Fed and AARP Report: Small Firms Owned by Older Americans Struggling

A report from the Federal Reserve Bank of New York and AARP indicates dire straits for older small business owners as the U.S. economy emerges from the pandemic, according to the Westchester and Fairfield County Business Journals . Last spring, more than 20 percent of small businesses shuttered, with 25 percent of those having owners age 45 and older. Meanwhile, the number of active companies owned by those at least 45 years old is down 9 percent compared with a 2 percent drop for firms with owners under 45. The report estimated that about 80 percent of small business owners are older than 45, and 25 percent of those who are at least 45 are worried about their personal credit scores or about losing assets because of late debt payments. Active businesses owned by whites 45 and older fell 8 percent for the year ending in January 2021, while Asian, Black, and Latino owners in the same age group saw declines of 19 percent, 16 percent, and 11 percent, respectively. "This illustrates the profound disruption the pandemic caused to small businesses and the stress it's placed on older business owners' financial health," said the New York Fed's Claire Kramer Mills. "A majority of older firm owners either reduced their salary or didn't take one at all, dipping into personal savings to cover business expenses." The New York Fed/AARP report concluded that "the experience of the pandemic creates opportunities for financial institutions to rethink how they can serve the financial needs of older entrepreneurs, particularly those owned by people of color, more effectively."