Three-Quarters of Small Business Owners Took on Debt to Offset COVID-19 Losses

A vast majority of small business owners have taken on debt as they grapple with financial losses associated with the COVID-19 pandemic, according to a recent LendingTree survey.

The LendingTree survey, the largest online market lending place in the U.S., polled 1,400 small business owners and found that 74% had taken on debt to deal with losses incurred during the pandemic.

Of those who took on debt, 37% of business owners used credit cards, while 28% turned to friends and family for financial help. Others used business lines of credit, personal loans or home equity loans during the crisis.

“I think it’s encouraging that people have been able to access debt during this time, and I think it diminishes the negative connotation of borrowing. It’s a critical, necessary thing. It’s also encouraging that there are programs for businesses to be able to borrow inexpensively,” Hunter Stunzi, senior vice president of small business and investments at LendingTree, said in the release.

Even still, few businesses reported being fully operational at this point.
Of the 79% of small business owners who reduced or suspended operations, only 13% have successfully resumed operations.
“That’s a real drag on revenue and on their ability to keep and pay their employees,” Stunzi added.

What’s more, for those small businesses that accessed aid through the Paycheck Protection Program as part of the CARES Act, most view it’s a temporary bandaid.

Only 10% of business owners who received PPP funds said it relieved all of their financial difficulties, while 62% said it helped somewhat and 28% reported no relief.