Research and Insights
October 29, 2020 | Jim Magats, SVP Omni Payments
The global coronavirus pandemic has led to an unprecedented public health crisis that has also devastated economies across the globe. Global shutdowns and stay-at-home orders negatively impacted the sales and operations of many SMBs, particularly brick-and-mortar businesses that rely on in-person sales. As a result, unemployment levels rose and consumer spending declined. In less than a year, the pandemic has resulted in permanent closures of tens of thousands of SMBs and left more than 25 million Americans unemployed. But there is hope.
A study released by PayPal today found that SMBs in the U.S. that incorporated digital tools have been better able to navigate and weather the pandemic and in many instances, even grow. In addition, the study found that partnership between the public and private sectors, specifically between the U.S. Small Business Administration and PayPal in the form of the Paycheck Protection Program (PPP), successfully provided funding access to SMBs that have traditionally been underserved, and enabled businesses that received the financing to help reverse a downward revenue trend.
This study is based on analysis of transaction datasets of SMBs in the U.S. using PayPal, which we refer to as “digital SMBs”. The research study found two promising trends:
This is all very promising news. Today, although only 46% of small businesses in the U.S. have an online presence, more than 71% of small businesses have reported boosting their digital capabilities since the pandemic began. A May 2020 survey also found that 51% of businesses reported increasing online interactions with their clients. Seventy percent of small business respondents in an August survey said they are ready to invest in new technology to expand digital payments, while 73% said digital payments are the “new normal.”
These findings point to the importance of digitization and access to capital for SMBs, the foundation of our economy. While it is unclear when the pandemic will end, it is clear that digitization and online commerce offer a path to recovery and growth for SMBs. In addition, private sector innovation combined with public sector policy will be key to enabling small business survival, recovery, and longer-term resiliency.
You can review the full study here.
*PayPal acts as a service provider in connection with PPP loans originated by WebBank. The lender for the Paycheck Protection Program Loan through PayPal is WebBank, Member FDIC
Sign up to receive the latest news to your email.