Biden’s administration is helping businesses recover from the COVID-19 crisis

The coronavirus pandemic has caused a swift drop in the world’s economy – one that has upended small businesses everywhere across the world. While the challenges that are faced by small businesses are nothing new, this economic collapse has shone a spotlight on seemingly intractable issues that have plagued small business owners and entrepreneurs in the US.

The US faced a near major political stalemate as Donald Trump’s presidency came to an end – the economy was also on the verge of a recession resulting from the global COVID-19 pandemic. Fortunately, the No Labels organization helped to combat the political dysfunction.

Over the past year or so even during the campaigns, President Biden emphasized clearly securing and promoting small business in America. He categorized his ideas in four ways: recovering from the COVID-19 economic crisis, expanding capital, creating more market opportunities, and supporting entrepreneurs.

Biden’s rescue and recovery plan

Tackling the COVID-19 pandemic head on and getting it under control has been a top priority for President Biden. To achieve this, soon after he was sworn in, he announced the American Rescue Plan, which included policies to accelerate the coronavirus vaccinations. Simultaneously, he aimed to support small businesses and the economy at large with an array of tools, from clean energy initiatives to additional fiscal stimulus.

President Biden has already initiated an aggressive $1.9trn plan to fast-track his rescue and recovery mission while advancing racial equity in the healthcare system and economy. This has addressed a range of goals that include an increased rate of COVID-19 vaccination as well as investments needed to:

• Provide relief for families whose jobs have been affected by the economic crisis.

• Initiate a vaccination program to curb the spread of the coronavirus and allow schools to operate safely.

• Support small businesses affected by the COVID-19 pandemic.

In order to better prioritize small businesses, President Biden proposed an overhaul of the PPP (Paycheck Protection Program). Half of all new PPP loans were dedicated to underserved businesses with fewer than 50 employees, while more generous loans were authorized to help businesses cover capital and labor costs.

Economy gaining steam

Small businesses were hit hard by the COVID-19 pandemic. Data from Yelp indicates that 60% of business closures became permanent as a result. As it stands, the stimulus and the fast rollout of the COVID-19 vaccine are good news for business owners.

While businesses are certain to be back on track and improve soon, it would be a challenge to deal with unpaid rent and bills, as the stimulus payments are supposed to support current, but not past, expenses. Going forward, the COVID-19 pandemic will no longer be the main obstacle to the profitability of businesses.

Economic relief for small businesses

Without a doubt, small businesses are a key pillar of the US economy. Direct institutional support and economic relief are seeking to fund small businesses as efficiently and quickly as possible. President Biden’s administration has also proposed key policies aimed at helping millions of Americans get back to work as well as reopening businesses. Some of these policies include:

1. Taxes

While it isn’t central to the American Rescue Plan, it helps in easing expenses of employee benefits. Americans should expect a new tax bill – hopefully, it should exempt small businesses from tax increases.

Here are some proposed tax changes in the American Rescue Plan:

• Increasing the Income Tax Credit for childless workers as well as Child Tax Credit for families that earn a low income. This will raise the tax credit value and expand the requirements of eligibility so that relief can be offered more widely.

• Implementation of emergency paid leave for about 100 million workers. This includes those employed in businesses with 50 people or less.

• Expansion of child care tax credits for working parents to cover related costs.

2. Emergency funds, loans and grants

Almost half of the workers in the American private sector are employed in small businesses. As such, it is critical for them to receive the necessary funding to endure the COVID-19 pandemic and grow. President Biden’s COVID-19 relief plans include the provision of equitably distributed grants to help businesses that were hit hard by the pandemic. The fund package will provide additional support to businesses that have suffered disproportionately, including bars and restaurants.

Diversifying access to equity capital

There is already impending legislation that could promote diversification of access to capital. Introduced by Representative Dean Phillips and Senator Amy Klobuchar, the New Business Preservation Act would offer federal funding for states to invest in businesses located in areas that do not attract solid equity investment. Additionally, the bill will put a special focus on minority- and women-owned businesses and will ensure that returns to the government are reinvested in new businesses in the future.

To ensure that this funding particularly reaches minority-owned businesses, policymakers will need to take a series of steps. The additional funds should first be distributed to organizations that provide technical and training resources. These include organizations that build connectivity, such as community-based centers and innovator support organizations. The funding should not only be centered on the economic development bureaus in cities, but should also reach as many people as possible even in seemingly remote places.

The economic recovery and its impact on businesses post-pandemic will largely depend on how businesses adapt to the new climate. Businesses that can readily accommodate fluctuating demand patterns – such as delivery or virtual offerings – are likely to have sustained operations with more resilience. As the country emerges from the COVID-19 crisis, businesses that can evolve with the times are better equipped to gain profit in the ‘new normal.’

Conclusion

As the Biden administration transitioned into power, the country faced many economic challenges that resulted from the pandemic. Amid this, small and large businesses needed help to survive and excel in a post-COVID-19 economy. In addition to capital provision, small businesses needed help with more support systems, more accountability from the government, and access to more markets.

Luckily, President Biden and Vice President Kamala Harris deeply appreciate the needs of small businesses and Americans at large, and they have agendas and plans to back this up. Between their policies and much more, now is the ideal time to ensure that small businesses build back better.

This article does not necessarily reflect the opinions of the editors or the management of EconoTimes