The Federal Reserve is predicting that a huge number of small businesses across the United States could fail during the recession sparked by the COVID-19 crisis, according to a report the Fed issued June 12.

“The nature of the economic recovery that follows the COVID-19 crisis will depend in part on the survival of small businesses,” the Fed said in its biannual monetary policy report to Congress on June 19. “The pandemic poses acute risks to the survival of many small businesses [whose] widespread failure would adversely alter the economic landscape of local communities and potentially slow the economic recovery and future labor productivity growth.”

The $660 billion in aid intended to help business owners cover payroll and overhead has reached only about three-quarters of the businesses that applied for and received the financial help. And more industries likely will have an ongoing need when the program ends.

Job losses have hit smaller businesses hardest, and many small companies have stopped issuing paychecks altogether. The Fed reported that 30-40 percent of small firms in industries hit hardest by social distancing have turned inactive since the pandemic began in February. The income of small restaurants was down 80 percent in April, and by early June, that moved to only 50 percent, according to  data from credit card transaction processor Womply, the Fed noted.

Society loses more than jobs when small businesses fail. Those failures “erase the productive knowledge within the firms, deplete the assets of business owners, alter the character of communities and neighborhoods, and, in some cases, deprive the country of innovations,” the Fed said.

These businesses are the lifeblood of communities and are massively important not only to the communities where they are located, but also to the health of the economy, the Fed noted.