to be forgiven.

As chart 1 shows, about 70 percent of firms in our BIE panel requested financial assistance of any form (ranging from borrowing through an emergency facility, from a bank, and even from family and friends) since March 13, 2020. A majority of the panel sought financial assistance from the PPP. Digging into these responses, we find that very few firms sought multiple sources of assistance. Of the firms seeking financial assistance, three-quarters of them sought assistance from only one source, and another fifth or so made requests from two sources.

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