The $3 trillion in relief approved by the federal government has so far reached few bank accounts as jobless claims mount and businesses remain closed amid the coronavirus pandemic.
An estimated 40 percent of small businesses that rely on hourly workers have closed, according to a report in the New York Times (NYT) on Thursday (April 9), citing an analysis by University of Chicago economists. Jobless claims have hit almost 17 million, and that does not count the hundreds of thousands of people who can’t get through to unemployment offices.
Many small businesses have also been unable to get relief loans due to bottlenecks in the system and technology hurdles. Federal agencies are simply crippled by demand, and the slow response is pushing some businesses to the brink of bankruptcy.
The Paycheck Protection Program committed more than $100 billion to businesses in the form of forgivable loans weeks after many firms closed — and little money has made it into borrowers’ bank accounts. Big banks are struggling with the Small Business Administration’s ancient computer system and smaller banks are running out of money.
Tony Fratto, who served in the George W. Bush administration during the 2008 financial crisis, told the NYT that although policymakers have been quicker to respond during the pandemic than during the Great Recession, the response was still too late and many businesses could face bankruptcy.
“There’s creativity and there’s scale, and they’re trying to do it quickly,” Fratto said, “but they weren’t early enough, and there’s going to be a lot of damage because of that.”
A “conservative estimate” indicates that 45 million Americans are at risk of losing their jobs, including 75 percent of the people employed by the hospitality and construction sectors, forecasters at Moody’s Analytics said.
“Most businesses are struggling with reduced demand as consumers shift their spending to necessities and cut back on the rest,” the analysts said.
Jobless claims released Thursday (April 9) show that the coronavirus triggered another 6.606 million unemployment claims for the week ending April 4.