Trillions of dollars of COVID stimulus money coming from the Federal government going to the states, cities, and school district do not have to be paid back. The aggregate amount of money given to the beneficiaries is over $1 trillion and will climb again with the passage of President Biden’s $1.9 trillion dollar stimulus. The funding is already over $4 trillion, and with the passage of the Biden stimulus, the number will be approaching $6 trillion.
I, like many of us, have small business friends who have been decimated by the economic
effects of the virus. Many applied for the Payroll Protection Plan (PPP), which, if the proceeds are used to make payroll, will be forgiven. A second loan was established called the COVID-19 Economic Injury Disaster Loan to help keep small businesses afloat while the economy recovered.
The challenge was that nobody knew how long the downturn would last. Millions of small
businesses hoped that relief would come quickly. These SBA loans carried a low-interest rate, and one year of delay in payments was given. We are now beginning to go into the period when the loans will need to be repaid and the economy has not recovered. It looks like it may be heading into another downturn just when the money has run out from the loans and business revenue hasn’t materialized.
Hundreds of thousands of businesses who have these economic injury disaster loans may not have the revenue to begin to repay the loans. We could be going into the most extensive bankruptcy filings perhaps in our country’s history. Yelp reported that 800 small businesses are closing every day.
Here is the question. If state and local governments are receiving trillions of dollars to deal with the economic devastation of COVID-19, shouldn’t small businesses get the same break? If there is going to be another round of stimulus money and a small business hasn’t recovered, the existing loan should be forgiven, and new money advanced to try and help save the company and in tun jobs. The federal level of deficit is expected to expand by $4.2 trillion in 2020. Perhaps it will be even larger in 2021, especially if we start off 2021 with a new round of just under $2 trillion.
Small business is the backbone of America’s economy. According to the Chamber of Commerce, there are 31.7 million small businesses in America which are one-person owned businesses that account for 22 million companies. When a single employer losses his customer base, he is out of business. The intent of the COVID-19 Economic Injury Disaster Loan was to try and help them survive until they could get back on their feet. They can re-apply for more money in some cases, but without forgiveness they are digging themselves deeper in debt and, in turn, pushing themselves closer to bankruptcy. They may have worked many years building their business, and see it slip away while they are waiting for the recovery is very painful.
President Biden, you need to save small businesses ahead of everything else. Save American small businesses and you save the country.