Housing Construction Decline and Installment Loans

Installment loans

Installment loans are a norm in today’s economy. They are no longer being used as emergency funds, but rather moving into the category of reliable sourcing for cash to pay bills. Looking at the economic climate, businesses understand that it’s imperative to find alternative ways of making payments and stretching budgets. The standard ways of procuring funds is not always available because of the serious recession.

Housing construction hits second lowest level in history

The housing slump has not ended yet. In March housing construction fell 10.8%, the next to lowest it has ever been in a recorded 50-year history. Housing issues are a major contributor to the recession and without a marked improvement, we can expect the recession to last quite a while longer. Reports from the Department of Commerce show that applications for building permits, including commercial, single-family and multifamily, were well beneath economists’ projections. In March, only 510,000 units applied for construction and what’s worse, January’s applications were only 488,000. There was a rise, however it’s nowhere near the normal average for construction in the spring.

The low level of new housing is one example of proof that the recession is far from over. In addition, jobless claims are up to 6 million for the first time. Analysts predict that employment will remain weak for the remainder of the year because businesses are finding it hard to factor hiring new workers into their financial structure. In fact, most businesses are downsizing to make their own budgets work. They are also cutting discretionary expenses and asking employees to take voluntary days off. These tactics are indicative of how severe the struggle to stay afloat is.

Small business’ revival

The small business’ revival will happen, but all signs show it will happen much slower than hoped. Businesses will have to look to installment loans to help manage debt. They also may have to use tactics like lay-offs and cut-backs more readily. Getting money to cover bills is no longer a quick process with traditional lenders. Businesses will have to look to creative ways of finding funding.

Some businesses are taking matters into their own hands by brainstorming. To revive business, Denny’s offered a free Grand Slam Breakfast to customers. Lines at over 1,100 franchises were long on the free breakfast day. Whether or not that promotion will bring in more consistent customers has yet to be seen though. Only time will tell if people are ready to pay for their breakfasts again, instead of eating at home.

Another tactic is taking advantage of the sagging market. Grocery stores that sell “damaged food” are cropping up. They take dented cans and beyond-sale-date items and sell them at a discount. Customers are lining up to get discount staples and discount stores are thriving.

Law firm Skadden, Arps, Slate, Meagher & Flom offered employees a full year off, in return for one-third of their salary. This is another creative tool that will prove effective or ineffective as time goes by. But for now, the law firm knows they will be making the debt payments for one year. That’s just the reassurance most businesses are seeking- temporary solutions to a recession that is going strong.

Businesses need to be proactive

Regardless of the tactic used, businesses understand that they need to be proactive as they wait out the recession. Early estimates were that things would turn around quickly, however after reading the signs of the times, it’s clear that that is not the case. The recession is here to stay for at least another 9-12 months and businesses are quickly acclimating. Installment loans, lay-offs and expense-cutting are all workable options corporations are looking to today.