Q: What’s Congress doing to help small businesses stay afloat during the pandemic?
A: Men and women across America pour everything they have into building their business. From mom-and-pop diners to hair salons, neighborhood gyms, coffee shops, retailers, craft brewers, and many more, the heart of a community’s economic and social vitality beats thanks in large measure to small businesses. Local residents depend upon the goods and services provided by neighborhood store fronts, the local workforce depends on these small businesses for their paychecks, local governments depend on the economic activity to pay for public services and local civic and youth organizations depend on them for charitable patronage. The coronavirus pandemic has turned America’s economy on its head, closing businesses and shutting down schools from coast to coast. The tremendous effort to mitigate the spread of the virus and save lives also comes at substantial cost to small businesses who are struggling to stay afloat and do right by their employees.
I’ve heard from many businesses across Iowa who are worried they may not survive the economic shutdown to re-open their doors. Their sacrifice and devotion to civic duty is the lifeblood of communities. It would be devastating to see them lose their livelihoods and way of life. As chairman of the Senate Finance Committee, I led negotiations in Congress to deliver emergency relief to small businesses and their employees who are facing lay-offs and reduced hours through no fault of their own. This financial lifeline would help ensure small businesses are able to stay viable and keep paying their employees while the economy is shutdown. We want to ensure small businesses are able to reopen their doors, put their employees back to work and serve their customers. That’s why I championed provisions to improve the cash flow and liquidity for businesses whose revenue has largely evaporated into thin air.
Our package includes significant assistance for employers, including a tax credit for employers who keep employees on the payroll after a government shutdown order or a major drop in income, temporary deferral of the employer’s share of payroll taxes, and expanded use of operating losses from prior years to offset their tax liability. These provisions would free up scarce resources to meet payroll and pay their bills, such as utility, leasing, insurance and other operating expenses. From my leadership position at the negotiating table, I fought to get these measures across the finish line to provide certainty to our small businesses, the lifeblood of communities across the country. This package will help the men and women in America’s vital small business community reboot and regain their footing to survive the virus and come back stronger than ever. With more than 30 million small businesses serving their communities across the United States, from start-ups to fourth-generation enterprises, small businesses employ nearly half of the nation’s entire workforce. They are the economic engine and #1 job creator in America.
Q: What help is available through the Small Business Administration (SBA)?
A: The SBA received a $377 billion boost in the phase three coronavirus economic recovery package to help small businesses stay afloat. The Coronavirus Aid, Relief, and Economic Security Act (CARES) provides $349 billion for the SBA 7(a) Loan Program. These SBA-backed loans will help lenders provide working capital for small businesses struggling with closures and lost revenue during this crisis. Small businesses with fewer than 500 employees and in operation as of Feb. 15, 2020 are eligible for assistance and should consult their lenders to determine the most favorable terms of credit available to them. These SBA-backed loans provide working capital for operational expenses, including payroll support, paid sick, medical or family leave costs, health care benefit costs, mortgage and rent payments and utilities, and certain existing debt obligations. Portions of SBA 7(a) loans are eligible for debt forgiveness for keeping workers on the payroll.
In addition, small businesses in Iowa are eligible for the Economic Injury Disaster Loan program. The CARES bill authorizes an additional $10 billion for this program that provides loans up to $2 million at 3.75 percent interest for small businesses, and 2.75 percent for some nonprofits, to help with operational expenses for those adversely impacted by the pandemic. Again, borrowers are advised to consult with their current lenders to ensure they secure the best borrowing options for their business.
The SBA operates a free online referral tool to match borrowers with SBA-approved lenders. Check the LINC here. For more information about SBA loan programs, visit sba.gov, or contact the SBA by phone at (800) 659-2955 or e-mail [email protected].