Staggered loans: A flexible modality of long-term financing for SMEs in global health emergencies

Abstract

<abstract> <p>Context: The context of this paper is the unprecedented global situation which has been and is still experiencing all countries all over the world, due to the pandemic caused by Covid-19 and its variants. Apart from the important problem of health population, all countries are facing a sharp reduction in their main economic indicators: stock indices, GDP (Gross Domestic Product), rates of employment, closing down of businesses, etc. Results: In this paper, we have presented and mathematically analyzed the so-called staggered loans as a useful tool for SMEs to be applied after times of crisis. Moreover, their pros and cons, and the advantages for lenders and borrowers have been highlighted. Specifically, this kind of loan can help solve the problem of the scarce offer of credit due to monetary politics currently addressed to reduce inflation. Policy implications: Taking into account that this economic situation cannot continue for longtime, many countries are thinking about the next stages of the way-out from the crisis in all sectors of affected economies. Purpose: In this research, we seek to provide some information on the characteristics of the so-called staggered loans and the repayment system applied by some microfinance institutions in Latin America. This can help SMEs to obtain the liquidity necessary to reopen and develop their activity. Methods: Methodologically, we have presented risk-based measures able to guarantee the profitability of lenders and control the solvency of lenders and borrowers.</p> </abstract>

Stock price reactions to reopening announcements after China abolished its zero-COVID policy

“…For small and medium-sized enterprises (SMEs), governmental assistance proved instrumental in shaping their reopening strategies (Ludvig, 2021). Rambaud et al (2022) posited that staggered loans could serve as financial lifebuoys for struggling SMEs, while Tang et al (2021) found that entrepreneurs with high alertness were less inclined to resume operations.…”