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Major banks around the world and in the U.S. are trying to keep their investors calm as the coronavirus outbreak continues to devastate financial markets and the world economy.  Policymakers at major banks say they are prepared to take the steps as necessary to limit the damage caused by the virus.

The Coronavirus has killed more than 4,000 people and infected more than 100,000 globally. The Organization for Economic Cooperation and Development warned that the outbreak poses the biggest danger to the world economy since the global financial crisis.

Here in America where infection levels are relatively low it makes be difficult for Americans to truly grasp where this virus will take them and what this all means to the average consumer.  The one thing that is a safe bet is that before the end of the year lending is going to start to dry up.  In uncertain times lenders tend to hold the purse strings very tightly until stability returns.  The unfortunate thing about this usually sound strategy is that the Coronavirus seems like it is here to stay.  Even more concerning, the negative impact of this disease may only be getting worse.

Small Business Will Feel the Impact First.

The first victim of the Corona Meltdown is the stock market.  It may get a lot worse before it gets any better.  Sales of face masks, hand sanitizer, and disinfectant may be spiking worldwide due to the cascading spread of coronavirus, but the stock market is deep in the red. Both the Dow and the Nasdaq have seen serious declines. The Dow actually saw its biggest one-day point drop ever. The scary part is, even if U.S. cases of the virus stopped increasing—which seems extremely unlikely—the ripple effects are already in place for long-term shock to the world economy.

The second victim of the corona meltdown is small business.  Whether its slowing consumer demand or the inability to get inventory, the average small business in American is in for a major problem as the year progresses.   This situation will only be exacerbated by the banks new anti-lending policies.  While it is of course difficult to predict the long term affects this meltdown will have it is clear that it will far out shadow the global meltdown of 2008.  No matter what your business, you will feel the impact.  The only true protection from this looming disaster is to start preparing today.  The only true antidote that I know of is perfect credit. It is important that you schedule an appointment with your Certified Credit Planner today to forecast your financial goals and capital needs for the next five years.

What is the worst-case scenario?

While most of us are struggling to regain our net worth after the Great Recession, we are now in the path of the next great recession that will be caused by the Corona Meltdown.  Nearly half of middle-class Americans face a slide into poverty as they enter their retirement, a recent study by the Schwartz Center for Economic Policy Analysis at the New School has concluded.

Only 25% of those on the Forbes list of the 400 richest Americans were self-made billionaires in 1984, compared with 43% last year. The wealth of the Forbes 400 has soared 1,832% since 1984, from $125 billion to $2.29 trillion last year. Upperincome Americans have also fared well over the last three decades. The wealth gap between America’s upper-income and middle-income families has reached its highest level on record, according to the Pew Research Center. In 2013, the median wealth of the nation’s upper-income families ($639,400) was nearly 7 times the median wealth of middle-income families ($96,500), the widest wealth gap seen in 30 years.

The moral of the story is that if you are a billionaire you will probably survive, everyone else needs to insure that they have some form of credit insurance so that even if the crisis destroys their finances or businesses they can quickly rebound.  Credit insurance works just like car insurance.  It protects you from loss or injury.  In this case loss of credit score or injury to your credit due to default.

How do we plan for the future?

You know that if you have a 720-credit score then you can access up to $250,000 personally and an additional $750,000 for business.  That means that technically if you have a 720 credit score you are a millionaire in this country. So, the first thing is to make sure that you have a 720 or higher credit score within the next 6-12 months.  Then as soon as you hit that 720 mark you should be borrowing against future need.   Most small business owners borrow against present need or even worst they try to borrow after default.  The savvy entrepreneur is going to heed this warning and survive the Corona Meltdown.  America is counting on you.  If you don’t currently have a Certified Credit Planner then please Google Dr. Michael C. Grayson, who was voted the world’s leading credit expert and currently holds all three credit industry records including the highest credit score in the world.  He has launched a revolutionary new program to combat this inevitability. Or call 515-620-3500.