To say that the novel coronavirus COVID 19 has devastated the US economy would be an understatement.
While the country has been enjoying fantastic economic growth for years prior to the pandemic, it didn’t take long for public health and safety measures to slam the brakes on that growth.
Today, as state and federal government agencies work to find ways to reopen our country safely, millions of businesses — including thousands in Tennessee — are finding it challenging to climb their way out of this economic downturn.
Early indications are that we are in the beginning stages of a V-shaped recovery in the hope is that we can bounce back quickly. However, people are staring at some uncomfortable financial realities right now after being held out work or unable to open their businesses for months on end.
In Tennessee, this has led to a major surge in loan applications — both traditional and non-traditional.
The people of Tennessee are looking for ways to mitigate their financial emergencies without sacrificing their financial future. Some are finding this process a little easier than others, but everyone is stressed out and a little anxious about what to do moving forward.
Let’s dig a little deeper into the economic reality that Tennesseans are dealing with right now, the demand for traditional lending to help them get out of these situations, the government subsidy programs, and how title loan lenders are filling in the gap.
Tennessee Has Been Hit Hard by COVID 19
Tennessee, like every other state in the country, has seen some significant economic turmoil as a direct result on the COVID 19 pandemic.
Hundreds of thousands of people across the state are currently unemployed, many of them no longer enjoying the extra $600 per week in enhanced unemployment benefits that were originally available as part of a government stimulus project.
It’s been a little over a month since that program ceased and Congress has shown no real progress whatsoever towards restarting, rejuvenating, or rebooting that program. Congress has tried a handful of times to come to a deal that could land on the desk of the President, but things just cant seem to get up off of the ground floor.
In the meantime, a little bit more than 27,000,000 Americans across the country are looking to take advantage of unemployment benefits. And while the unemployment rate now is better than it was a couple of months ago (significantly better, in fact) there are still tens of millions of Americans that are finding themselves unable to cover their basic needs as the economy remains shuttered for the most part.
Making things even worse, emergency stay orders that put a moratorium on evictions and utility shutoffs are about to be lifted in states across the country.
Tennessee saw this protection lift at the end of August (August 29, to be exact), which means people are now on the hook not only for expensive utilities once again potentially without any income coming in but are also on the hook for overdue fees and disconnection charges that will really sink them deeper into debt.
It’s not a great situation, that’s for sure; especially as the weather gets colder and colder.
People need help and they need help now.
Demands for Traditional Lending Has Skyrocketed
Unsurprisingly, all this economic turmoil has pushed people to banks, credit unions, and traditional lenders in waves.
Traditional lending organizations in the state of Tennessee say that they are overwhelmed with applications, with many of them reporting that they haven’t ever seen a rush like this in their lifetime.
Almost 99% of the Tennessee private workforce is made up of businesses that have 500 employees or less, with north of 160,000 small businesses employing more than 2,100,000 people in the state. A lot of them business owners and employees are having a tough time navigating this new financial reality.
Reports out of Pinnacle Financial Partners based in Nashville are that they process more than 3900 applications looking for north of one billion dollars in lending in just one weekend alone.
Bank of America reported that they received more than 180,000 loan applications over that same stretch of time, with businesses across the country looking to take advantage of lending totaling more than thirty-three billion dollars.
These aren’t small figures.
Even more worrying is that many of these traditional financial institutions are reporting that they are seeing even more loan applications now than they did even just a month ago. They’re having difficulty moving through these loan applications, getting people approved, and getting them the funding they need to keep themselves afloat.
Government Subsidies Have Been Unable to Cover the Gap
While the federal government has been stuck in quicksand getting people a second round of stimulus, they did roll out a major multi trillion-dollar aid package at the beginning of the pandemic.
The CARES Act pumped much needed money into the US population, providing direct stimulus to taxpayers but also providing access to federal loans and other financing options through the Paycheck Protection Program.
The money earmarked for that program, however, didn’t last very long.
In fact, the initial run of financing was gobbled up so quickly that Congress had to move again to replenish those funds with a second round of money and now that cash is starting to run out, too.
Plenty of Tennessee businesses took advantage of the PPP program when they had the opportunity to do so.
According to state records, the average size of a PPP loan in the state of Tennessee was right around $95,000. About 82,000 small businesses that applied for this kind of financing as part of the CARES Act received less than $150,000, with about 11,000 businesses in the state of Tennessee getting more money than that.
Businesses in the Knoxville area that took advantage of smaller loans averaging $36,000 report that they were able to save north of 25,000 jobs. Many small business owners in Tennessee feel that if the PPP program and other Small Business Administration initiatives were not available they wouldn’t have remained open at all.
This lifeline saved hundreds of thousands of businesses throughout the state and millions more around the country.
And while 88% of those that took advantage of Paycheck Protection Program funding were small businesses, there are still a lot of entrepreneurs and employees that are still in tough financial straits.
Title Loan Lenders Are Helping
Thankfully though, non-traditional lenders like title loan lenders, for example are filling in the gap and providing the people of Tennessee access to the quick cash and capital they need when they need it most.
Although these loans are considered the worst consumer loans, they are seeing a surge in applications as residents have limited options. As one title loan lender in Tennessee puts it, Make no mistake about it, until the economy is fully opened again and people are able to go back to work or open their businesses 100% millions are still going to be teetering on the edge of financial ruin.
Unlike the government, these lenders claim that they’re able to get an injection of cash into the hands of people dealing with these financial emergencies. Best of all, these loans are available with absolutely no credit check necessary whatsoever because you’ll be using the title of your vehicle to secure your loan as collateral.
More and more people in Tennessee are moving towards non-traditional lenders as they notice how long the wait for traditional lending is with banks and credit unions.
As we highlighted above, a lot of those institutions are overwhelmed with applications. Because the financial climate currently isn’t all that attractive, it’s not like they are approving a lot of risky loans, either.
All of the loans that are getting approved by traditional are for folks with picture-perfect credit, plenty of cash in the bank, and assets they can use to further secure those kinds of loans. If that’s not your situation, then those banks and credit unions likely won’t be able to help you.
Title loans, though, are available to literally anyone and everyone who owns a vehicle. One recent applicant, Shana Cooper, is quoted as saying, “The application process is lightning fast, and I got the cash deposited in my bank account in 24 hours after I’d been approved — that’s money I need to pay my rent, utilities, and groceries.”
It doesn’t get much better than that.
If you’ve been looking for a bit of financial help in Tennessee to get you through these rocky times — like so many of our fellow Tennesseans have already — it may not be a bad idea to check out the alternative lending industry. As always, borrow responsibly.
Photo Credits: stock photos