Since the early months of the pandemic, Facebook has been surveying small businesses around the world to find out what they’re going through and what help they need. Throughout 2020 and 2021, our State of Small Business reports have painted a consistent and sobering picture. The pandemic has been devastating for small businesses everywhere. Many have closed for good, and many of those who remained open have seen sales slump and staff laid off. And it has hit businesses led by women and under-represented communities the hardest.
Today we’re publishing the results of our latest survey of more than 35,000 small business leaders, across 30 countries and territories, carried out this July and August. It finds that closure rates are falling around the world in a majority of surveyed countries, a sign that the small business recovery is underway. But there is still a long way to go and many of the inequalities and challenges persist.
Globally, 18% of small businesses said they were currently closed, down from 24% in February. In the US, both numbers were slightly lower, at 16% and 22% respectively. However, of those businesses still operating globally, more reported reduced employment this time around, rising from 30% in February to 36% in July.
Women and minority-led businesses were still more likely to be closed than the global average. 20% of women-led businesses were closed globally, compared to 16% of those led by men. In the US, Hispanic-led businesses were the most likely to report being closed at 24%, a drop of two percentage points since February. Minority-led businesses in the US were also more likely to report lower sales compared to the same period in the previous year, with 44% doing so compared to 29% of other small businesses.
One silver lining is that many small businesses have found success by shifting online. The use of digital tools has increased during the pandemic, and it’s up again in this survey to 88% of all businesses compared to 81% in February. More than half expect their use of digital tools to be permanent. For some, shifting online has been the difference between staying afloat or going under. For others, it’s given them a whole new lease on life.
However, most small businesses are still struggling financially. 60% stated they had some form of difficulty in paying business-related expenses, and roughly a quarter reported struggling to pay down loans or debt (26%), bills (25%), rent (25%), and employee wages (24%).
With these challenges in mind, Facebook is marking National Small Business Week in the US by announcing new programs, tools and resources to help small businesses, including The Good Ideas Exchange. Next month, business leaders from Facebook, American Express, HubSpot, Indeed, UPS, Vimeo and more will come together to hear from small business owners on some of the biggest challenges they are facing. Teams from each participating company, big and small, will then take part in a Hackathon to develop solutions that can help. Good Ideas resulting from the Hackathon will be announced in early 2022.
To address the needs small businesses are facing with cash flow, we are introducing two new ways for diverse businesses to access capital more easily:
- After a successful pilot with Facebook Diverse Suppliers, we are expanding the Facebook Invoice Fast Track program. Beginning October 1, eligible US-based small businesses will have the opportunity to get cash immediately for the goods and services they’ve invoiced their customers, instead of waiting the 60 to 120 day period it normally takes to get paid. We will be funding $100 million in invoices on an ongoing basis.
- We’re introducing a new small business funding resource on Facebook that connects small business owners with purpose-driven grant & loan opportunities, business resources and small business networking groups.
Today’s report also reveals that over a fifth of small businesses expect the final three months of 2021 to represent the majority of their sales for the year. To help them get ready for this critical sales period, we are also announcing the second year of our 2021 global holiday program, The Boost with Facebook Good Ideas Season. Beginning next month, small businesses can access free resources, digital skills training, thought leadership and networking opportunities needed to prepare for a successful holiday season.
Facebook is in the business of small business. More than 200 million businesses use our apps every month to create virtual storefronts and reach customers — with millions using our tools to help them make the transition online since the start of the pandemic. Whatever challenges they face, Facebook will continue to do all we can to help them find success online.
Read the full State of Small Business report.