It is often said there is not a practical way for govt to distribute money to SMBs. So they take the easy route of giving money to large companies.
1. What about SBA guarantees small business loans up to 3X of last federal tax paid by the company for 0% interest. The small business can repay the loan in 5 years.
2. If you want a more radical plan, give 6 months of payroll as a loan to every small business for 0%-0.25% interest. Payback period is 5 years.
These ideas are easy to implement, rewards good behavior and equitable.
What do you think?
If you want to save small businesses, you need to hit pause on all their bottom line costs until demand picks back up. That means freezing mortgage/rent payments, property taxes, and other debt obligations they have today. Anything short of that is mostly wishful thinking or throwing tax dollars at a non-viable solution. Also note that this doesn't help small business employees - I don't care how kind-hearted a business owner is, you can't pay employees when you're not making any money. Taking on giant loans to pay them is ridiculous - you're better off having the government pay them instead.
1. Grant for R&D projects. There is a lot we could do while WFH that would make our products better after this. It would be great to not need to worry about customers atm and just work on innovation.
2. Low/no interest loans for 3-6 months of expenses. We have a lot of outstanding receivables. All our customers are holding payment. We’ll get it later, but we need that cash now. We also have a lot of customer opportunities in the pipeline. Most of them won’t go away. But they will be 6-12 months delayed. But we’ll need the cash 3 months from now not 9-15 mo this from now.
Who would then get affected? Mostly rich rentier types and then the banks. The banks will be given super low interest rates from the fed to cover the shortfalls in interest from these loans.
Essential services like food/medicine production, etc should be given grants to fill in any production holes.
If I'm right in believing this will be an ongoing issue for at least 6 months and likely over a year then nothing is going to realistically save many businesses that have little revenue over these time frames. That said other business will do well like medical and home delivery groceries.
We need to protect people. It truely sux if someone loses their business through no fault of their own but what's important is make sure these people have some money ongoing after the fact. Then the economy will repair itself to the new reality, and again when a vaccine or other solution is found down the track.
Also I think making sure landlords and banks can't kick people outta homes and similar with utilities are important.
Further well likely need some dry power when this is over to kick-start the global economy.
...hard questions and who really knows.