A Government-Backed Line of Credit Would Help Small Businesses More Than Current Relief Efforts
5 Pages Posted: 5 May 2020
Date Written: April 22, 2020
In an effort to provide relief in response to the COVID-19 pandemic, Congress charged the Small. Business Administration (SBA) with the task of administering a variety of credit programs, in part with the help and guidance of the US Department of the Treasury.
Unfortunately, not only is the SBA too small to manage such a huge responsibility, it also has a long record of poor performance in times of emergency. There is no reason to believe that this effort will be different; the program as administered through the SBA will predictably serve small businesses poorly. To better help small businesses, Congress should create a government-backed line of credit. This would allow businesses to survive by giving funds — without red tape — to businesses that are facing increased demand right now.
In this brief, we suggest an alternative that is more likely to prove helpful: a government-backed line of credit — one neither extravagant nor insignificant — for every American.
Keywords: healthcare, coronavirus, coronavirus pandemic, COVID-19, public health, economics, quarantine, economy, economic crisis, small business, stimulus, business loans, business financing
JEL Classification: I00, I18, H80, H81
Suggested Citation: Suggested Citation