As the COVID-19 pandemic continues to wreak havoc on the global economy, governments around the world have implemented various measures to support businesses and individuals. However, as these aid programs come to an end, experts are warning of a potential surge in insolvencies.
In the United States, the Paycheck Protection Program (PPP) provided loans to small businesses to help them keep their employees on payroll during the pandemic. However, the program ended on August 8th, and many businesses are still struggling to stay afloat. According to a survey by the National Federation of Independent Business, 22% of small businesses expect to have to close their doors if economic conditions do not improve in the next six months.
Similarly, in the United Kingdom, the government’s furlough scheme, which paid up to 80% of employees’ wages, is set to end on October 31st. This has led to concerns that many businesses will not be able to afford to keep their staff on, leading to a surge in unemployment and insolvencies.
Experts are also warning of a potential wave of personal insolvencies as government support programs for individuals come to an end. In Canada, the government’s Canada Emergency Response Benefit (CERB), which provided $2,000 per month to eligible individuals who lost their jobs due to the pandemic, ended on September 27th. This has led to concerns that many Canadians will struggle to make ends meet, leading to a surge in personal bankruptcies.
The situation is similar in Australia, where the government’s JobKeeper program, which provided wage subsidies to businesses, is set to end in March 2021. This has led to concerns that many businesses will not be able to survive without the support, leading to a surge in insolvencies.
While government aid programs have been crucial in supporting businesses and individuals during the pandemic, they cannot continue indefinitely. As these programs come to an end, it is important for businesses and individuals to prepare for the potential financial challenges ahead. This may include seeking financial advice, exploring alternative sources of funding, and cutting costs where possible.
In conclusion, the end of government aid programs is likely to lead to a surge in insolvencies around the world. While the situation is challenging, it is important for businesses and individuals to take proactive steps to prepare for the financial challenges ahead. By doing so, they can increase their chances of weathering the storm and emerging stronger on the other side.
