As president-elect Joe Biden prepares to take office this month, many people are left questioning what intentions he may have for the future of small and medium-sized businesses in this country. The Coronavirus pandemic has taken a heavy toll on businesses as various states and counties have vacillated back and forth between shutdowns and reopenings. The recession triggered by the pandemic’s global economic blowback continues to take a toll on every element of life as well as the small business sector of America. As a new president takes the reins, many wonder, what will a new administration mean for the future of businesses?
Based on what we have heard thus far, we can expect to see a much more nationalized response to the Coronavirus pandemic from President-elect Biden and Vice President-elect Kamala Harris. Their expressed intentions cover both a national public health response, in addition to a proposed economic response program.
While the Federal Reserve issued $600 billion of low-interest loans to small businesses as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and an additional stimulus package of $900 Billion was released on December 21st, 2020, the president-elect has discussed his intention to issue an additional $377 billion in aid once he takes office. Those additional funds are likely to come in the form of grants as opposed to the loans of the first SBA PPP stimulus package.
Businesses that are struggling across the country need immediate support. With vaccines reaching the general population as late as summer 2021, many small businesses would be looking at loan repayment farther down their existing road of financial struggle. Global uncertainty remains around the timing of an economic recovery, and businesses cannot possibly anticipate a return to cash-flow normalcy.
In addition to the President-elect’s intention to issue additional emergency funding, there is a discussion of additional measures to support workers directly. These may include the following:
Emergency paid leave
The Family and Medical Insurance Leave (FAMILY) Act, aims to provide up to 12 weeks of paid family medical leave to employees. It is likely that a new administration will advocate for the passing of the Healthy Families Act, which would give employees 7 days of paid sick leave for personal and family health needs. Additionally, as a direct response to the Coronavirus pandemic, an emergency paid leave program that would require 14 days of paid leave to employees that are sick, exposed, or required to quarantine due to the Coronavirus may be on the table.
SHould additional leave be granted through the federal government, employers will not be responsible for the additional costs associated with that additional leave. The goal is to avoid employees feeling the need to hide symptoms or exposure to the virus. Federally funded leave allowances would encourage employers to support their employees in taking precautionary leave if necessary. Those employers would then be able to seek reimbursement following their paid leave.
The emergency paid leave plan would be covered 100% by federal funding. It is capped at an average weekly income totaling $1,400 per week for the employee. This program is not intended to replace existing paid leave already offered by businesses but is rather an effort to enhance the support of a healthy workforce in the face of this pandemic.
Expanded unemployment compensation
The next administration has indicated that they intend to allocate additional funding to expand unemployment benefits. States will be issued additional government funding to support the increased demand for unemployment benefits. Additionally, eligibility requirements may be adjusted to waive the “work history” and “actively searching for work” requirements.
While independent contractors, caregivers, and domestic workers were previously ineligible to participate in unemployment benefits, the new administration says that those classes of workers can expect to receive financial support as well if they can prove that their hours of employment have been reduced or diminished completely by the effects of the pandemic.
Additional funding for small and mid-sized businesses
As previously mentioned, the Biden-Harris administration has indicated that they plan to enact an additional small business stimulus program to support businesses that are experiencing revenue down-turns. Unlike previous emergency loans, however, the intention is to issue these loans interest-free.
Under this plan, additional funding would be made available to the Small Business Administration (SBA) and to the individual States for distribution to small businesses.
State and Local Emergency Fund
In addition to allocating funds specifically to be distributed directly to support small and mid-sized businesses, there is also a proposition to contribute to a state and local emergency fund. This funding would be distributed as follows: 45% to state governments, 45% to local governments, and 10% to “hot spots,” or communities where the spread is especially significant.
This fund would grant state and local government officials the flexibility to designate spending where it is needed most in response to local circumstances. Some of these uses may include:
- Paying for medical supplies and expanding critical health infrastructure, including building new or renovating existing facilities;
- Expanding hiring where needed including health care and emergency services workers, caregivers in nursing homes, drivers, childcare workers, substitute teachers, and others;
- Overtime reimbursements for health workers, first responders, and other essential workers;
- Mortgage & rental relief for impacted workers;
- Employer assistance for job maintenance;
- Interest-free loans for small businesses;
- Funding existing and new local and state jobs initiatives;
- Cash assistance, e.g., cash payments to working families, unpaid caregivers, seniors, those with disabilities, and children, or a child allowance; and
- Targeted refundable tax relief, e.g., to fund new legislation to expand State Earned Income Tax Credit relief.
Overall, the Biden administration’s initial plans focus heavily on continued support for both businesses and States amidst the ongoing Coronavirus pandemic. While many businesses are still unsure of their futures, the new administration’s intentions to provide additional financial support may allay some of these fears. Global desire to return to normal is evident and the ongoing support of the federal government through consistent messaging, clear vision, and fiscal support will combine to clear a path forward for business as usual as soon as possible.