Seven in 10 business owners are worried about maintaining the business' solvency during the coronavirus pandemic, according to two surveys released Monday.
Seventy-two percent of manufacturers said they are very concerned or somewhat concerned about remaining financially solvent, where assets are greater than liabilities, said the Federal Reserve Bank of New York, which conducted the polls late this month.
Among retailers and service firms, 68% said the coronavirus has made them very concerned or somewhat concerned about maintaining their solvency.
“Many firms are noting difficulty accessing credit and are concerned about their solvency,” New York Fed economists Jaison R. Abel, Jason Bram and Richard Deitz said in releasing the polls on the bank’s Liberty Street Economics blog. The government shutdown of all but essential activities is “unprecedented and the economic impacts are likely to be temporary but severe,” the trio said.
The New York Fed surveyed about 125 manufacturers in New York State and about 200 retailers and service firms in the state, northern New Jersey and Fairfield County, Connecticut. Long Island businesses participated in both polls, which took place March 20-24 as all three states declared states of emergency and closed nonessential businesses and schools.
In terms of remaining solvent, 45% of service firms and 38% of factories are using their cash reserves to make up for revenue shortfalls due to the coronavirus. Credit lines are being used by 30% of service firms and 25% of factories while personal savings is being used by 19% and 16%, respectively.
Such drastic measures are called for because 85% service firms have seen their profit drop since earlier this month. The hardest hit industries are tourism, retail and health services, the New York Fed economists said, adding Long Island, the Hudson Valley and upstate have been impacted more than New York City so far. Among manufacturers, 70% said their profit has fallen since the coronavirus pandemic hit the northeast.
Separately, Eric J. Gertler, Gov. Andrew M. Cuomo’s economic development czar, said Friday the virus “is having a devastating impact in the state’s economy. Life in the state is rapidly grinding to a halt – and with it much of the economy.”
Speaking to the board of Empire State Development, the state agency that he leads, Gertler said, “Small businesses are bearing the brunt of the downturn. Hundreds of thousands of small business jobs will either be lost or severely impacted by the outbreak."