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About Damjan Jugovic Spajic

Damjan won’t tell you how to run your business, but he will try to advise you on how to save your money and avoid financial ruin. As a staff writer at SmallBizGenius, he focuses on finding the most consumer-friendly services available and provides advice to both established and fledgling businesses out there.

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News

Small Business

Less than a week after the Senate extended the deadline for Paycheck Protection Program loan applications to May 31, the program seems to be running out of funds. Of the $296 billion set aside for the PPP in December, only $66 billion remains unallocated. The Senate voted 92-7 for the deadline extension in a show of bipartisan support for small businesses. This move was crucial for the program to reach businesses that need help the most - women- and minority-owned companies, and those with fewer than twenty employees. After some much-needed content changes to the program in February, the Senate rushed to extend its deadline, too. Additional changes, including a funding increase, were left out. However, advocacy groups and the Small-Business Administration are warning that the money will run out before the deadline, leaving many companies without aid. Businesses rushing to apply for a loan are doing so because a loan backed by the government can be forgiven if businesses spend them on payroll expenses. These funds represent a crucial lifeline and insurance against losses caused by the pandemic. Unfortunately, the money might not reach these companies in time, or at all. The Fed has already faced criticism for its easy policy while both the economy and inflation are soaring. As a result, bipartisan support for the approval of another funding run is far from guaranteed. The businesses left without funds in the first round of applications might miss out on what could be a lifesaving source of aid. As vaccines roll out, the hope remains that independent enterprises will soon be able to return to business-as-usual or at least business of any kind. However, this hope is much fainter for companies run by minorities or those with just a few employees, as funding has been more elusive than ever. 

April 16,2021
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Small Business

In a press release published on March 24, the Small Business Administration announced that it is increasing the lending limit for the Economic Injury and Disaster Loans program. Starting April 6, small businesses that have taken out a six-month loan for up to $150,000 will be able to extend the loan to up to 24 months and $500,000. According to the SBA, 3.7 million businesses employing more than 20 million people have received support through the EIDL program. Due to the pandemic lasting longer than expected and increased calls from small businesses for the SBA to remove the $150K cap, the agency decided to more than triple the maximum loan amount. Businesses that are already receiving a loan subject to the old limits do not need to apply for an increase. Instead, the SBA will contact them directly via email, detailing the process for a loan amount increase. Once the new limits are in effect, all new loan applications will automatically be considered for the increased loan limit. This decision comes after the SBA’s announcement that from March 12, it would extend deferment periods for all disaster loans, including the EIDL, to 2022. In an effort to shift all payments to this year, the first payment due for loans starting in 2020 will be pushed back to 24 months after the date on the note and 18 months after the date of the note for loans beginning in 2021. It seems that the federal government is doubling down on its efforts to prop up the ailing economy. Previously, the deadline for PPP loans was extended by two months, following much-needed revisions to the program aimed at helping businesses owned by women and minorities. Additionally, the IRS has made EIDL advances and forgiven funds non-taxable, providing additional financial respite to small businesses.

April 12,2021
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Finance

Robinhood Markets, operator of the trading platform at the center of the GameStop stock market storm, has lifted trading restrictions on all stocks, including GME and AMC. This move comes eight days after the company’s controversial decision to block purchases of GameStop, AMC, and other stocks. That action led to an enormous backlash in online communities and a review-bombing campaign that saw Robinhood drop to a one-star rating on many platforms. Google alone deleted more than 100,000 negative reviews to salvage the trading platform’s rating. Other consequences weren’t so easily reversed. At the height of the trading frenzy, Robinhood had to draw on bank credit lines to secure enough cash to clear trades. The trading block led to a huge drop in GameStop stock prices because potential buyers could not execute trades on the Robinhood website. Only a day after the January 29 decision to block GameStop trading, Robinhood announced it would resume trading the stocks in a limited capacity. This came after a $1 billion cash infusion from investors looking to safeguard traders.On February 4, Robinhood announced that it would remove volume restrictions on all stock trades. GameStop stock prices, which dropped during the trading blackout, began rising again. It remains to be seen whether Robinhood will manage to restore its tarnished reputation. While the GameStop debacle was the worst PR disaster the popular trading platform has faced, it isn’t the first time Robinhood has faced criticism. In December 2020, the platform came under scrutiny from securities regulators. Investigators felt Robinhood was guilty of gamifying investing because the website and mobile app made investing similar to a video game, which lured users and made them lose sight of the actual risks involved. Those investigations came after Robinhood paid a $65 million settlement for misleading customers about its revenue sources. Whatever Robinhood’s fate may be, questions that arose during the GameStop crisis will remain - especially questions about how free the market is, the long odds facing retail investors, and whether big players are illegally manipulating the market.

February 05,2021
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Retail

Retail apocalypse is a term used to describe a change in consumer spending patterns that resulted in the widespread closure of brick-and-mortar retail stores throughout the last decade, especially those belonging to huge retail chains like Sears and J.C. Penney. This is the result of a variety of different factors including the growth of e-commerce, market saturation, and the shrinking of the American middle class. These underlying problems were only exacerbated by the COVID-19 pandemic, with thousands of stores closing their doors permanently. Unfortunately, newly available data reveals that the apocalypse will continue well into 2021, as many retailers have experienced unrecoverable losses. The year 2019 already saw a significant increase in retail closures. During that year alone, 9,302 stores were closed, a 59% increase from 2018. This was the highest number of yearly closures since 2012 when this type of data tracking was first initiated. When the coronavirus pandemic hit in early 2020, it accelerated the slow death of retail stores. According to data published by Business Insider in August 2020, over 8,300 stores have already been permanently closed. While this figure is worrying, it is still lower than the numbers from 2019. However, the final tally was far worse. According to Forbes, a total of 15,542 stores were closed by December 31 of that year. While it’s evident that retail stores were facing difficulties long before the pandemic, the effects of the coronavirus on various businesses cannot be understated. Measures intended to curb the spread of the virus, including nationwide lockdowns, hastened the demise of many of these companies. Some retail chains closed only a portion of their stores, while others shut down almost completely and were forced to file for bankruptcy. J.C. Penney, the brand synonymous with American mall culture, filed for Chapter 11 bankruptcy back in May 2020. In total, the company closed 175 stores so far. J.C. Penney managed to emerge from bankruptcy in December 2020, but we’re yet to see a tangible recovery. Sears and Kmart have been in free fall for some time, with their combined store count amounting to only 95 in July 2020. Sears Holdings, the parent company of both of these chains, filed for bankruptcy in 2018 and was almost liquidated in 2019. While Sears and Kmart keep marching on, it’s only a matter of time before the stores further diminish in number. GameStop, the troubled video game retailer, has also been on a downward spiral for some time now. While the company announced in March that it will close 320 stores, it ended up closing nearly 450 of them in 2020. In the third quarter, their sales dropped by 26.7%. These are only some of the many large chains that saw massive store closures and significant drops in revenue. While retail stores have recovered from the lockdown in March and April of last year, this holiday season has indicated that most retail sectors are not out of the woods yet and may experience further losses. Of course, not all sectors have faced losses during the pandemic. Essential retailers, such as those that sell groceries and home improvement products as well as those that have shifted towards online sales have experienced massive growth of revenue. In 2020, Walmart’s net sales grew by nearly $10 billion. While most retailers hope that the COVID-19 jab will put them back on track, the question remains whether they’ll be able to hold out until a significant portion of the population has been inoculated.

January 04,2021
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