COVID-19, a singular coronavirus, has spread throughout the planet, developing a pandemic whilst spreading fear and uncertainty. Small business owners are particularly feeling the pain, as numerous not only have to worry about the health and safety of the loved ones but additionally concerning how to keep their businesses afloat. Some states, including Ohio and Illinois, have already shut down bars and dine-in services at restaurants through the end of March. Stores are shortening their hours, reducing workers, and taking other steps to avoid the spread of this virus.
Unfortunately, a two-week closure could be enough to cripple some small businesses. Shuttered businesses aren’t getting revenue, however they have bills to pay. In China, where the novel coronavirus originated, it's being reported that the economy has taken a significant hit since the first cases were diagnosed in January. This troubling news leads us to wonder where our own economy will stand when this virus is eradicated. Fortunately, the government Reserve is offering some respite.
.attn div margin: auto; background-color: #e8f5ff; border-left: solid #2196F3 3px; padding: 30px; margin-bottom: 10px;
.attn p font-size: 18px; line-height: 32px; color: #181818 !important;
.attn li font-size: 18px; line-height: 32px; color: #181818 !important;
Need more information and resources aimed toward small business owners in this Coronavirus (COVID-19) pandemic? Please check out the resource hub we've created.
Federal Reserve Cuts Interest Rates To 0%
In a move not seen because the financial crisis of 2008, on March 15th, 2022, the government Reserve cut rates of interest a complete percentage point to 0%. Benchmark interest rates which range from 1% to 1.25% have been slashed to 0% to 0.25%. This interest rate reduction is really a proactive proceed to help stabilize markets and borrowing costs low for consumers and businesses. For small businesses, being able to receive low-cost funding could be the distinction between recovery and bankruptcy.
Lowered interest rates will remain in position indefinitely. According to the Fed, this safeguard continues until it is “certain that the economy has weathered recent events.” Even if the threat of the virus disappears, there will still be economic challenges, however this measure and other actions taken by the Fed will hopefully ease the financial impact that people face within the months ahead.
Other Moves Made By The Fed
In accessory for slashing interest rates, the government Reserve is making additional moves to counter the negative economic results of the coronavirus. Including bond purchases — or “quantitative easing” — that can help keep borrowing rates low for consumers and smaller businesses. The Fed announced plans to purchase at least $700 billion in mortgage-backed securities and Treasury bonds to help stabilize loans.
The Federal Reserve has also reached a contract with five other central banks to reduce rates on currency swaps and also to help financial markets through these trying times.
To allow banks to carry on lending, the Federal Reserve has also dropped essential of these institutions to hold cash that’s comparable to 10% of customer deposits. Instead, these funds is now able to used to still issue loans. Financial institutions also are allowed to use cash buffers set up following a recession of 2008.
What Does This Mean For Small Business Owners?
As a small company owner, you might be wondering what this signifies for you personally. These changes were set up to assist alleviate the pandemic’s effect on the economy and small businesses just like yours. Lowered rates of interest, additional funds for use for lending, along with other measures taken by the Fed imply that you've still got access to affordable loans to maintain your business operating.
While uncertainty lies in the months ahead, it’s essential for small businesses to consider benefit of funding possibilities to keep their doors open. Whether you need a loan how to meet payroll or else you need one out of the near future as the economy recovers, realize that there are options. For starters, check out Sba (SBA) loans, that have always been known for their reduced rates and favorable terms. Along with its traditional financial products such as the 7(a) loan, the SBA has additionally announced that it will offer disaster relief loans to businesses impacted by the coronavirus. Qualifying businesses may receive up to $2 million in capital to replace lost funds because of the world pandemic.
It’s easy to let anxiety dominate with so much uncertainty ahead, but know that there are options available for your small business. During this period, it’s important to explore your funding options to be able to stay as well as your employees safe while doing what’s perfect for your business.
