The covid-19 pandemic has caused large-scale loss of life and economy across all sectors. It has psychologically and socially impacted the general population ranging from their health and well-being to their education, career, and businesses. It has impacted the global economy drastically. India saw its worst recorded decline in economic growth since 1996 during the pandemic. In India, most of more than 100 million people engaged in small businesses were laid off and about one-third of the small businesses went beyond the scope of rescuing during the pandemic. In such a scenario, this paper intends to delineate the psychological impact of the pandemic on small businesses in India which faced a significant economic blow. At the same time, the resilience of some small businesses that managed to cope and thrive during these difficult times have been briefly discussed.