Robert P. Bartlett III and Adair Morse
Using City of Oakland data during COVID-19, we document that small business components of survival capabilities — revenue resiliency, labor flexibility, and committed costs — vary by firm size. Nonemployer businesses rely on low cost structures to survive. Microbusinesses (1 to 5 employees) depend on 14% greater revenue resiliency. Enterprises (6 to 50 employees) use labor flexibility to survive, but face 10% to 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 PPP increased medium-run survival probability by 20.5% specifically for microbusinesses.