COVID-19 has hit Texas hard, with over 2.8 million cases and nearly 50 thousand deaths. But, as we know, the pandemic did not only affect the health of Texans. Rather, the necessity for social distancing and lockdowns made it impossible for businesses to continue as usual. While there were some “winners” in purely capitalistic terms, the majority of businesses struggled.
This has been particularly true of Texas small businesses, which do not have the resources or connections of the big corporations. They’ve had to rely on a number of factors, including fortune, adaptability, government support, and private funding.
Let’s take a look at the timeline to see the impact of the pandemic on TX small business.
Initial Casualties
Since the pandemic has been ongoing for over a year now, it is easy to misremember its immediate impact. We tend to think that businesses survived until they no longer could, but that is not quite accurate.
In fact, many businesses collapsed or had to lay off huge numbers of staff almost immediately, before the government could even start rolling out financial aid. This is because most small businesses have to exist on the edge, relying on the money they make every single week to keep going. A couple of weeks without income was enough to lay waste to their resources, considering that the average small business had less than two weeks cash-on-hand.
It would be nice to believe that small businesses generally thrive, and it is easy to do so if you look at the impact of small business on our economy. In March 2020 we learned that most of these companies are not making much profit, but are surviving month to month, with enough income to pay salaries and cover expenses.
The Paycheck Protection Program (PPP)
Towards the end of March 2020, the government signed the CARES Act into law. This provided $2.2 trillion in relief for individuals and businesses. $350 billion of this was assigned for small businesses in the Paycheck Protection Program (PPP). The PPP provided this money in loans repayable to the Small Business Administration.
The PPP was meant to save small businesses that could no longer pay workers’ salaries. Unfortunately, economists have ascertained that most of the funds went to businesses that were not in danger of going under, and that very few jobs were actually saved by the PPP.
This does not mean that the program was a total failure, and other aspects of the CARES Act did help keep certain businesses afloat. But the reality is that small businesses on the verge of collapse which could not find a way to earn income during lockdowns simply did not survive.
Adapting to the New Normal
Even companies that had resources to survive the first weeks and months of the pandemic did not have enough to survive indefinitely. And, as the pandemic wore on, Texan small businesses steadily crumbled.
It’s well-documented that the hospitality and tourism industries were some of the hardest hit, as dining out and traveling became impossible. Businesses in other industries struggled as well, with a lack of walk-in customers as well as a general lack of spending money for people who had lost their jobs or were only earning part of their salaries.
The companies that survived were those that were both fortunate and savvy enough to have the financial and practical resources to adapt. These companies found new means of service delivery as well as alternative income sources. Restaurants began using a delivery model, stores pivoted to online shopping, and events organizers went to work on virtual events.
However, there were a number of businesses which survived in spite of not finding ways to adapt.
Surviving
There are small businesses in Texas which survived due to a combination of factors in spite of not changing much. These businesses utilized their PPP loans and funding from Texas business loan lenders. Private loan companies needed to survive as well, after all, and continued giving loans even when the risk was higher than they would normally allow.
These businesses also took advantage of the relaxing of social distancing measures after initial lockdowns, as well as the patronage of Texans unconcerned about contracting the virus. Governor Abbott took the approach of putting personal freedoms at the forefront rather than strict public health measures, and businesses willing to risk the consequences continued accepting patronage from Texans with the same approach.
Unfortunately, the pandemic has continued to wreak havoc on human lives and lifestyles, which has meant that more businesses have collapsed over the past year. While businesses reopened and new businesses were started during lulls in the pandemic, only a proportion of these have managed to survive until now.
What’s Next?
The good news is that the future now looks bright for Texas small businesses. With vaccine rollout continuing and life slowly getting back to normal, Texans are ready to start spending their time and money in the ways they did before the pandemic.
Those businesses that managed to adapt now have multiple means of service delivery and multiple income sources. We can expect to see our economy continue to recover, with small businesses at the forefront.