The pandemic forced governments to support businesses as economies struggled across the world. Different countries opted for different schemes: for the USA there were stimulus cheques, while in the UK there was the furlough scheme. But how did these policies affect businesses?
What were the stimulus cheques?
In the USA, there was an attempt to help support the small businesses during the pandemic, by offering stimulus packages to keep them going. SBA grants were just one example of this. Businesses could receive up to $15,000 in grants that didn’t need to be repaid to help them cover costs from employee wages, to rent for office buildings or equipment hires. In order to qualify they had to demonstrate that they had fewer than 300 employees and illustrate that revenue decreased by more than 30 percent during March 2020 compared to a similar period in 2019. Aside from this, businesses were eligible to apply for loans of up to $500,000 from the Small Business Administration, with soft repaying structures that could take as long as 30 years.
Wages were covered
In the UK, there was a centralized attempt to protect jobs – the main way this was encouraged was by covering wages with the furlough scheme. This scheme featured the government covering 80 percent – or up to £2500 a month – of eligible employees’ wages to support businesses and ensure that they didn’t have to make staff redundant. The scheme ended in September 2021, but at its peak, almost a third of the UK workforce was furloughed.
Cashflow was able to stabilize
One of the main effects for small businesses was that their cash flow stabilized with stimulus cheques. They were able to secure loans that kept their business going, while consumers were able to continue spending through government funded stimulus cheques. The upshot was that small business owners were able to retain control of their company and look ahead towards the end of the pandemic and put themselves in a promising position for cities opening back up. Stimulus cheques ensured that small businesses had a buffer and time to look at some innovative ideas. Some businesses, for instance, are looking into open banking solutions rather than staying with traditional forms of payment.
The pandemic was – and still is – a difficult situation for businesses. But with schemes such as stimulus cheques and furlough payments helping to stabilize cash flow, companies are looking ahead to a brighter future as society opens back up.