While thousands of residents are in hospitals ill with the coronavirus, business owners all over the country are scrambling to keep their company from going under.
With customers staying in their homes, many businesses have experienced drastic losses ever since Covid-19 landed on our shores.
And though the government has provided some financial assistance for these ailing businesses, it simply isn’t enough for companies whose revenue has completely dried up.
When that happens, you’ll do anything you can to get by.
Boss of Events Company Bled $100K a Month Since Feb; Now Has to Fold Pizza Boxes
One business owner in Singapore, Peter, has some tough decisions to make in the coming months.
Speaking to South China Morning Post, Peter said he might have to close his 14-year-old events company if business doesn’t improve soon.
What many people forget is that in addition to a substantial decrease in revenue, companies still have business expenses to pay every month to keep the business running.
These include rent, CPF contributions, wages, renovation, advertising, and so on.
Even though Peter has earned zero revenue since February, he still has to pay $100,000 a month for his two office spaces, six vehicles, and 25 staff members.
“We are bleeding S$100,000 a month and our reserves are almost dry”.
Peter is hoping that things will pick up by June, but since residents will still have to stay at home for the most part after the circuit breaker, this doesn’t seem likely.
And to rub salt into an already gangrenous wound, Peter recently got married and has to pay over S$2,000 a month for his mortgage and car loan.
As a result, the business owner has started folding pizza boxes to survive during this trying time.
That’s awful.
“But can’t he just take a loan?” you ask with furrowed brows.
Unfortunately, it’s not that simple.
A Short-Term Solution
As SCMP reported, due to a government initiative that allows banks to borrow at a near-zero interest rate, banks have been able to lower their loan interest rates, attracting businesses that are struggling to stay afloat.
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Around 2,500 loans amounting to S$1.9 billion were issued in March and April.
But, just like Peter’s events company, many businesses might have to shutter in the future, which means paying back their loans will be impossible.
This is one of the reasons Peter is hesitant to take a loan, even with the invitingly low interest rates.
“Taking a loan is never off the table, but I see no way to pay it back,” he said.
So, while businesses might survive in the meantime, they run a risk of defaulting in the future since there’s no telling when this pandemic will die down.
According to SCMP, banks across Singapore are already prepared for large-scale loan defaults, with billions of dollars’ worth of provisions, though the risk for them is low as the government will be taking the risk instead.
Both the government and banks are hoping that the loans will be enough to keep businesses afloat until the economy bounces back, but no one knows for sure if it’ll happen.
These are dark, dark times we’re living in.
Reader: Tell me about it, I can’t even watch movies with my girlfriend at the cinema anymore.
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