Where Small Businesses Have Looked for Help From the Local Community

Nearly 8 in 10 small businesses have received aid from the federal government since the coronavirus pandemic began in March 2020. But it’s no surprise that these small businesses have also asked for help from their communities.

According to U.S. Census Bureau data, just about 5% of businesses have asked for help from state or local governments, while a little more than 4% of businesses have sought aid from family or friends.

Key findings

• The two cities connected by the Baltimore-Washington Parkway lead the way in turning to their local support networks. According to our analysis, 14.9% of small businesses in Washington, D.C., requested aid from state or local governments, while 4.1% sought help from family or friends. Up the road, Baltimore reported 13.9% of small businesses turned to state or local governments, and 2.9% looked to family or friends.
• Birmingham, Ala., ranked last among the 50 largest metros in requesting local support. In fact, 0% of Birmingham small businesses asked state or local governments for help, while just 0.9% of small businesses reported seeking aid from family or friends. Buffalo, N.Y., was the only other city with 0% of small businesses saying they didn’t request aid from state or local governments.
• No Oklahoma City businesses reported asking family or friends for financial assistance since March 13, and only 2.1% requested aid from state or local programs. Oklahoma City had one of the highest rates of small businesses not requesting financial assistance.
• Small businesses rely more on federal programs than local sources. More small businesses requested aid from the Paycheck Protection Program (PPP) than the local sources — state or local governments and family or friends — combined.

Metro areas relying on local support the most

No. 1: Washington, D.C.

Our research shows in Washington, D.C., small businesses have asked their local communities for support the most. In fact, up to 19% of small businesses have asked for community support — 14.9% from state or local governments and 4.1% from family or friends. (Note that respondents could have requested aid from both outlets, so some overlap is possible in the results.)

Despite the high rates of businesses requesting financial assistance from local sources, D.C. had an above-average rate of small businesses stating they didn’t request aid from any source at 20.5%, compared with the average of 17.6% across the rest of the states.

No. 2: Baltimore

D.C.’s neighbor, Baltimore, came in second at up to 16.8% — 13.9% from state or local governments and 2.9% from family or friends. Almost 7 in 10 small businesses here requested PPP aid.

Many Maryland businesses that were closed during the early stages of the pandemic have been allowed to reopen under specific conditions. The number of cases per capita are again rising in both the state and Baltimore County specifically, according to The New York Times. This latest trend could be a potentially bad sign for businesses in the area.

No. 3: Philadelphia

Philadelphia falls just behind at third place, at 15.7% total, with 11.4% of small businesses reporting they requested financial aid from state or local governments and 4.3% turning to family or friends for support. Our data shows 83% of businesses in Philadelphia reported requesting financial aid from at least one source, which is slightly higher than the average across the metros.

Pennsylvania recently announced $50 million in grants for hazard pay for front-line workers. Businesses in the state can apply for up to $3 million in grants — up to $1,200 per employee. With the initiative, we may see more businesses in the Philadelphia area saying they took advantage of local sources of aid.

With the PPP application deadline nearing the end, will small businesses turn more to local communities?

As the data shows, small businesses haven’t turned en masse to their local communities for emergency business aid. The general belief was that after business shutdowns eased — and with support from the federal government — businesses could begin to return to normal operations.

But with this week’s Aug. 8 deadline for applying for PPP aid nearing, we may see some kind of small business crisis in the same way we could see an eviction crisis now that the coronavirus relief bill unemployment benefits have expired.

Without federal aid coming and with state and local governments already looking to cut their budgets, local communities may end up being one of the few sources left for small businesses to look for help. How much local communities will be able to support their favorite small businesses, though, remains a question.

Methodology

We analyzed results from the Census Bureau’s Small Business Pulse Survey to find the percentage of small business owners in the 50 largest metro areas who had reported saying that they requested financial assistance from state or local governments and family or friends. We then ranked the metros using a combined number. The most recent survey was conducted June 21 to June 27.