Helping small businesses survive the financial ravages of the COVID-19 pandemic is the centerpiece of President Joe Biden’s economic recovery plan.
Shortly before his inauguration, Biden unveiled a $1.9 trillion American Rescue Plan, which includes $15 billion in grants to help the hardest hit businesses and $35 billion for small business financing.
The plan also includes money for the distribution of vaccines to help curb the deadly pandemic, which has claimed more than 400,000 American lives and shuttered thousands of small businesses across the nation.
Biden must convince a closely divided Congress to support his plan. “We have to act and we have to act now. We cannot afford inaction. … They’re hurting and they’re hurting badly,” Biden said, as he unveiled his plan.
Biden’s proposal comes on the heels of the hard-fought compromise COVID rescue plan Congress passed in December and signed into law by former President Trump. The December action was an extension of aid to small businesses that Congress approved in the spring.
The rollout of the SBA’s $284 billion Paycheck Protection Program in mid-January places greater emphasis on smaller businesses and allows qualifying businesses that received money in the first round of COVID relief to apply again for funding.
Loans are capped at $2 million, as opposed to $10 million in the first PPP. In addition, money can be used for purposes beyond “payroll protection.” Such purposes include operation, property damage and supplier and worker protection expenditures. Eligible applicants have been expanded to include nonprofit organizations, destination marketing organizations, housing cooperatives, etc.
Research by University of Southern California economists concluded in December that the COVID-19 pandemic could result in net losses starting at $3.2 trillion and reaching as much as $4.8 trillion in U.S. real gross domestic product over the course of two years.
Real GDP is a measure, adjusted for inflation, that reflects the value and the quantity of final goods and services produced by a nation’s economy in a given year.
The pandemic’s economic impact depends on factors such as the duration and extent of the business closures, the gradual reopening process, infection rates and fatalities, avoiding public places and pent-up consumer demand, according to research by the USC Center for Risk and Economic Analysis of Terrorism Events (CREATE).
The researchers found that the mandatory closures and partial re-openings alone could result in a 22 percent loss of U.S. GDP in just one year and an even greater loss of GDP over two years. Other key factors, they noted, will influence how disastrous the losses may be.
Clearly Congress and President Trump responded appropriately with two rounds of grants and loans in 2020 to help shore up the nation’s small businesses during these dire times. President Biden’s continued focus on these efforts is heartening.
Throughout 2020 and into this new year, the Small Business Development Center at Cal State Bakersfield, an extension of the U.S. Small Business Administration, has expanded its services – including offering free counseling, educational programs and webinars to help local entrepreneurs apply for available loans and adapt their operations to the harsh pandemic realities.
A primary feature is the one-hour “Webinar Wednesday” series, Managing Your Small Business through the pandemic, that began in March 2020. The free weekly webinars provide pandemic relief updates on available federal, state and local funding options, tax credit programs, employee programs and other opportunities for employers and business owners. Past webinars can be found on the CSUB SBDC YouTube channel.
As the Biden administration rolls out additional programs, SBDC free services will be critical to the success and survival of Kern County businesses.
The U.S. Small Business Administration may not have the largest budget in the federal government. But its influence and power are in its programs and services.
The agency does much more than provide loan guarantees. It supports about 900 small-business development centers, counseling centers and networks for women, minorities and veteran entrepreneurs. These networks and centers are instrumental in getting small businesses back up and running.
The Small Business Development Center at CSUB is one of five service centers within the University of California, Central California SBDC Regional Network. It assists small business owners in Kern, Inyo and Mono counties by providing free consulting, small business training and research. For more information, go to www.csubsbdc.com
Kelly Bearden is the director of the Small Business Development Center at Cal State Bakersfield.