Facebook, OECD, World Bank: SMBs Begin Rebounding from Covid-19

Cash flow will be the primary challenge over the next few months

The global closure rate for SMBs came down to 18% in June from 26% in May Ridofranz/iStock
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The continued loosening of restrictions imposed due to the coronavirus pandemic has brought more optimism and more concerns to owners of small and midsized businesses, according to the second wave of the Global State of Small Business Report, released by Facebook Wednesday.

The social network teamed up with the Organisation for Economic Co-operation and Development and the World Bank to analyze data from a survey of over 25,000 SMBs from more than 50 countries, conducted from June 24 through 30.

They wrote in the introduction to the report, “Several governments around the world have begun to loosen Covid-19 lockdown restrictions in recent months, as they balance attempts to limit the spread of the virus with efforts to revitalize economic activity. Some SMBs in these economies have begun to resume their in-person operations, although often in a limited manner. As closed businesses have started to reopen, policymakers’ focus has begun to shift increasingly toward economic recovery and, in particular, toward building resilience in a post-Covid-19 world.”

The global closure rate for SMBs came down to 18% in June from 26% in May, and the U.S. saw similar good news, with the number dropping to 17% from 23%.

Hard-hit industries such as hospitality (specifically hotels, cafes and restaurants) and transportation also showed signs of rebounding, with the percentages of businesses in those sectors reporting lower revenue relative to the same period in 2019 dropping by eight percentage points and 11 percentage points, respectively.

Roughly one-third of SMBs surveyed globally said they reduced employment due to the pandemic, and 41% of those in the U.S. believe cash flow will be a challenge over the next few months.

Of SMBs that are closed, 27% cited financial restraints. Just 19% of respondents in the U.S. were receiving financial assistance, usually from government loans and grants.

The gender disparity also showed signs of narrowing, with 16% of male-led businesses and 15% of those led by women having been forced to close. The report pointed out that women were more likely to operate micro-businesses in sectors that were particularly impacted by the pandemic.

Facebook also shared data specific to the U.S., with highlights including:

  • 82% of SMBs led by women and 84% led by men reported that they were operational or engaging in revenue-generating activities, up from 71% and 83%, respectively, in May.
  • 46% of SMBs that were operational reported that their sales in the past month were lower than in the same month last year, down from 62% in May.
  • 22% of operational SMBs reduced headcount as a result of Covid-19.
  • 48% of operational SMBs said 25% or more of their sales were made digitally in the past month, down slightly from 50% in May.
  • 63% were optimistic about the future of their businesses, down slightly from 65% in May.
  • 12% of SMBs that were closed attributed it primarily to financial challenges, up from 9% in May.
  • 17% of SMBs that were not receiving financial assistance said it was not available to them, up from 11% in May, while 23% of SMBs said they were receiving some form of financial support, with
  • 34% of that group getting that support via government loans.

Facebook chief operating officer Sheryl Sandberg said in a statement, “Despite showing a huge amount of resilience and creativity during the pandemic, small businesses still face major challenges. For many, cash flow is their biggest problem. Direct financial support could make the difference so that they can pay their employees and keep their doors open. That’s why Facebook has made $100 million available in grants for small businesses around the world, and are making a further $100 million available in grants for U.S. Black-owned businesses, creators and nonprofits serving Black communities.”


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david.cohen@adweek.com David Cohen is editor of Adweek's Social Pro Daily.
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