The stimulus package proffered by the U.S. government overwhelmingly favored large corporations (in the form of subsidies and tax abatements), meaning that loans to sustain overhead for smaller businesses (the “Paycheck Protection Program”) were somewhat limited. Consequently, those public funds were soon exhausted. Unemployment remains high as a result…even as operating expenses remain unsustainable for businesses with no buffer in their cash-flow model. (More than THREE QUARTERS of small businesses have less than 2 weeks of cash liquidity. Only about 30% are effectively breaking even each month. Few have enough cash on hand to tide themselves over for over a month.)
A large portion of the trillions of dollars in the much-touted federal aid package was purportedly geared towards small businesses; yet the overall legislation (the CARES Act ) ended up being little more than a slush-fund for well-connected corporations.
Meanwhile, the U.S. SBA is also strapped. So most struggling businesses are still searching for sources of capital infusion.