Unemployment Claims Reaches 5.2 Million in America and Hits Small Businesses Hard

The COVID-19 health crisis has led to a financial crisis. As a result, 5.2 million Americans have filed for unemployment between April 5 and April 11, according to the Department of Labor. Due to the high volume of claims, individuals and small businesses are facing challenges when trying to access government funds to support their livelihood and businesses.

In a recent report, The New York Times Outlined the impact the demand is hitting small businesses hard.

From The New York Times:

The Small Business Administration has run out of money for its Paycheck Protection Program, officials said on Thursday, leaving millions of businesses unable to apply for emergency loans while Congress struggles to reach a deal to replenish the funds.

 

Congress initially allocated $349 billion for the program, which was intended to provide loans to businesses with 500 or fewer employees. The money has gone quickly, with more than 1.4 million loans already approved as of Wednesday evening, as small businesses struggle with virus-induced quarantines and closings.

 

Treasury Secretary Steven Mnuchin is expected to resume negotiations with lawmakers about adding another $250 billion to the fund on Thursday.

It is the fear of many leaders that the organization and others that provide economic relief that they will run out of money.

The Times spoke with a number of business owners and one of them shared that this series of unfortunate events is non-stop. “There’s a whole domino effect to this thing, and I’m one of the dominoes,” he said. “This morning, I read that the money’s gone and I’m like, ‘Heck, I didn’t even get a shot at this.’”

And he is spot on.

With the number of unemployed Americans, people are experiencing new financial realities. One of them is having a negative bank account balance which is causing difficulties receiving funds from the stimulus plan.

One of those challenges being is that when money is deposited into accounts with negative balances, banks are legally allowed to take what is needed to zero the balance.

And while no one can predict the ultimate outcome of this natural disaster, economists strongly believe that those living in poverty will be hit the hardest.

Read the full story here.

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