Question of the Week
What Is At Stake For Small Businesses In The 2020 Election
This week has brought us one of the most contentious elections of our lives. And it’s just another chapter in the wild story that has been 2020. We’ve had a pandemic, heightened racial tensions and a faltering economy. With Covid-19 infections coming back with a vengeance, stimulus talks at a standstill and a still undecided election, things are set to only get more tumultuous.
No matter who the final victor is in the election, it’s important to understand what’s at stake for small business owners tomorrow and in weeks and months to come.
Negotiations have been stalled for weeks over a next round of stimulus, and the upcoming election may spark a renewed focus on supporting recovery. Many economists credit the three stimulus packages passed at the beginning of the pandemic with preventing severe economic damage. The $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act was the largest aid package in American history. Small businesses benefited from Economic Injury Disaster Loans (EIDL) and the new Paycheck Protection Program (PPP).
But now, as CARES’ impact fades, we are still far from full recovery. The recent rise in coronavirus cases, new lockdown orders looming, at least12.6 million workers on unemployment and eight million American pushed into poverty all jeopardize continued recovery in the fourth quarter.
While everyone can agree we need more stimulus, Republicans and Democrats in Congress can’t seem to agree on what that would look like. The most recent Democratic relief plan passed on October 1st, known as the Heroes Act 2.0 is a $2.2 trillion version of the $3.4 trillion Heroes Act passed in May. The proposal has not passed in the Senate due to opposition from Republicans.
For small businesses, that proposal includes $30 billion additional for PPP. It allows for second loans to small businesses with fewer than 200 employees that have experienced a 25% reduction in quarterly revenue. It also provided money specifically for the airline and restaurant industries, as well as for Community Development Financial Institutions (CDFIs) that could help get funds to underserved communities. Lastly, it enhances the employee tax credit established in the CARES Act and streamlines the PPP forgiveness process.
The Republican plan, blocked by Democrats on October 20th, also would have bolstered PPP. It allotted an additional $258 billion to the program and would have allowed hard-hit businesses to take out second loans. The Democrats argued that the GOP plan was inadequate to address the needs of the country during the pandemic. Each side blames the other for the standoff on additional stimulus.
Goldman Sachs analysts said the outcome of the election continues to be the “biggest variable.” President Trump has signaled support for the extra funding for PPP proposed by Republicans in congress.
Vice President Biden has outlined stimulus measures on his website including: Establishing a small-business trust fund: $60 billion in funds for smaller lenders and community based financial institutions.
- Reserving half of new PPP funds for businesses small businesses with 50 employees or less
- A “weekly dashboard” to show which small businesses are accessing loans
- Restricting PPP amounts to no more than lost revenue
- Guaranteeing that every small business will get relief, rather than capping the fund.
If President Trump is reelected and Republicans keep the Senate, a rescue bill could still pass before the end of the year. If former vice president Joe Biden wins and Democrats gain control of the Senate, relief will likely be stalled until January, when Democrats will face less Republican opposition to a larger package. Either way, the fate of small businesses seems to rest in the hands of the candidate who wins tomorrow
Quote of the Week
“The two most powerful warriors are patience and time.” – Leo Tolstoy
Task of the Week
I mentioned self-care last week. But after all that’s gone on this week, I hope you can find some way to take care of yourself this weekend. If you need some inspiration, you can check out some ideas here.