Economy – US Federal Reserve Banker Bowman fears mass bankruptcies in small businesses

“The financial pressure on many small businesses remains high, and I am concerned that a growing number of small businesses have already closed permanently or are on the verge of failure,” Bowman said at a business meeting in Oklahoma on Monday. Many banks had told her “that the Paycheck Protection Program (PPP) and other fiscal measures only postponed this financial pressure, but did not remove it.”

The US monetary authorities, including Chairman Jerome Powell, had seen the restrictions to contain the coronavirus as the only safe route to economic recovery and supported fiscal aids such as the PPP and loans to small businesses.

In Bowman’s view, however, the restrictions were paid at too high a price. “These restrictions may have been helpful in containing the pandemic, but they appear to have disproportionately impacted the ability of smaller firms to maintain their operations and sources of income, resulting in significant cash flow pressures,” Bowman said.

The PPP was originally worth $ 660 billion and was initially in high demand. It is intended to support small and medium-sized companies in times of crisis so that the companies can keep their staff.

(Reuters/cash)

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