The effect of COVID-19 on small businesses across the country has left an impact on many communities.
Minnesota Senator Amy Klobuchar is one of many who are calling for another coronavirus stimulus package. In one social post, she specifically cited a study about business closures in the US. It claimed that "800 small businesses a day are closing across the country."
THE QUESTION
Did a study find that 800 small businesses are closing each day in the US?
THE ANSWER
Yes, a study done by Yelp found that roughly 160,000 businesses closed between April and September this year.
But that number is an estimate based on one source. More data is needed to determine whether the number of closures is actually higher or lower than that. Additionally, to see the real impact of COVID-19 it's important to compare the official number to closures in a typical year without a pandemic.
WHAT WE FOUND
A report by Yelp found 163,735 businesses listed on Yelp that were open in April 2020 had closed by September. That averages out to more than 800 closures per day.
That’s the number that Sen. Klobuchar and others have used, but if you stop there, you miss some key context. Due to the difficulties in tracking small business closures, it’s possible that the number is higher or lower than Yelp’s estimate.
For instance, Yelp’s report combined what it described as permanently closed businesses and temporarily closed businesses. If you only look at permanent closures - the number goes from an average of 800 to 500 closures.
Other data from the University of California Santa Cruz indicates that the number of closures could be even higher. The university's data shows nearly 317,000 businesses closed between February and September. That’s closer to 1,500 closures a day.
As of early December, government sources like the Bureau of Labor Statistics don’t have current business closure numbers available. It will likely take more time to gather those.
Even when the official numbers are gathered, we have to compare them to previous years to understand the real impact of COVID-19.
In 2017, the US Small Business Administration Office of Advocacy reported that the U.S. saw 1 million new businesses open, while 898,000 businesses closed. That means even in a normal year, the U.S. can still see an average of nearly 2,500 daily business closures.
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