Small firms make huge contributions to the circular economy. However, survival of these firms has been a concern, more so in the context of COVID-19. Hence, it is critical to understand the factors predicting business survival chances of small firms. The present study examines whether owners’ resilience (a psychological resource) is positively related to small firms’ business survival chances during the pandemic. We borrowed from the broaden-and-build theory to posit that psychological resilience provides a broadened repertoire of resources which help in coping with depression, leading to higher chances of business survival. Further, using a sample of 657 small firm owners, we investigated if direct and indirect linkages between psychological resilience and business survival chances change with owners’ experience of financial fragility (i.e., lack of financial resources). Our study carries significant implications for theory and practice.