Updated: May 7, 2020
EconWatch (April 19, 2020)
What has the government done to mitigate the devastating economic impacts of COVID-19?
As COVID-19 cases continue to rise, small businesses are struggling. In March, the President passed the CARES Act, setting aside $376 billion to support businesses and creating Small Business Administration (SBA) run programs. One of them, the Paycheck Protection Program (PPP), extends the SBA’s normal loan program by allowing banks to give out loans so businesses can pay their employees without debt.
However, there have been many flaws in the system. Due to the high demand, banks are now backed up with PPP applications; businesses and workers sometimes have to wait for weeks.
Furthermore, a lack of directions from the government results in banks favoring businesses they already have existing relationships with and placing other businesses at a disadvantage.
There is just not enough money in this program to support all of America’s struggling businesses. The government has since promised to add more money to the program, which has yet to happen. Many people believe this is a flawed system that will not work, no matter how much funding is added. Whether that is true will likely become apparent soon.
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