The financial ramifications of the COVID-19 pandemic have been significant for countless businesses throughout the United States. At the start of the pandemic, federal stimulus funds were issued in various forms to help businesses survive the economic crisis. However, as the virus continues, many of these businesses are being forced to close.
According to a Wall Street Journal analysis of legal filings and government data, over 300 U.S. companies that received approximately half a billion dollars in stimulus relief have also filed for bankruptcy this year. These 300 companies employ a total of 23,400 workers who are being adversely affected.
The affected companies received a variety of stimulus relief, including Paycheck Protection Program (PPP) loans and additional loans and grants. This stimulus relief was meant to help get them through the crisis short term. As the year has progressed, however, the money has run out. With no guarantee that a second stimulus bill will be approved, many businesses are moving towards bankruptcy.
Financial experts believe the number of business struggling is more than what was reported in the Wall Street Journal since their study only analyzed companies that were considered big borrowers through the stimulus program. A total of $525 billion was issued by the federal government in PPP loans to 5.2 million companies since April, according to figures from the Small Business Administration (SBA). These companies constituted just half of the total PPP loans issued. Additionally, the companies included in this study were those that filed for bankruptcy.
These 300 companies were issued between $228 million and $509 million in loans. Many of them have cited the COVID-19 pandemic as the main reason why they are proceeding with bankruptcy. They simply were not able to continue working under these uncertain and difficult conditions. According to the study, the hospitality industry, including restaurants and hotels, has been hit the hardest. The restaurants and hotels that filed for bankruptcy employ over 6,600 employees.
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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.