Back
davidlerner.com > Financial Literacy  > Coronavirus, Small Business, and Government

Coronavirus, Small Business, and Government

We are collectively experiencing very strange days indeed. Whole sectors of our economy are closing their doors with potentially disastrous long-term effects. Neighborhood mainstays are shutting their doors for the first time in decades, and by the looks of things, some may not open again. 

In Los Angeles, the 27-year-old late-night diner legend, Swingers, has closed permanently in the wake of forced closures recently, and the parent company has also closed their British pub The Pikey

The SBA (U.S. Small Business Administration) is one of the key programs created by Congress to help small businesses and their workers get through this crisis, but it is almost out of cash. The $350 billion Paycheck Protection Program has processed more than 1.6 million loans so far. The SBA stated recently that it estimates it has processed more than 14 years’ worth of loans in just 14 days.

These are loans aimed at keeping workers on the payroll. They’re forgivable — so they become grants if a business meets the criteria. And members of Congress are at odds about how to get more aid to businesses. [2] While there is bipartisan agreement that there should be “more money”, Republicans want another $250 billion for the program, but Democrats want more strings attached, like specific help for women and minority-owned businesses. Also, there’s the problem of passing anything, with Congress working from home right now and unlikely to come back to Washington until next month.

The challenges are very real. In addition to the small business sector, around 22 million people have now filed for state unemployment benefits in April since President Trump announced a National Emergency. In just one week, there were over 5 million new unemployment claims. States pay out these benefits — and states are strained. Each state pays out unemployment benefits from a trust fund paid for by taxes on employers. 

Government programs are currently experiencing what could be compared to the “bank withdrawal rush” of the Great Depression. As of mid-April 2020, the number of Coronavirus cases has reached over two million cases worldwide, with new daily cases in the U.S. of over 30,000. It took only seven days for the number of deaths in the United States to double. And if you’re interested in how that’s affecting the economy, a gallon of gas in the U.S. on average will cost you about $1.81. 

Fortunately, there were announcements recently that seem to indicate at least the idea of restrictions being lifted soon. Whether that comes with additional restrictions or guidelines for public safety and health is yet to be seen. Another concern is whether our small business sector survives this trying time.

 

 

IMPORTANT DISCLOSURES

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC

Your Investment Counselor

(ICname)
Skip to content