COVID-19 government disaster loans saved businesses, but saddled survivors with debt
COVID-19 government disaster loans saved businesses, but saddled survivors with debt
COVID-19 government disaster loans saved businesses, but saddled survivors with debt
In 2020 and 2021, COVID-19 Economic Injury Disaster Loans were a lifeline for small businesses.
But now some small businesses are having trouble paying them off. And a Small Business Credit Survey report from the 12 Federal Reserve banks shows that small businesses that haven’t paid off COVID-19 Economic Injury Disaster Loans are in worse shape than other small businesses.
Dwayne Thomas, owner of events lighting company Greenlight Creative in Portland, Oregon, got a roughly $500,000 EIDL loan in 2020, when all events shut down, crippling his businesses.
EIDL loans were designed to help small businesses stay afloat during the COVID-19 pandemic. Most of these loans have a 30-year term with a 3.5% interest rate. With lower interest rates than typical loans, the loans were provided for working capital and other normal operating expenses.
This is probably heartless: but if your business was going to to under without massive loans, and you took said loan, well, congrats: the existence of the business which (from the article) can afford to pay it back is only there BECAUSE of the debt.
It's not some boat anchor anyone but the owner undertook, and they did it for a good reason. Does it make your company worth less if you try to sell it? Sure, but how much is a bankrupt and dead company worth, again?
I'm generally NOT a 'the free market will sort it all out' type, but in this case, that feels like the correct thing to let happen.