Banks’ Loan Losses Before & After COVID-19 Look Bad

Even without the coronavirus outbreak, Q1 bank earnings didn’t look good. Now, the situation is tougher. This article is about banks’ loan losses, and where you can find reliable business funding, e.g., a merchant cash advance, that’s fast and easy to obtain.

U.S. Bank Loan Losses

In Q1, the 6 big American banks had $25.4bn of loan loss charges. The KBW Bank Index witnessed a drop of 45%, which took $795 billion from its 24 constituents.

The beginning of the year was marked with the introduction of the new accounting rule, Current Expected Credit Losses (CECL). The latter means loan losses must be calculated and recorded before they occur. Then, the unemployment rate increased drastically, and much of the economy was shut.

The unprecedented situation created by the COVID-19 pandemic put the sector into a critical state. In April, the numbers were floating around like annualized GDP growth of minus 35%.The economic crisis caused by the pandemic is well observed in low interest rates and souring loans.

Alternative Funding to Sidestep Losses: Merchant Cash Advance

The new accounting means banks lose money because of bad loans as much as they were losingunder the previous accounting rules.During Q, U.S. banks’ previsions were added with billions for loan losses. Now, the specialists in the field forecast even higher charges in this regard.

Yousef Abbasi, a global market strategist at INTL FCStonebrokerage, notes that the current state of the economy will make the banks go through struggling times. They can’t go on keeping higher dividends since they’re going to work on reducing their losses on more loans and continue forbearance.

With all this in mind, it’s clear that getting access to additional financing for your business can be tough. That’s where trustworthy alternative lending companies step in. Thanks to a reputable alternative online lender, you can be sure to fast and easily obtain funding, such as a merchant cash advance, to keep your business alive.

The banking sector in the U.S. was already faced with a new reality after the new accounting rules introduced in January. Now, the COVID-19 pandemic has made things even worse. Banks are dealing with greater loan losses. Thankfully, there’re reliable alternative lenders you can work with to get the funds you need.

Author Bio: Michael Hollis is a Detroit native who now lives in Los Angeles. He is an account executive who has helped hundreds of business owners with their merchant cash advance solutions. He’s experimented with various occupations: computer programming, dog-training, scientificating… But his favorite job is the one he’s now doing full time — providing business funding for hard working business owners across the country.

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