Sep 16, 2020 2 min read

Among popular Christmas season activities during recent years has been finding the Elf on the Shelf. The stuffed toy, about 12 inches long, delights children who wonder where in the house he or she may be hiding.

Thanks to COVID-19, a good place to start looking for the elf this year would be the factory where the novelty is manufactured. The elf, along with a substantial number of other products, may become a victim of the coronavirus.

Blame a credit insurance crunch.

As a recent Associated Press story explained, many manufacturers and distributors rely on credit insurance. They obtain it to ensure they will be paid for products they ship to retailers.

If a retailer is in financial trouble and cannot pay for goods shipped to it by a distributor or manufacturer, credit insurance can take care of the problem. Without it, there is no guarantee of getting paid.

COVID-19 has changed the dynamics. Now, with many companies struggling, credit insurance may be getting more difficult to obtain and/or more expensive for some distributors and manufacturers. One cannot blame them: All insurance is based on risk, and the risk of a retailer encountering financial problems, perhaps even going out of business, has increased. That is particularly so for small businesses that constitute a huge chunk of the retail economy.

Among firms facing the credit insurance crunch is The Luminstella Co. It markets various products, including some under the Elf on the Shelf brand. Only 50% of orders for its products are covered by credit insurance – meaning the firm may not be willing to ship to some. The worst-case scenario could be a shortage of elves for the shelf, not to mention financial woes for Luminstella.

Obviously, credit insurance challenges could affect some small retailers adversely, too. Unless they can obtain stock from distributors and manufacturers, they, too, could find the going tough.

Members of Congress are still haggling over a new coronavirus relief package. If and when one is enacted, it will be exceedingly complex and expensive, with tons of provisions intended to help individuals, families and businesses affected by COVID-19.

If lawmakers are not discussing some sort of assistance to ensure credit insurance is available and affordable, they should be.