> thin-margin Mom & Pop, or medium sized private enterprise that had 1 week of cash on hand and ceased operations overnight.
It would be foolish of them to fold instead of getting loans. And it would be foolish of a bank to deny a good business a loan to get through the next couple years. I think much of the moaning about closing up is to encourage low-cost loans. Which is fair, because the government should be subsidizing such loans to lower the bar for a "good" business.
One issue is the time it may take to get a loan approved and have funds available, especially during a crisis as dramatic as the one we’re in. The other larger issue is that the loan is incredibly high risk because the owner may not ever be able to pay it back and in some cases be asked to put their personal property up as collateral. If getting a loan was such a slam dunk, many more owners would be pursuing it, but the realities are, they may be worse off taking a loan they cannot pay back versus closing up and moving on.
It would be foolish of them to fold instead of getting loans. And it would be foolish of a bank to deny a good business a loan to get through the next couple years. I think much of the moaning about closing up is to encourage low-cost loans. Which is fair, because the government should be subsidizing such loans to lower the bar for a "good" business.