Business Owners Dip Into Their Own Pockets
Plenty has been written about the struggles small businesses in the U.S. are experiencing as a result of the coronavirus. Despite attempts by the government to provide them assistance such as the Paycheck Protection Program, the funds largely went to businesses and individuals who didn't need it as badly as many small business owners.
Desperate times calls for desperate measures and small business owners who are fighting to stay alive are doing just that as they're increasingly reaching into their own pockets to keep their businesses running.
According to a survey of 500 small business owners in mid-July from CreditCards.com, about 35% of small business owners have used their own personal funds since the coronavirus shutdowns began. Overall, 70% of respondents said they have depended on other sources of funds to serve as a lifeline such as business savings, business credit cards and loans—including PPP loans.
"These are tough numbers," CreditCards.com industry analyst Ted Rossman said. "They show just how dire this is for small businesses, and also how intertwined their personal and business finances are. You kind of have to worry about some of them compromising their own financial well-being."
Looking at the survey results by funding source reveals 24% of small business owners used their own personal credit cards compared to 20% who used business credit cards. As for tapping into savings accounts, the survey found 21% of small business owners used funds from their personal savings account compared to 24% who tapped into business savings accounts. 30% of the respondents said they received PPP loans while 9% said they took out other loans.
A recent survey from the National Federation of Independent Business found that 71% of small businesses have already used all of the funds from their PPP loan. 46% of those small businesses that received a PPP loan anticipate needing additional assistance over the next twelve months. Their survey also found that 21% of the small businesses that received a PPP loan have already or anticipate having to lay off employees.
Elsewhere, searches for the term "restaurant" on Facebook Marketplace paint a dire picture of the state of small restaurants across the U.S. The results show countless restaurants across the country that are trying to liquidate equipment or the restaurant entirely.
With so many individuals and small businesses in such poor financial condition as a result of the coronavirus, Congress is still struggling to agree to an additional relief package.
The next time someone says they work in the best interests of Americans, just remember how little debate there is over actions such as the Fed buying bonds of companies like Apple, which does absolutely nothing to benefit the majority of Americans who need it most.
GDP plunges. GDP fell a record 32.9% on an annualized basis in the second quarter, according to the U.S. Department of Commerce. The second quarter GDP print is significantly worse than the previous worst quarter, which was the second quarter of 1921 when GDP fell 28.6%. Personal consumption, which accounts for about two-thirds of GDP, accounted for a quarter of the second quarter GDP drop as the service sector took a hit. During the financial crisis, the most GDP fell for a single quarter was 8.4%. "It’s a very deep and dark hole and we’re coming out of it, but it’ going to take a long time to get out," Moody's Analytics chief economist Mark Zandi said.
Clorox has the best reputation. According to the annual Axios-Harris Poll 100 Corporate Reputation Rankings, Clorox has the best reputation among Americans. Hershey, Amazon, Publix and General Mills rounded out the top five most reputable companies. "Clorox went into over-production on a critical consumer PPE product while Hershey’s invested in producing disposable masks. But among all of them, the theme of presence was paramount," Harris Poll CEO John Gerzema said. "Many had employees who acted as front line workers, reassuring Americans that the country was still working while everything else was shut down."
TikTok will pay creators. TikTok announced the TikTok Creator Fund, which will pay out $2 billion to content creators on its platform over the next three years. Half of the funds will be spent on creators in the U.S., while $300 million will be spent on creators in Europe. Users will submit an application that if approved, will see TikTok pay them on a regular basis to create content. "To further support our creators, we’re launching the TikTok Creator Fund to encourage those who dream of using their voices and creativity to spark inspirational careers," general manager of TikTok U.S. Vanessa Pappas said. TikTok increased the size of the fund from $200 million after seeing "an incredible response to the Creator Fund."
Fitbit deal faces probe. Google's $2.1 billion acquisition offer for Fitbit will face an EU antitrust investigation as the European Commission wraps up an investigation into data use in healthcare. Despite Google offering not to use Fitbit data for targeted ads, the antitrust investigation will still go forward. The EU declined to comment, while Google said "The wearables space is crowded, and we believe the combination of Google and Fitbit's hardware efforts will increase competition in the sector, benefiting consumers and making the next generation of devices better and more affordable."
Facebook boycott targets European companies. The organizers behind the "Stop Hate for Profit" advertising boycott of Facebook are asking European companies to join the boycott. The organizers warned the boycott will "not go away" until their concerns have been addressed. "The global campaign, which includes paid media, will be asking advertisers in Europe to stand with the 1,100 advertisers in the U.S. in the fight against hate and disinformation on Facebook," a spokesperson for the boycott said."