$50 Billion for Small Enterprise As Congress Passes a Sweeping $1.9 Trillion Stimulus
Lawmakers on Wednesday approved a massive $ 1.9 trillion bill that extended unemployment benefits through September 6, mailed $ 1,400 checks for many Americans, and raised $ 50 billion in new aid to small businesses brought the market.
The House passed the measure 220-211 with no Republican approval. President Joe Biden is expected to sign the bill this Friday. The bill was previously passed by the Senate, which over the weekend approved a more targeted version of a previously passed house measure. The bill, approved today, repeals a gradual increase in the federal hourly minimum wage from $ 7.25 to $ 15 by 2025. It also reduces the pool of Americans who are eligible for economic impact payments. Direct payments drop to zero for those with an annual income of $ 80,000 and married couples with an annual income of $ 160,000.
“This legislation is about giving the backbone of this nation – the essential workers, the workers who built this country, the people who run this country – a chance to fight,” Biden said in a statement the passage of the law the house.
The bill contains many provisions that can have downstream benefits for small businesses. This includes:
- $ 48 billion in testing and contact tracing
- $ 7.5 billion for vaccine distribution
- US $ 350 billion for states and municipalities
- $ 160 billion for schools and universities
There is also an annual extension to theChild Tax Credit – $ 3,000 for children ages 6-17 and $ 3,600 for children under 6. The existing child tax credit is $ 2,000.
However, when compared to these numbers, help for small businesses seems scant. The invoice includes:
- $ 28.6 billion in grants for highly competitive food service company called the Restaurant Revitalization Fund
- $ 15 billion in targeted assistance to businesses applying for Economic Injury Disaster Loan (EIDL) grants
- $ 1.25 billion for closed venue operators, which sweetens the existing Shuttered Venue Operators Grant (SVOG) program first approved by the last $ 900 billion stimulus package
- A provision that enables companies to participate in both SVOG and PPP
- Extending Employee Retention Credit through the end of the year, the refundable tax credit designed to help employers keep employees on payroll
- Expanded access to the paycheck protection program and increase PPP coffers by $ 7.25 billion, though the program is expected to end on March 31 and will have mostly cash left over
“The small business component of this bill was almost a footnote compared to other bills,” said Ami Kassar, founder and CEO of MultiFunding, an Ambler, Pennsylvania-based small business loan advisor. For reference, in the last $ 900 billion bailout package passed under Donald Trump, lawmakers allocated $ 325 billion to small businesses – nearly a third of the law’s total allotment.
While Kassar suggests that Congress may have room to negotiate a future recovery-focused bill, it could make business owners feel a little left out – especially after the PPP sunsets in late March. In the past few days, lenders and small business groups have been raising alarm bells about the need to extend the PPP or offer an allowance for applications submitted before the deadline.
This round of PPP was upcharacterized by delays due to increased data and fraud controls. The subsequent validation checks caused delays – sometimes up to six weeks for some borrowers. Additionally, the last minute PPP changes requested by the Biden administration on Feb.22 have added further delays as lenders who participate – many not – scramble to adjust their systems.
In addition, it is generally expected that the PPP will receive increased interest by the deadline if companies can participate in both the closed venue grant program and the PPP. Companies that take out a PPP loan must now use that money towards any grant the company later receives. Previously, companies had to choose between taking out a PPP loan or maintaining the SVOG program, which was still unopened. The $ 15 billion program approved by the last incentive has not yet started. It should start in mid-February.
Aside from PPP, the package offers promising opportunities – especially for badly affected companies such as restaurants, bars and caterers. Mainly the $ 28.6 billion restaurant revitalization fund that provides bars, restaurants, and caterers with grants equal to the difference between a company’s gross earnings before the pandemic – i.e. 2019 – and last year’s gross earnings. If the company has fewer than 20 locations, it can receive a grant of up to $ 5 million per location, up to a total of $ 10 million. The fund is managed through the SBA.
“Right now, we thank all our members of Congress,” said Sean Kennedy, executive vice president of public affairs for the National Restaurant Association. “Nobody has lost more jobs and income than the restaurant business.” He notes that the U.S. restaurant industry lost an estimated $ 250 billion through January as more than 110,000 U.S. restaurants permanently closed.
Kennedy notes that time is of the essence as business owners continue to struggle under government-mandated capacity limits and low consumer demand. “The challenge now is that a lot of authority and responsibility has been given to the SBA. You need to create and implement a $ 28.6 million program very quickly,” he says, noting that the SBA announced it would transfer some his best practices in creating the SVOG program in the restaurant revitalization fund. “You’re developing a lot of skills in creating the closed venue program that will help launch the Restaurant Revitalization Fund in a timely manner.”