Small-Business Survival Capabilities and Fiscal Programs: Evidence from Oakland

Robert P. Bartlett and Adair Morse

Journal of Financial and Quantitative Analysis, 2021, vol. 56, issue 7, 2500-2544

Abstract: Using City of Oakland data during COVID-19, we document that small-business components of survival capabilities (i.e., revenue resiliency, labor flexibility, and committed costs) vary by firm size. Nonemployer businesses rely on low-cost structures to survive. Microbusinesses (1–5 employees) depend on 14% greater revenue resiliency. Enterprises (6–50 employees) use labor flexibility to survive but face 10%–20% higher residual closure risk from committed costs. The evidence argues for size targeting of financial support programs, including committed costs and revenue-based lending programs. Supporting the capabilities mapping, we find that the Paycheck Protection Program (PPP) increased medium-run survival probability by 20.5% specifically for microbusinesses.

Date: 2021
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