Payments on COVID disaster loans for small businesses are due, and it couldn't come at a worse time.
Roughly $390 billion went out to nearly four million small business owners during COVID lockdowns.
"Those are starting to come due at the end of 2022 and early 2023, which could add to the financial pressure that a lot of small businesses are facing across the United States," says Vance Ginn, chief economist for the Pelican Institute for Public Policy.
Ginn says many small business owners are still struggling to find and/or pay workers, on top of rising costs under Bidenflation.
"Small businesses employ about 90 percent of all workers," he says. "This is really where you get the mass number of people working. If they start to pull back, it could lead to a rapid draw down in the number of jobs being created or that are even there now across the economy."
At the same time, consumers are starting to pull back spending due to higher interest rates.
"As inflation goes up, they don't have as much to spend on other goods and services. So, a lot of these small businesses are taking a hit at the same time they're going to start to pay back a lot of these loans," says Ginn.
Originally aired on KTRH News in Houston, Texas.
Vance Ginn, Ph.D.