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The 2020 holiday season has finally gotten a lot happier for America’s 30 million small business owners and their employees. On Sunday, after days of efforts by small business advocates, including the Job Creators Network, President Trump signed a $ 900 billion COVID-19 legislative package that includes almost $ 300 billion in additional funds from the Salary Protection Program .
This PPP extension is a lifeline for small besieged American businesses that are bravely trying to deal with another outbreak of the virus and the associated business restrictions implemented by state and local governments.
Although the legislation was passed too late to impact employment levels during the Christmas season, small business owners will now be able to use these new funds to make payroll decisions in the first quarter of 2021.
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In 2020, PPP distributed about five million forgivable loans worth more than $ 500 billion, saving more than 50 million jobs. Up to 84% of all small business employees owe their jobs to this federal program that has finally been extended. With the COVID-19 vaccines falling into the arms of Americans right now, the pandemic will soon be over.
In just a few months, small businesses can get rid of their costly capacity constraints and operate like it’s 2019 again.
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These PPP funds will serve as a bridge to take small businesses from here to there. By keeping employers afloat, Sunday’s extension of the PPP will also accelerate the economic recovery when conditions permit.
These funds cannot arrive anytime soon.
According to Yelp, 163,735 American companies have closed since March 1. The National Restaurant Association estimates that 110,000 restaurants have closed for good – about one in six across the country.
According to Harvard University’s Opportunity Insights Economic Tracker, total small business revenue in November is about a third less than in January. A Goldman Sachs survey of small businesses found that four out of ten respondents laid off employees or cut salaries. The extension of Sunday’s PPP will stop the bleeding.
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In addition, legislation clarifies that past and future PPP expenses are tax-deductible, making these forgivable loans even more beneficial for employers.
According to the Brooking Institution, this tax provision will save companies about $ 200 billion. This will also make tax records much simpler. JCN and other small business groups defended PPP tax deductibility directly with Treasury Department officials in September.
Almost as important as what’s in Sunday’s COVID-19 aid package is what it isn’t.
Republicans have managed to prevent Democrats from including hundreds of billions of dollars to rescue blue state pension funds, whose fiscal problems predate the pandemic. Texas taxpayers should not have to pay for the catastrophe of unfunded liabilities in California.
Republicans were also able to include legislative language to end the Federal Reserve’s emergency purchasing authority. That cap will prevent Democrats next year from simply using the Fed to monetize the blue state’s debt, protecting small businesses from the pernicious threat of inflation.
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PPP funds, by contrast, are not a bailout. Small businesses are doing their civic duty, reducing their capacity, investing in security measures and expanding outdoor operations in an effort to reduce the spread of the virus. The PPP extension is an investment in the US economy that will pay off when small businesses reap the rewards of pent-up post-pandemic consumer demand.
The salvation for Sunday’s small businesses, combined with the continued release of the COVID-19 vaccine, means that 2021 looks bright for small businesses.
It’s a great ending to a horrible year.
Alfredo Ortiz is the president and CEO of Job Creators Network.