For Small Businesses, the Stimulus Package is Just a Start
Rare events call for even rarer outcomes. Congress has come together to unanimously pass a record-breaking $2 trillion stimulus package designed to keep the country open and prevent any further financial collapse. This is good news for small business owners -- but what exactly does it mean for your business?
Here’s What’s in the Stimulus Package
It’s not very often that Congress can unimously agree on a bipartisan deal -- especially one that amounts to more than 40 percent of the 2020 federal budget. Yet despite some last-minute tension and challenges, it appears that this bill is going to be passed and enacted -- potentially staving off a massive recession (or even depression).
The question is, what exactly is inside the bill?
Well, without going through the hundreds of pages and line items in detail, here’s a look at who’s getting what:
- Unemployment benefits on steroids. Unemployed individuals are eligible to receive an extra $600 per week for as long as four months -- on top of standard unemployment benefits. This is designed to help make up for 100 percent of lost wages. (This aspect of the bill almost caused a small group of GOP lawmakers -- including Sen. Lindsey Graham (R-S.C.) -- to block the fast-tracked vote over worries that workers would be paid more than their normal salaries, thereby incentivizing people to stay home.)
- $500 billion in essential industry loans. There’s a $500 billion pot of loans in the bill that’s designed to prop up essential industries like airlines. Some of the money may even go to cities and states.
- Checks for citizens. The vast majority of U.S. citizens will receive some sort of check from the federal government to offset lost income and to reinfuse the economy with spending.
According to Politico, “All U.S. residents with adjusted gross income up to $75,000 ($150,000 for married couples) would get a $1,200 ($2,400 for couples) “rebate” payment. They are also eligible for an additional $500 per child. The payments would start phasing out for earners above those income thresholds and would not go to single filers earning more than $99,000; head-of-household filers with one child, more than $146,500; and more than $198,000 for joint filers with no children.”
- $100 billion for hospitals. The healthcare workers in this country are heroes -- always, but especially now. Inside the bill is a $100 billion bucket of grants designed to help hospitals fight the coronavirus. The hope is that this money will help offset some of the money these facilities are losing by being forced to delay elective surgeries and other procedures.
- $150 billion for state and local governments. With many state governors worried that their states are running out of the funding needed to pay for sky-high unemployment claims, this money will go towards alleviating some of this concern.
- Pentagon support. The nation’s Defense Department is going to see a helpful infusion of $10.5 billion. This will serve numerous purposes, including helping the National Guard deploy as many as 20,000 soldiers to assist state response teams over the next few months. Roughly $415 million of the money will go to research and development work at the Pentagon -- specifically research around vaccines.
- Aid for insurers. Major insurance companies are worried about suffering heavy losses as a result of increased expenses. The bill provides some money to help offset these losses.
- Emergency assistance for schools. Schools, colleges, and universities have been hit hard. More than $30 billion is being set aside for education funding.
This is just a small sample of what’s inside the package. There are dozens of other benefits for specific industries and taxpayers. But as a small business owner, you’re really interested in knowing how it impacts you and your operations. That’s what we’re going to discuss in the following section.
How the Stimulus Package Could Impact Your Biz
In addition to the provisions for government entities, massive public companies, and private citizens, the stimulus bill also offers relief for small businesses. Here’s what you need to know:
- Looser net operating loss-reduction rules will allow you to offset more this tax year. If you have an otherwise healthy balance sheet, consider ramping up your marketing and branding. By partnering with a good marketing company, you can set your business up well to come back stronger than ever when the pandemic winds down.
- Businesses who continue to employ their workers through the coronavirus pandemic will be eligible to receive business tax credits that defer payroll taxes. Employers will have the option to delay this year’s payroll taxes and then pay 50 percent in 2021 and the other half in 2022. This will provide you with some additional cash flexibility, should you need it.
- If you have a business with 500 or fewer employees, you may qualify for a small-business interruption loan. Under this plan, the government will provide loans to employers who don’t lay off employees. The amount will be capped at $1,540 per week, per employee.
What’s the Takeaway?
Nobody wanted a $2 trillion bill. The Democrats didn’t get what they wanted. Republicans didn’t either. It’s a huge figure that will undoubtedly carry long-term economic ramifications for a country that’s already dealing with an astronomical national debt and high inflation.
But was there any other way to handle the problem?
A failure to act would have meant millions of additional unemployed workers, a deeper dive on Wall Street, more business closures, and additional fear and anxiety among the American people.
As a small business owner, the only way to see this bill is as a win. It might not have everything you need -- and it won’t totally offset the pain and losses that this pandemic have caused -- but it’s a nudge in the right direction.
We are a nation of entrepreneurs. We are a collection of creative, ambitious, and determined people who always rise to the occasion. Politics and viruses aside, this is our chance to come back stronger than ever.