Main Street is as cash strapped as it has ever been.

Over 40% of the U.S. small businesses have less than three months of cash reserves, new data from Goldman Sachs showed on Wednesday, and the money crunch is leaving them vulnerable to fallout from COVID-19’s resurgence or other financial emergencies.

According to the bank’s 10,000 Small Businesses Voices survey, there is a “critical warning sign” for policymakers amid the rise in coronavirus cases caused by the Delta variant. More action is needed to aid small business owners as they continue their road to recovery, Goldman noted.

Already, small businesses have been a central part of federal COVID-19 aid programs, but have suffered high rates of failure during the pandemic. Many have struggled to dig themselves out amid worker shortages and supply bottlenecks hitting the entire economy.

One of the most extensive parts of the U.S. government’s response was the creation of the Paycheck Protection Program (PPP). Since its inception, the program has disbursed $800 billion of the $813.5 billion so far appropriated by Congress to this program, according to May estimates.

Still, the path to recovery has been uncertain for these businesses, particularly as the Delta variant puts renewed pressure on the economy.

“The consistent feedback we get from businesses is that there's just a ton of anxiety right now about what's next,” Joe Wall, National Director of Goldman Sachs 10,000 Small Businesses Voices, told Yahoo Finance Live on Wednesday.

Goldman’s survey found that 44% of small business owners said they have less than months of cash reserves. And an even greater share - some 51% - of black owned small businesses have less than three month’s cash on hand, according to the same survey.

“This is a trend that we've seen very consistently over the last 17 months or so,” Wall added.

“They’ve lagged when it comes to their personal finances being impacted. In fact, at the end of last year, we saw that almost 60% of black small business owners have been forced to dip into their personal savings,” Wall said.

To that end, the survey also found that more than 31 percent of all respondents said they are confident they would get access to funding, but that number was only 20% for Black business owners.

“The challenge they're running into right now is that because of the financial toll of the pandemic their financial statements don't look so great for the past 18 months,” Wall said.

Despite the strong economic growth this year, Goldman’s findings highlight the rocky recovery for many small businesses who are looking for additional financial assistance — but have been stumped by program requirements and government red tape.

“What they really need is some sort of a realignment of the underwriting demands,” said Wall. “We're obviously still in the throes of the pandemic and for most businesses, they can't put forth the type of underwriting criteria they would under normal circumstances.”

Meanwhile, the federal loan programs have been a crucial lifeline in keeping mainstreet businesses afloat. But the survey underscored how many are concerned by the level of debt they’ve taken on.

Small business struggles are personal

A large number of business owners surveyed by Goldman Sachs, 41%, said they are concerned the debt that has piled up during the pandemic could make it challenging for their firm to recover. That number soared to 55% for Black small-business owners, where respondents said any new debt could undermine their financial stability.

And with the Delta variant a growing drag on economic activity, especially for restaurants, bars and retailers, 88% of business owners said they support additional federal aid.

“They think the federal government should create a loan structure that has a fixed low interest rate, a long tenure and is something that they can deploy in a flexible manner, consolidate their debt in a way to allow them to kind of repair their balance sheets,” the survey noted.

There are still many unknowns, especially if a severe wave of COVID infections leads to more lockdowns in the future. Some small businesses — like Guy Coffey, CEO of Frenchies Modern Nail Care — would rather have the opportunity to stay open and run his business than closing shop.

“I'd much rather have the freedom and the latitude,” Coffey told Yahoo Finance in an interview. “Rather than giving me another a hundred thousand dollars that I'm going to owe you anyway.”

However, Wall points to the fact that more assistance in aid needs to be streamlined on the state level.

“There is still a significant amount of money that the federal government deployed throughout COVID to states and municipalities that's sitting there,” Wall said.

In New York, Governor Kathy Hochul on Wednesday announced changes to the state’s $800 million COVID-19 Pandemic Small Business Recovery Grant Program that will enable more small businesses to apply for funding.

“We hope other states will follow suit and do something similar because the money's sitting there, and the small-business community in particular really needs it right now,” Coffey said.

“Every small business failure is a personal bankruptcy,” he added.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv

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