How is COVID-19 Affecting US Businesses

COVID-Affected-US-Businesses

The ongoing Coronavirus pandemic has threatened the livelihood of many small and medium enterprises. The prolonged shutdown of non-essential businesses all over the world has led to small offices, factories, retailers, hoteliers and restaurant owners facing an uncertain future. The biggest problem that small businesses face is that of cash liquidity. Small and middling enterprises always work on a tight budget and barely have cash in hand to cover a month’s expenses. And a sustained downturn surely breaks the cycle for them. The coronavirus downturn has been a prolonged one. Data from credit-card companies reveals that 30 per cent of small businesses have shut down during the pandemic. Transaction volumes have dipped. Travel agencies are down 98 per cent, photography studios 88 per cent, day-care centres 75 per cent, and advertising agencies 60 per cent, says an Atlantic report. According to a study conducted by Thryv Inc and America’s Small Business Development Centres in late March, almost three-quarters of US small businesses experienced a substantial drop in business. The same number were planning to let go of employees or reduce hours. Almost 50 per cent then showed interest in applying for loans. Most (63 percent), said they were likely to be fully open by mid-April, while 27 percent were unlikely. “Based on this wave of data, while 36 percent feel confident, we know roughly 60 percent are quite rationally concerned about their long-term recovery,” said Charles “Tee” Rowe, president and CEO at America’s SBDC. “SBDCs can connect local business owners with the right resources to deal with these difficult times and help navigate the loan process.” A recent Goldman Sachs survey reported that 50 per cent of business owners that were surveyed said they didn’t think they could continue business operations for more than three months. The Federal government has come up with a $350 billion plan to provide forgivable loans to small businesses, now boosted by a second tranche of $320 billion. Some specific loans for small businesses have been put out such as the Paycheck Protection Program, where small firms can apply to retail banks and credit unions for loans of upto $10 million, intended for expenses such as rent, insurance, utilities, and wages. The PPP loans become grants, provided that employers retain their employees and spend 75 per cent of the money on payroll. But declaring help and seeing its implementations is a different matter. Nobody is clear, neither the banks nor the applicants, on who qualifies for how much and how to disperse the loans. A survey by the National Federation of Independent Business showed that four in five applicants for the emergency funds did not know whom to apply to and whether they qualified for the loans, and the first tranche had already been exhausted before people were aware of the stipulations.

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Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

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