Bank of America Research Finds Small Business Owners Remained Resilient During a Challenging Year

December 2, 2020 at 9:00 AM Eastern

According to the new Bank of America 2020 Small Business Owner Report, U.S. small business owners have remained resilient and flexible this year as they navigated an evolving business landscape brought on by the health crisis.

The research, based on a survey of more than 1,000 business owners, found that entrepreneurs anticipate a strong post-pandemic environment that will support small businesses. On the road to recovery, they say stronger consumer confidence and increased spending (79%), restored confidence in public health (78%), debt forgiveness (66%) and government relief programs (66%) will be most beneficial. Once the U.S. recovers from the pandemic, many entrepreneurs believe:

  • Small businesses will return to being “the backbone of the U.S. economy” (79%).
  • Consumers will have a greater appreciation for small businesses (69%).
  • Entrepreneurs will be better prepared to handle potential reemergence of the coronavirus (59%).
  • The effects of coronavirus will impact their bottom line for two years or less (59%).

Business owners demonstrate resilience and innovation

The latest research in our series of surveys reveals that more than four in five businesses stayed open in some capacity amid shutdowns this year, either as an essential business (38%) or by adjusting operations (47%). Among businesses that remained open, 78% report an impact on their day-to-day operations, including:

  • Implementing enhanced sanitation practices (45%).
  • Changing their primary revenue stream (37%).
  • Limiting hours of operation (33%).
  • Experiencing supply chain disruptions (28%).
  • Shifting to a digital/online strategy (25%).

Nearly one-quarter of entrepreneurs took steps to reinvent themselves or help their local communities. Of those business owners, 61% developed new products or services and 51% donated time, products and/or services to support relief efforts.

“During what have been unprecedented challenges for small businesses this year, I’ve been inspired by business owners throughout the country who have demonstrated a commitment to innovation while serving the needs of their local communities,” said Sharon Miller, head of Small Business at Bank of America. “Every day, I hear from entrepreneurs who are retooling and adapting to create new opportunities for themselves and their employees.”

Access to capital remains crucial during the pandemic

Maintaining a steady cash flow and access to capital continue to be critical issues for entrepreneurs. Forty-two percent of business owners applied for at least one type of loan specifically to address the impact of the coronavirus, including a Paycheck Protection Program (PPP) loan (34%), Economic Injury Disaster Loan (16%) and/or traditional bank loan (5%). The top two ways business owners have or intend to use this financing are on payroll and staffing needs (75%) and maintaining operating expenses (62%).

“At Bank of America, we have continued to help small businesses navigate the current environment through our client assistance programs and the Paycheck Protection Program, as well as our grants and investments in small and minority-owned businesses,” added Miller.

Guarded business and economic outlook

Entrepreneurs are significantly less confident in the economy over the next 12 months – with optimism declining to levels not seen since 2016:

  • Thirty-nine percent of business owners anticipate their local economy will improve over the next 12 months (down from 51% pre-pandemic 2020 and the lowest since 37% in fall 2016).
  • Thirty-seven percent predict the national economy will improve (down from 47% pre-pandemic 2020 and the lowest since 29% in spring 2016).

Business owners are also reporting softer business projections for the coming year, with hiring plans and revenue expectations at record lows since 2012 and 2013, respectively.

  • Seven in 10 plan to keep staffing levels stable in 2021; 13% plan to hire in the year ahead.
  • Earlier this year (pre-pandemic 2020), 55% of business owners expected their revenue to rise over the next 12 months. This fall, there is an even split among those who expect revenue to increase (34%), stay the same (34%) or decrease (32%).

Top economic concerns

Business owners’ top two concerns for the year ahead include the political environment (78%, up from 63% pre-pandemic 2020) and the impact of coronavirus (75%). Other top concerns for the year ahead include:

  • Health care costs (62%, steady with 60% pre-pandemic).
  • Consumer spending (56%, up from 46% pre-pandemic).
  • Stock market (50%, steady with 47% pre-pandemic).
  • Strength of the U.S. dollar (49%, up from 41% pre-pandemic).

For an in-depth look at the insights of the nation’s small business owners, read the full Bank of America 2020 Small Business Owner Report.

Providing a business advantage to small business owners

Bank of America provides advice, solutions, access to capital and dedicated support to meet the unique needs of our 12 million business owner clients. According to the FDIC, Bank of America maintained its position as the nation’s top small business lender at the end of the second quarter of 2020, with $51.3 billion in total outstanding small business loans (defined as business loans in original amounts of $1 million and under). According to the U.S. Small Business Administration, Bank of America has been the largest PPP loan provider in the U.S. by number of approved loans, and has delivered more than $26 billion in PPP loan funds to help more than 345,000 small business clients in need.

Separately, in June, Bank of America announced that it is making a $1 billion, four-year commitment to help local communities address economic and racial inequality accelerated by the global pandemic. The programs will focus on assisting people and communities of color that have experienced a greater impact from the health crisis, with a particular focus on health and health care, jobs/reskilling, small business and affordable housing. Bank of America has already allocated to these four key areas across 91 U.S. markets and globally.

Bank of America 2020 Small Business Owner Report

Ipsos Public Affairs conducted the Bank of America 2020 Small Business Owner Report survey online between July 29 and September 3, 2020 using a pre-recruited online sample of small business owners. Ipsos contacted a national sample of 1,048 small business owners in the United States with annual revenue between $100,000 and $4,999,999 and employing between two and 99 employees, as well as conducted 342 interviews of Hispanic small business owners, 307 interviews of Black small business owners, and 114 interviews of Asian American small business owners. In addition, approximately 300 small business owners were surveyed in each of 10 target markets: Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, Miami, New York, San Francisco and Washington, D.C. The final results for the national, DMA and demographic segments were weighted to national benchmark standards for size, revenue and region, while the final results for the Hispanic segment were weighted for size, revenue, region, and whether the respondents were primarily English-speaking or Spanish-speaking.

Prior to 2016, waves of the Small Business Owner Report Survey were conducted by telephone, and while best efforts were made to replicate processes, differences in sample, weighting and method suggest caution when making direct statistical comparisons of the results from pre-2016 and post-2016.

Bank of America

Bank of America is one of the world’s leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 66 million consumer and small business clients with approximately 4,300 retail financial centers, including approximately 2,900 lending centers, 2,500 financial centers with a Consumer Investment Financial Solutions Advisor and approximately 2,300 business centers; approximately 17,000 ATMs; and award-winning digital banking with approximately 39 million active users, including approximately 31 million mobile users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and approximately 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.

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Reporters may contact:

Don Vecchiarello, Bank of America
Phone: 1.980.387.4899