As part of the Care Act introduced in March, the U.S. Congress has previously passed a pay protection program designed to help small businesses survive the epidemic. The plan stipulates that enterprises with less than 500 employees can apply to banks and obtain loans after being approved by the small business administration. The programs total funding was $349 billion, and Congress added $310 billion to the program after it quickly ran out of money.
So far, the pay protection program has provided more than $500 billion in loans to small business owners, and lenders may also be exempted from repayment if they spend most of their money on employees salaries. The deadline for applying for loans under the program is August 8, after which businesses will not be able to apply. According to a survey by Goldman Sachs Group, only 16% of small U.S. companies believe that they can continue to pay their employees after the end of the plan. As many as 84% of the companies surveyed have made it clear that their funds will run out in the first week of August. As Congress has yet to reach an agreement on whether and how to extend the program, the fate of many small businesses and their employees is in the air.
According to the MITs report of 22.4% on the number of employees in the U.S. economic research program, which was published on February 4, by David toell, a professor at the Massachusetts Institute of technology, said that the number of employees in the study, which was the core of the study, was increased by 22% to 22%. Studies have shown that direct loans to businesses helped alleviate job losses during the epidemic, possibly helping to save 1.4-3.2 million jobs. Now that the plan is about to expire, companies facing capital depletion may be forced to lay off staff.
CNBC said only 16% of small U.S. businesses will continue to pay after the end of the program, while 84% said they will run out of money in the first week of August
Its hard to get money
Although small businesses have avoided mass layoffs through loans during the outbreak, business owners have also paid a lot of costs. Due to the hasty introduction of the rescue plan, many rules are still changing after the loan is issued, which makes it difficult for enterprises to adapt. For example, the plan originally stipulated that the lender must use more than 75% of the fund for wage payment within eight weeks of the first loan, otherwise the loan amount could not be exempted. Since then, the rules have changed, eight weeks have been extended to 24 weeks, and only 60% of the money is required for wage payments. Chester Specter, a former chief economist at the securities and Exchange Commission, said the rules were too rigid and caused tension between businesses and employees..
According to CNBC, many catering companies are directly feeling the negative impact of the pay protection program. Many business owners spend almost all their money on their employees, but from a business point of view, loans do not help the business. For example, Robert Miller, a boss of three restaurants in the Pittsburgh area, said he was under the eight week rule to run out of loans until the last week when the government informed him that eight weeks had been extended to 24 weeks, but he was out of money. I ran out of loans a few weeks ago, but the turnover is more than half that of last year. Miller believes that such a business is meaningless, and believes that there are millions of small business owners facing the same dilemma.
In addition, many small enterprises also need to bear the extra costs of epidemic prevention and control, such as the purchase of disinfection products and personal protective equipment. In addition, many commercial real estate operators can not be exempted from rent due to economic pressure. As a result, many small business owners are faced with the dilemma of borrowing money to maintain their lives. Many people do not know whether to borrow money or not. Even so, money is not something you can borrow if you want to. Albert Campo, a certified public accountant in New Jersey, said that due to the collapse of a large number of catering enterprises due to the epidemic, bank lending will be more conservative, which may be difficult for these enterprises to obtain loans during the economic downturn.
The Wall Street Journal said the U.S. aviation Union hopes the government will continue to allocate funds to enable airlines to pay their employees
Airlines may lay off staff in autumn
While many small enterprises are struggling on the verge of bankruptcy, many large enterprises in the United States are also facing the plight of capital depletion. Among them, the $25 billion financial support plan provided by the care act for the U.S. aviation industry will expire at the end of September, which is another fiscal cliff fall event with serious consequences.
Analysis shows that during the outbreak of the epidemic, a large number of routes were cancelled, and this financial support is very important to pay the salaries of the aviation industry and avoid layoffs of airlines. As for the prospect of the plans expiration, many airlines have given their employees preventive injections in advance, asking them to prepare for possible layoffs after October. United Airlines, for example, said it could lay off 36000 front-line employees in October. The Wall Street Journal said that due to concerns that the rebound in the epidemic will prevent the aviation industry from recovering this year, several US aviation unions have jointly requested that the government allocate another $32 billion to pay the salaries of pilots, flight attendants and pilots for at least six months. Many airline executives have warned that it may take two years for the U.S. airline industry to return to its level in 2019, and they may be forced to lay off staff in the autumn if they fail to extend the funding support plan. Although layoffs are still our last resort, it is clear that this possibility cannot be ruled out in this very bad environment. Said Gary Kelly, CEO of Southwest Airlines. (CCTV reporter Gu Xiang) source: CCTV news client editor: Yang Zeyu_ NF6036
Analysis shows that during the outbreak of the epidemic, a large number of routes were cancelled, and this financial support is very important to pay the salaries of the aviation industry and avoid layoffs of airlines. As for the prospect of the plans expiration, many airlines have given their employees preventive injections in advance, asking them to prepare for possible layoffs after October. United Airlines, for example, said it could lay off 36000 front-line employees in October.