If you’ve heard about the stimulus package passed by the U.S. House over the weekend, and you’re wondering what it contains to help small businesses recover from the devastating effects of the pandemic, you’re in for quite the dud.
Unless you’re a live music/concert venue or a restaurant, there’s very little in the way of details about how the average small business will be aided by the legislation.
When you think about the enormous impact of the pandemic, and how a third of small businesses fear they will close this year, then this stimulus package seems like mere scraps compared to the carnage.
The American Rescue Plan Act of 2021 is being debated in the U.S. Senate for the next couple of days, and there’s a price tag of $1.9 trillion on the bill.
Just on the surface, the amount of money allocated to small business relief seems like a small slap in the face.
Stimulus package SMB details
There are four areas where the legislation attempts to aid small businesses:
- $15 billion for advance payments on EIDL loans.
- $25 billion for restaurants and bars
- $1.25 billion of shuttered venue operators
- $175 million to create what’s being called a “community navigator” program, which seeks to help raise awareness on these COVID relief programs (including PPP).
If you add all those numbers up, they sound big: $41.4 billion. Congress is also asking for another $7 billion and change to add to the current PPP coffers, but that money is not likely to be spent, considering the difficulty in actually finding people willing to take a second PPP loan.
In fact, one issue with legislation like this is that much of the funding never gets spent – billions are still remaining from the stimulus package passed at the end of 2020.
Why this is a small slap
While the $41.4 billion to small businesses seems like a hefty amount, take into account the entirety of the proposed ARPA legislation. The amount designated for small businesses accounts for a little less than 2.2 percent of the entire stimulus package.
As has been reported in numerous media outlets, the amount of money set aside for small businesses is less than the $50 billion allocated to expand access to the Affordable Care Act health program passed during the Obama Administration.
When you think about the enormous impact of the pandemic, and how a third of small businesses fear they will close this year, then this seems like mere scraps compared to the carnage.
For regular small businesses – contractors, home service companies – they only allocation of funding is through the EIDL loans available. While there had been discussion of grants in this legislation, EIDLs must be re-paid, and there is strong sentiment that most small businesses are wary to take on more debt. The legislation also suggests most of these loans will be in the $5,000 to $10,000 range, just as in prior EIDLs.
That leaves the majority of the money – nearly $27 billion – for restaurants and venues. Make no mistake, those businesses sorely need the help, and this stimulus package is certain to help.
The legislation passed by the House is currently being debated in the Senate, and the process could go quickly. Some suggest the Senate may vote as early as Wednesday.
One thing certain to be eliminated from the House version of the bill is the increase of the federal minimum wage to $15. President Biden and Democratic leaders of the Senate have already announced they will not make this part of legislation that, in effect, is supposed to help the nation’s economic recovery after the pandemic.
Once passed, the bill will have to go back to the House, where it is expected to pass.
Jonathan McElvy is the CEO of McElvy Partners. His company includes the Greensheet, The Leader, Fort Bend Star, Charlotte Media Group, Coastal Bend Publishing and Texas Printers. He has managed and owned small businesses for 20 years. If your business would like to talk more about your individual needs, click HERE for contact information. You can follow him on Twitter @mcelvy.