'Small businesses are in trouble,' expert breaks down the reasons why

Anne Zimmerman, Co-Chair Small Business for America’s Future, joins Yahoo Finance to discuss, the future outlook for small businesses amid COVID-19.

Video Transcript

ALEXIS CHRISTOFOROUS: For a lot of small businesses, these are uncertain times, even as the economy begins to recover. And a new survey by the advocacy group Small Business for America's Future shows many local businesses have been forced to borrow big, and some are considering closing their doors altogether.

Let's talk about this now with Anne Zimmerman. She is the cochair of Small Business for America's Future, and she runs her own accounting firm in Ohio. Anne, good to have you with us. What do these results tell you about the state of the economy for small businesses?

ANNE ZIMMERMAN: Thanks for having me, Alexis. It tells us that it's in trouble and that it's so important that we protect these small businesses so they can help lead us out of this recession as they did the last recession.

We're finding that over half of small businesses have taken on debt to survive so far in COVID. And of this, a substantial portion, about 40%, is over $50,000, which for a truly small business, your Main Street businesses, could be quite a bit. As they try to come out and slowly reopen and recover and they have additional costs and things, this could spell the end for many.

BRIAN SOZZI: Anne, just based on what you've seen through the prism of small businesses across the country, does it make any sense to you that the stock market has rallied 40% off the March 23 lows?

ANNE ZIMMERMAN: No, not at all. And I think we're seeing the impact of big business and their reach into government, their ability to reach out and lobby so much more than small businesses, which is much of what we do, trying to pull small businesses together so that they can be heard on things like-- that are truly affecting them, which now, of course, includes the COVID recovery plan and how they're going to survive.

We found in our survey that 1 in 4 had thought about closing permanently, and about 13% were already looking at bankruptcy. So that is not good for the economy in general. I realize we are the small business that don't have the reach, but we do have the impact. We created 2/3 of the jobs coming out of the last recession and are needed to help with that again. We need to be here.

ALEXIS CHRISTOFOROUS: Anne, you know that Congress is thinking about another possible stimulus package. But from what we understand, it would not include more help for small businesses. We saw the PPP loan program. Some small businesses called it a debacle. What would you like to see Congress or local governments do to help at this point?

ANNE ZIMMERMAN: Well, we did find with our survey that about 8 in 10 felt that this administration has not been helping them. We would like to see some actual grants given to the truly small business. I'm not talking about the Ruths Chris and the ones that took the PPP and kind of misused it, I feel, in a way. I'm talking about Main Street barber shops and the nursery down the street from us, the ones that-- we have 30 million small businesses, and 6 million of those employ 60 million people. That's a significant number. The other 24 million, by the way, are self-employed.

But those 60 million need to be kept on. They need to be able to work through some of this, and we need to keep those businesses afloat. Grants is the answer, I believe.

ALEXIS CHRISTOFOROUS: All right, Anne Zimmerman, we're going to leave it there. She is the cochair of Small Business for America's Future. Thanks for being with us, and good luck to you.

ANNE ZIMMERMAN: Thank you so much for having me.