Can an Installment Loan Help a Struggling Company?

The unemployment rate soars in four states

For those who still have a job, an installment loan may help you pull through the staggering economy. For those who have had to take pay cuts in order to retain their jobs, you are luckier than many. California, South Carolina, Michigan and Rhode Island reported unemployment rates of ten percent or more in January, and economists predict it may reach double digits nationally by the end of the year. In addition, California is forcing state workers to take two unpaid days off per month and is failing to process income tax refunds because of budgetary concerns. The lowest unemployment rate in January was reported by Wyoming at 3.7 percent.

The Effect of Government Bailouts

Though it would seem that relying on the government to bail out companies with lagging sales is a good plan, it’s also important to understand the impact these might have. We need only look at the recent situation with AIG—the government stepped in to help and yet they still paid bonuses to top executives, some of whom put the money into offshore bank accounts. This is clear mismanagement of funds that could have been used to rebuild their infrastructure or for the government to help other businesses in need of funding.

Businesses get help but what about individual people?

The government steps in and helps businesses but what help is there for the many people who are suffering from economic downturns? Their jobs are gone and they are facing the problem of trying to pay the bills on unemployment which is usually about 40-50% less than a worker’s former salary. An installment loan may help for those who have a good chance of being able to return to a job comparable in pay to the one they lost. It’s certainly an avenue worth some research but wouldn’t it be better for businesses to use short term installment loans and leave the government loans to those plagued by unemployment?

Effect of the New Stimulus Package

With the new administration in place and new stimulus packages becoming available, many people are still skeptical and with good reason. The current recession is the longest since the one that plagued the country in 1981 and there is no end in sight. With economists predicting national double digit unemployment by the end of the year, it’s essential that we look to the government for some kind of help to get the economy back on track and get people back to work. Mortgage rates are lower than they have been in at least ten years but foreclosures are high because of unemployment. It’s too early to know if President Obama’s stimulus package will pull the economy out of the slump, but the hopes are that it will.

An installment loan instead of a bailout

Perhaps a better solution to the problem and a way to avoid incidents like that of AIG is to provide a low cost installment loan to those businesses in need of funding instead of huge bailouts that can be mismanaged. Save the grants for the individuals who are attempting to feed their families and save their homes on half of the income they were making. It’s important to take care of the people as well as the businesses.