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The Economic Effects of COVID-19 on Businesses

The Economic Effects of COVID-19 on Businesses

Written by Taher Kameli

According to a Centers for Disease Control and Prevention report, there are 5,176,018 reported cases of  COVID-19 in the United States alone as of August 13, 2020. As a result, the lives of caretakers, family, and employers of the affected individuals have also been changed. The unemployment rate in the United States is estimated to be at 13 percent and counting, and Federal Pandemic Unemployment Compensation ended on July 25, 2020. This is the highest unemployment rate Americans face since the Great Depression. People and businesses have taken drastic measures to keep afloat.

Several new laws and acts have recently emerged in the United States as a response to the COVID-19 outbreak. Among them is the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The CARES Act was signed into law on March 27, 2020. Where small business owners, self-employed workers, and independent contractors were previously excluded from unemployment benefits, they are now included due to the expansion of benefits by federal lawmakers. Small business owners must have been directly impacted by COVID-19 to qualify for unemployment through the CARES Act. However, the small business must have paid unemployment taxes and must be willing and unable to find employment.

Programs such as the Paycheck Protection Program and the Economic Injury Disaster Loan have also been approved through December 31, 2020. These resources help provide options for small businesses to cover expenses and operational costs and recover from substantial economic injury.

Though many laws and financial resources have become available to mitigate the adverse impact of the pandemic, the rising rates of impacted businesses and people continue to increase. This increase complicates the efforts of economic recovery and creates further uncertainty for the future of many companies. The social distancing protocols, travel restrictions, and other quarantine orders have greatly impacted customer spending and demand and will continue to do so. While the necessary restrictions provide health and safety precautions, they also undoubtedly put a strain on the consumer-seller relationship.

According to Business Law Today, the U.S. government has committed trillions of dollars in business stimulus programs to maintain a flow of credit to those affected by the pandemic. Unfortunately, the aid has been insufficient in the ongoing economic distress, and loan lenders have resorted to making amendments and arrangements to previous deals.

With a potential change in our nation’s leadership in the near future, we can also expect potential changes in the United States’ response to COVID-19. This may involve new laws or acts that directly affect the economy. Although the future impacts of the pandemic on the business and corporate world remain uncertain, we can hope for cooperative negotiation and recovery in the United States.

 

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Citations

 

  1. Centers for Disease Control and Prevention
    1. https://www.cdc.gov/coronavirus/2019-ncov/cases-updates/cases-in-us.html
    2. “Coronavirus Disease 2019: Cases in the US.” Centers for Disease Control and Prevention, U.S. Department of Health & Human Services, 13 August 2020, https://www.cdc.gov/coronavirus/2019-ncov/cases-updates/cases-in-us.html.

 

  1. Thomson Reuters CARES Act Article
    1. https://www.thomsonreuters.com/en/resources/covid-19-small-business-resources/cares-act-stimulus-for-small-business.html
    2. “CARES Act Stimulus for Small Business.” Thomson Reuters: The Answer Company, Thomson Reuters, 10 August 2020, https://www.thomsonreuters.com/en/resources/covid-19-small-business-resources/cares-act-stimulus-for-small-business.html.

 

  1. ABA Business Law Today Article
    1. https://businesslawtoday.org/2020/05/distressed-company-ma-time-covid-19-benefits-risks-section-363-sales/
    2. Lucano, Andrew, et al. “Distressed Company M&A in the Time of COVID-19: Benefits and Risks of Section 363 Sales.” Business Law Today, American Bar Association, 27 May 2020, https://businesslawtoday.org/2020/05/distressed-company-ma-time-covid-19-benefits-risks-section-363-sales/