Global financial markets saw momentous losses this week as Coronavirus caused citizens around the world to grind to a halt without any telling when we’ll all be back to business as normal.
Due to COVID-19, multibillion-dollar businesses such as airlines, sports leagues, cruise ship companies, theme parks, millions of small businesses, and their employees are now confronting an unclear future.
Fear of the Unknown
As COVID-19 spreads, so does anxiety and panic, which has resulted in businesses closing, cancelation of global events, and store shelves being cleared out. Across the United States, cities are declaring a state of emergency and encouraging people to maintain a social distance and prepare for the worst.
As health experts and government officials are constantly emphasizing on slowing the spread of the virus, the only way to move forward and mitigate risks is by shutting down, isolate from others and self-quarantine.
President Donald Trump said: Avoid gathering in groups of more than ten people, avoid discretionary travel, and avoid eating and drinking in bars, restaurants, and public food courts.
At the same time, the British Prime Minister says that: We must act like any wartime government and do whatever it takes to support our economy.
Reaction and Impact on Small Businesses
As a result of the outbreak, we’ve seen the Federal Reserve and five central banks around the world, in a synchronized effort, cut interest rates. What this says is that central banks understand the panic and anxiety the coronavirus has brought down upon each one of us.
Slowing the spread of coronavirus is damaging the economy. When we’re told to stay and work from home, essentially what happens is that we don’t end up spending on goods and services which freezes our economy really. As we’re freezing the economy’s ability to grow, at the same time, we’ve got a mortgage to pay along with dozens of other bills.
A rate cut makes it convenient for banks to lend money. By lowering rates, individuals and small businesses get significant relief, especially at a time like this, where you might have almost no income. However, you still have employees, rent, and other bills to pay.
Lowering rates for small businesses means they can borrow. If you’re a small business owner who’s equally confused and panicked as others, go to sba.gov (Small Business Association) to figure out what loans are available to you.
Impact of COVID-19 on Workers and Marketers
For a worker who’s employed at a small business whose operations might be shutting down temporarily, a rate cut won’t help you. In this situation, the state might be able to help you. Head over to your state’s website, look up your state name, and search for unemployment benefits.
Several states have changed their benefits, especially for people who are in quarantine or have had their small business temporarily shut down due to the global outbreak. You can apply for unemployment benefits.
The senate might be passing a bill which would inject money into the system to help people and business who are severely affected right now. The leisure and airline industry are being wiped out. Bloomberg reported that, according to an aviation expert, Coronavirus could bankrupt most airlines by the end of May.
For the most part, coronavirus is crushing individuals, and small businesses as a considerable number of the workforce cannot work from home. The reality is that even if you apply for unemployment benefits, that’s usually 60% to 75% of average pay you get in a month.
That matter is worse for those individuals who can’t work from home and have their kids staying at home as schools and universities are closed.
In this challenging time, small businesses that aren’t equipped with a work from home infrastructure are increasingly feeling the heat. With employees unable to show up for work (for all the right reasons), small businesses are facing huge losses.
In the UK, the government has announced an economic rescue package where the government will give up to £330 billion of loans to businesses. While it’s unclear how much of this will save businesses who are struggling to stay afloat, one thing is clear; there are tough challenges to operate with the way coronavirus is spreading.