How To Keep Small Business Alive in the USA?
According to a report by the Federal Reserve Bank of New York in the United States, among financially “healthy” small businesses, only about 20% have enough money to function normally for 2 months in the absence of revenue. There are less than 10% of less financially small businesses. Therefore, governments have urgently developed programs to help small business companies. One of the main measures is the loans/payday loans nc for salaries (usually 70–80%) like Cecelia’s Marketplace did. Moreover, bank loans in the United States can be transformed into grants if firms do not eventually fire workers (or hire new ones).
US loan issuance program
In the United States, the $350 billion Small Business Administration (SBA) loan program started working. Companies with a staff of up to 500 people, inclusive, can get a loan for up to $ 10 million at 1%; funds can be spent on salaries, rent, utilities. If the company does not fire employees, the loan amount spent on such high priority expenses within eight weeks between March 1 and June 30 will be forgiven – both the loan body and the interest.
However, the inflow of people with the aim to get funds in the early days was so large, and the measures to ensure the functioning of the program were so unprepared that this provoked numerous complaints from both businesses and banks.
Banks complained that United States Department of the Treasury and the SBA did not explain many details, including on loans, did not provide forms for filling out applications for the new program, and the form on the SBA website contained many fields that it was not clear how to fill out, and the site was constantly freezing.
Many banks were not ready to immediately accept and process applications. So, JPMorgan Chase began to do this only on Monday morning and quickly suspended the portal until 5:00 pm due to technical problems. Citigroup did not start accepting applications by Tuesday. Bank of America, although it earned under the program already on Friday, having assigned 3,000 employees for it, gave priority to existing customers with loans, followed by customers receiving other bank services, and only then it promised to consider applications from outside. This caused a wave of outrage among entrepreneurs and legislators.
The SBA has filed requests for 220,000 loans worth about $ 66 billion.
Difficulties of issuing loans
Difficulties with the loans’ issuance are associated with the fears of banks. They must lend to small business companies from their own funds and then ask the SBA to reimburse them within seven weeks. If the borrowers meet the loan terms and spend the money on their specified needs, SBA will reimburse the bank in full. If the money is used for other purposes, the borrowers themselves will pay the banks within two years. According to a poll of 500 small businesses, about a quarter of them have closed, another 40% may at least temporarily suspend operations in the next two weeks.
Online loans as the way to keep small business function?
An online loan program is one more option to find financial solutions to problems appeared last time. It is one of the most out of contact option provided by different financial institutions.
This option has several adavntages over classic bank loan. They are:
- the online loans can be issued at any time of the day (and not only during business hours, as, for example, in a bank);
- you can get any amount, both large enough and small;
- all charges are transparent, the amount that must be returned after a certain time is shown in the short form, plus it can be calculated independently;
- there is no need to inform about the purpose for which the loan is taken, this is a personal matter of the client;
- the loan processing procedure is very fast;
- no need to collect a lot of certificates and other documents, spend extra time on their search and execution;
- any adult can get a loan (regardless of whether he is employed or not);
- clients with bad credit history can also get a loan;
- you can repay the loan as it is convenient for the client (online, at the bank’s cash desk, etc.);
- there is a possibility to extand the loan.
Finally, we may not guarantee that these exact options will help keep small business companies functioning. But we believe that the world will find a solution to this problem soon.
Tags: loans, loans online, online loans