March 8, 2021

Here’s one for the “this could never be good news” file.

By the end of the year, a third of U.S. small businesses could close, according to the troubling findings of a Federal Reserve report on American small businesses.

The Fed stated around 9 million small businesses are likely to close permanently by the end of this year unless they receive more stimulus relief soon. Many small business owners told the Fed they’ve exhausted personal savings and borrowed all the money they can to keep things afloat.

Frankly, they’re at the end of their rope.

The survey found the number of small businesses with more than $100,000 in debt increased to 44 percent last year, up from 13 percent a year before. As a result, many said they’ll have no choice but to shut their doors permanently without more relief.

It’s worse for minority-owned businesses. They were more likely to report a poor financial outlook with a whopping eight in 10 saying they must have additional relief just to survive this year.  

If we lose anywhere near 9 million small businesses this year, it would all but guarantee a second recession in short order. However, the second one would almost certainly hit harder and last longer than what occurred in 2020. Not only that, losing so many businesses could also tank the high-flying stock market at long last. And I’m not talking about a “ho hum” correction, but a full-blown bear market.

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