Second COVID-19 shutdown would be devastating to tech businesses
Here’s what you need to know.
The ongoing coronavirus global pandemic has caused losses for the US equities market since July 2020. A large number of tech businesses have been forced to shut down operations due to the quarantine and lockdown orders that have been passed by governments all over the world.
According to brokerage BuyShares.co.uk., startup companies in Silicon Valley layoff more than 26,000 tech jobs, at companies like Uber Technologies Inc., Groupon Inc., and Airbnb Inc.
Globally, companies are working day and night to find a way to bounce back from the economic crisis. Brad Nakase, a business and employment lawyer for car accident at Nakase Law Firm, says that businesses in technology are still facing bleak conditions despite the fact that the stock market is starting to look promising. Due to the nature of his job, Nakase deals directly with tech employees in San Diego County that is home to Qualcomm, Oracle, TeraData, Zovio and many others. Many tech employees who have been laid off during these tough times and are struggling.
A number of local tech businesses did not have the required resources to adopt the ‘work from home’ strategy, which resulted in them having to completely stop their operations for months. Some owners of small tech businesses were too caught up in planning how to adapt to this extraordinary and unexpected situation that they weren’t able to apply for aid such as federal loans.
Brad Nakase, 2020 Litigator of the Year from the Institute of Trial Lawyers says that the future is uncertain. It is unclear when things will go back to normal and when the coronavirus will be eradicated. Businesses and people who have lost their means of livelihood are in need of assistance. It is essential for politicians to come together and bring forward a solution to improve the financial conditions of the people in the form of a corona aid relief program.
Even though things are slowly going back to normal and restrictions are being lifted, businesses and people will still take months to get back on their feet. There are still certain restrictions regarding the operations of businesses which will definitely impact their profitability. Multiple re-openings have impacted their marketing, location layout, PPE, sanitation policies, and systems. They have been forced to adapt to situations that started with deliveries only, then moved to curbside pickup, was followed by limited in-person capacity and now to outdoor seating only.
Companies can employ fewer people now due to higher costs being incurred and lower earning capacity. Aid programs are being stopped even though conditions haven’t gone back to normal. A number of US citizens were reliant on the Paycheck Protection Program that is been extended only till August 8th. At the same time, the number of Covid-19 cases is rising in several states, leaving people puzzled about the situation.
It is still a struggle for owners of tech businesses and residents of the US to cope up with the financial insecurity and uncertainty that the future holds.
What do tech businesses need?
At the end of the day, customers are what tech businesses need. This global pandemic has resulted in most people being reluctant to even step out of their houses and at the same time they are also cautious about controlling their cash flow during these uncertain times. The rate of unemployment is at an all-time high and the manner of crisis management is poor as well; this means customers might not return for quite some time.
One of the solutions that the government has taken into consideration is the issuance of additional loans; however, owners of businesses have shown reluctance towards taking additional loans keeping in mind the current circumstances. There is no certainty regarding the duration of the pandemic and this leaves us with a question mark about businesses struggling to pay off loans as well.
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