PayPal found that struggling small businesses would welcome government grants to help them but they also lacked confidence in the government being able to deliver that support.
PayPal reported that finding last week when it revealed three key challenges for small businesses: finding customers, having enough money to keep their business running, and competing with large established companies.
PayPal itself advocated for tax cuts that allow small businesses to make digital infrastructure investments to help them fare better as ecommerce continues to see strong growth.
The payments firm kicked off a new quarterly small-business confidence index in November 2020 in collaboration with Morning Consult. The index measures the sentiment of US SMBs (small- and medium-sized businesses) and surveys them about their challenges and needs.
As a partner to more than 28 million SMBs, PayPal said the new quarterly index will help it understand how to work more effectively across the public and private sectors to jumpstart recovery efforts.
The inaugural survey sampled 500 small businesses in November.
In publishing the results on January 19, 2021, PayPal said the pandemic had resulted in one of the largest wealth transfers from SMBs to large enterprises, as commerce consolidated around the largest players.
PayPal referenced a finding from a recent survey that pointed to the increasing importance of digitization. “Without access to digital tools to reach prospects and customers, or financing to maintain operations, many SMBs may be forced to close,” it said in Tuesday’s announcement.
Interestingly, the PayPal-Morning Consult Small Business Confidence Index found that 42% of small- and medium-sized businesses believe economic conditions will improve this year, and nearly 60% believe economic conditions will improve over the next three years.
“Conversely,” PayPal wrote, “nearly 30% of SMBs believe the economic conditions will decline over the next year, and 27% believe the economy will continue to worsen and ultimately make it too hard to keep running their business.”
A troubling finding from the report: 60% of SMBs have $25,000 or less cash on hand and 41% have less than $10,000.
Other findings worth noting:
- Respondents from underrepresented communities were 2 times as likely to list access to capital as a key challenge.
- The favored forms of government support were Grants (62% of respondents), tax cuts (46% of respondents), loans at reduced interest rates (45% of respondents), and delays of tax payments (45% of respondents).
The full report can be found on PayPal’s corporate website.