Tens of thousands of businesses have ceased to exist, and millions of Americans have lost their jobs because the US Congress ignored midsize businesses in its government support program.
It is reported by the Bloomberg agency.
The US authorities, first of all, helped the largest companies in the country, and then, not without scandals, help reached small businesses. However, the government has left medium-sized businesses alone with the crisis, although they account for nearly a third of the US private sector gross domestic product and employ 48 million people.
Back in March, Congress allocated $ 500 billion to the Treasury Department to stabilize the economy. At the time, the Federal Reserve was expected to buy back 95% of any loan the bank makes to midsize businesses. It was planned to allocate up to $ 600 billion for this, but three months later, only $ 472 million, or 0.08% of the planned volume, was spent on buying out the debts of medium-sized businesses.
“While all this money was left aside, tens of thousands of businesses were permanently closed, and millions of Americans lost their jobs,” – emphasizes Bloomberg.
However, the point is not at all that Washington refused to pay off loans to enterprises. A Fed study found that demand for loans from businesses of all sizes declined in the second quarter of 2020. A survey among small business owners also showed that only 3% want to borrow money. Thus, the government wanted to solve a problem that does not exist. When offering to buy out loans, officials did not take into account that in a crisis situation, when it is not clear whether it is worth waiting for some profit, the business least of all wants to burden itself with additional debt burden.