Effect of Lockdown on Small Businesses

The universal COVID-19 pandemic has led to one of the worst economic mayhems we have experienced in a few decades. Its manifestation has been felt across the globe, with even the largest economies such as the UK, USA, and China grieving over the turmoil it’s caused. Tourism and hospitality sectors are especially being hit the worst, with international travels being derailed mandatorily by the law.

The pandemic has also sent ripples across small businesses in the affected countries, with the less left countries employing stringent measures such as no contact between people. Lockdown orders are being issued on a no-nonsense directive by heads of states to aid in preserving the health of their citizens.

It’s clear to see that such directives inhibit the interaction of business owners and their customers. The small business sector where customers meet for services directly from their providers is notably the worst hit. This has called for financing institutions recording an influx of customers, with a lot of pressure being put on business owners with not-so-intact financing options. Cares Act also useful to uplift small businesses.

Money Lending

With the economy plunging from prosperity to peril, money lenders are keeping a keen eye on who to lend money to. Most small businesses are registering losses, especially those with existing debts and massive bank loans.

The US-based Small Business Administration (SBA) has some of the most coveted loan options. They provide long term loans with low-interest rates for small business owners. The guarantee they give while offering their loans is now coming to jeopardy too. This is because SBA doesn’t directly give loans but partner with local middle lenders to guarantee their clients loans, and that’s why they are more focused on small business lending.

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Intermediate lenders, in this case, local banks, are victim to the lockdown effect. Banks have to remain partially closed as people aren’t allowed to come into contact with bank tellers. Transactions are mainly online, and meetings have to be held via teleconferencing; in as much as these methods are working, many profit-generating undertakings are being put to a dead end. 

SBA Loan for Small Business

The SBA agency is conjoining with BitX Funding to provide capital to small businesses during these hard times. This plan will ensure business owners across the US have access to operating capital during the lockdown period. Small business owners whose cash flow is at ground level are encouraged to apply for this SBA relief.

You, however, need to check if your business is in a county or state professed a disaster area by your governor or area commissioner, and if the plunge-down is due to the disaster and not by the economic downturn.

We also recommend a visit to the attorney office in Los Angeles, CA, for corporate business counsel, Real Estate Transactions, Mergers and Acquisitions, and advice in all levels of business. All these services are offered just under one firm. If the lockdown directive has brought your business to an economic turmoil, Shenon Law is your firm of choice.