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As small businesses such as restaurants, bars, gyms and hair salons are forced by the coronavirus pandemic to go dark and lay off millions of employees, frantic owners are desperate for government aid to help them salvage enterprises that can’t survive for long without customers.

But the main federal lifeline offered so far — low-interest disaster loans — is unappealing to many people running on thin margins and leery of taking on debt they can’t afford to repay.

“All we do is make enough money to make it through the off-season,” said Donna Benefiel, who owns the Sunset Produce Market in Banks, Ore., and a grocery store on the Oregon coast. “We’re not that profitable. We don’t have any reserves. How do we borrow a year’s worth of money and then have to pay it back?”

On Monday, the Federal Reserve resurrected an asset-purchase facility from the 2008 financial crisis intended to encourage banks and financiers to make loans to small businesses and households. It also plans to announce a new Main Street Business Lending Program designed to support lending to “eligible small and medium-sized businesses” but offered few details.

A disaster loan program is already up and running. Congress authorized up to $7 billion early this month for small business disaster loans through the Small Business Administration. Unlike the agency’s flagship loans, which are made by banks, disaster loans are issued directly by the government.

Red tape has slowed the process. To make businesses in their state eligible for the loans, each state’s governor had to submit a formal disaster declaration request to the agency. It took until Sunday for all 50 states to have their applications filed and approved.

 

Source : https://www.nytimes.com/2020/03/23/business/coronavirus-small-business-loans.html