Small business is the backbone of the American economy
Small businesses are the backbone of the American economy. According to The National Federation of Independent Business, they account for half of all private-sector employees and generated 64% of net new jobs in the past decade. So when Covid-19 forced widespread shutdowns, small business owners were struck.
Many lost income and had to lay off staff. And as if that wasn’t enough, they also faced difficulties getting loans from banks. This blog post will explore how Covid shutdowns affected small business loans.
Covid Shutdowns and Small Businesses
The Covid-19 pandemic has been devastating for small businesses across the country.
Many have been forced to shut their doors due to restrictions on gatherings and a decline in customer traffic. Some companies have been able to weather the storm by pivoting to online sales or offering delivery and curbside pickup, but many others have not been so lucky.
The shutdowns have a ripple effect on the economy, as businesses that rely on small businesses for supplies and services have also been impacted. As the country begins to reopen, it is unclear what the pandemic’s long-term effects are on small businesses. Many are struggling to stay afloat, and it may be some time before we see a return to pre-pandemic levels of business activity.
How Did Covid-19 Impact Small Business Loans?
The novel coronavirus has upended life as we know it, and the business world is no exception. In the wake of the pandemic, many small businesses have been forced to close their doors, resulting in a sharp increase in loan defaults. This, in turn, has made it more difficult for small businesses to secure funding.
Banks have been reluctant to lend to small businesses due to the perceived risks involved. However, the current economic climate has made them even more conservative. As a result, many small businesses struggle to obtain the financing they need to stay afloat. The Covid-19 pandemic has profoundly impacted small business loans, and it is unclear what the future holds for these vital financial institutions.
Final Word
Covid-19 shutdowns have had a ripple effect on small business loans. Banks now require more documentation and proof of income, which can be difficult for small businesses to provide. The good news is that other lenders may be able to help your company in this time of need. Contact our team at Business Loan Vision to understand how!
