5 Reasons You Can Be Denied a Loan or Credit Card

5 Reasons You Can Be Denied a Loan or Credit Card

The pandemic has brought about a recession in the economy and every nation is feeling the pinch. Local governments are fully aware of the economic hardships their citizens and businesses are facing. The pandemic has caused a widespread panic since it is leaving countless people without jobs and most of the small businesses are merely surviving. The sudden financial plunge has prompted most governments to take immediate measure and try to revive or stimulate the economy back to normalcy. The governments have come up with stimulus packages that offered to the citizens and their business in the bid to bring relief and induce spending into the economy. The move will seek to rekindle the economy and reduce the adverse effects of the pandemic on the people.

Below are various stimulus options that are made available during this tough time.

Business loans

Most businesses especially the SME's (Small and medium-sized enterprises) are experiencing a decline in cash liquidity which is inhibiting them to meet their expenses which include payment of wages, interest on the debt, rents, and taxes among many others. The various governments are releasing financial aid to the affected business to help them avoid bankruptcy or closure. The government is keen to help avoid problems such as temporary inability to pay creditors and the laying-off of workers. All the mitigation measures have been reported to help enhance the business cash flow. Most governments have come up with a blend of both non-tax and tax measures. The non-tax measures are closely related to loan guarantee schemes that allow businesses to take up loans from financial institutions at friendly terms that may include cash grants and small interest free loans. However, this stimulus targets the small business that is on the receiving end. Some of the non-tax measures may include non-wage costs and deferral of payments.

Tax stimulus

Several countries have stepped up by introducing measures to help households mitigate the wrath of the pandemic. Some of the measures include extending tax filing deadlines, providing faster tax refunds, tax deferrals for most households to cater to their taxes, and tax exemptions to business properties and assets. The tax deferral measures are brought up to help the low-income households. The measures extend to promoting refunding of excess payments from personal income tax by coming up with a flexible mode of payment. In some countries, they have introduced a temporary VAT (Value Added Tax) reduction that aims at stimulating consumption. Some governments have also introduced interest deferral on mortgage payment, which has helped a lot of homeowners rethink of a strategy for repayment as they enjoy the grace period. Other measures also include deferral of utility bill payment.

Unemployment benefits

The employment benefit, courtesy of the pandemic, seeks to bring financial relief to people affected by the coronavirus, the unemployed, freelancers, self-employed, gig workers, and independent contractors for a specific period of time. The stimulus package caters for the needs of people who just their jobs and are finding it to make both ends meet. Most governments are supporting this initiative through direct transfers rather than using the tax system which works differently in each country. Transfers are made regularly since the payment processes are faster and more targeted as there is an urgent need for financial assistance to vulnerable families during this pandemic. On the other hand, some countries offer cash payments to low-income households in the broader sense, as they are more likely to be affected by the crisis and have fewer savings to support themselves. There are countries also coming up with financial incentives for the most vulnerable in society. However, the stimulus is intended to help families meet their expenses and survive during these harsh times. In some cases, the benefit is provided as a lump sum and in other cases as on the regular basis.

Rental assistance and moratoriums

Most governments have come up with stringent policies guiding the eviction and utility shutoff moratorium laws. It is important to have a clear mind and conscious that the protection laws do not strip you of your responsibility to meet your rent or mortgage. It only pushes the dates further up to when the economic turmoil subsides. The laws also don't hinder the landlord from suing for eviction and vacation of their property. The house and loan stimulus aims to postpone the dates that the bills are supposed to be paid. However, after the signing the contract the protection doesn't exempt the landlord from enforcing an evacuation in the event of criminal activity, public health threats or other violations. In addition, many states have rental and mortgage assistance programs in place, but these protections are temporary, and something must be done soon. Finally, tenants and landlords who cannot pay their rent or mortgage due to a coronavirus outbreak can negotiate reduced or late payment with their landlords or creditors. Homeowners who find it hard to meet their bills can also seek foreclosure relief and government mortgage assistance. Moratoriums could also help the two strikes an agreement to work together and postpone the payment up to a later date.

Nutritional assistance

The local government officials have also introduced a nutritional and food supporting system that aims at enhancing the food security of different countries as well as providing food to affected families. Most of the learning institutions were closed after the onset of the pandemic and with most breadwinners laid off, the local government had to come up with ways of helping the vulnerable in society. Some of the governments are working closely with the Agri-food promotion agencies to improve means of managing surplus by providing to the less fortunate and families that are currently struggling to put something on the table. Again, some governments are breaking their food banks to help communities that face a shortage of food suppliers during these trying times. Some of the stimulus packages such as the food nutrition package have helped restore sanity and humanity in our societies.