By Jeff Domansky, March 10, 2021
The US Congress today passed the Biden administration’s $1.9 trillion COVID-19 bill and economic recovery program. Missing in action were Republican votes and an increase of the minimum wage to $15.
The relief package is ambitious and based on the administration’s belief that money for testing and vaccines, aid for the unemployed, increased health insurance coverage, assistance to schools, funds for state and local governments, child tax credits, and rental and homeowner assistance will all combine to supercharge the recovery.
Although 70% of Americans support the plan, it’s still a big gamble. If it works, it could put the US economy on a faster road to recovery.
PPP and restaurant business support
In addition to the one-time $1400 relief checks and extension of unemployment benefits to September, there is also a little bit of good news for business.
A $28.6 billion Restaurant Revitalization Fund will provide grants to the hard-hit restaurants, breweries, and bars to cover payroll, rent, utilities, and other operational expenses.
“Today Congress spoke with one voice in support of the restaurant industry. The Restaurant Revitalization Fund will keep doors open in restaurants large and small in every community,” said Sean Kennedy, National Restaurant Association executive vice president of public affairs.
The bill provides $7.25 billion for the Paycheck Protection Program, a significant drop from earlier PPP funding. Airlines will receive $15 billion and an extension of the previous Payroll Support Program.
Is it enough to help businesses survive?
Alignable published a sobering new March report and update on the State of Small Business in the US.
The report’s good news shows some small business optimism around the new PPP funds for business and the May timeline for widespread vaccine distribution. 28% of more than 8,000 firms surveyed said these efforts could help them recover in 2021.
Business sentiment shifts negative
Unfortunately, the economic misery among SMEs is rising again.
Alignable’s March report shows 78% of SMBs still experiencing negative financial impact, up from 68% last month; 58% are reporting “significant impact,” up 12% from February.
“Businesses reporting a positive impact was cut almost in half, dropping from 15% last month to 8% now,” writes Alignable CEO Eric Groves in the report.
Additional findings show the road to recovery is rocky:
- Revenue hit a new COVID-era low as58% collected less than half of their pre-COVID sales.
- Cash flow is worse than ever, with41% saying they have one month or less cash on hand, up 9% from Feb.
- Statistics are even worse for 56% of minorities and 51% of women business owners, who have only four weeks until they use up their business savings.
- Rent woes hit a new 2020-2021 high as 49% of small business owners say they can’t pay their March rent, up 11% from Feb. and 16% from Jan. And, 67% of minority-owned and 53% of women-owned businesses can’t afford their March rent.
“With the growing cash on hand crisis, it’s not surprising to see concerns over financial resources top the list of troubles cited by small business owners,” Groves adds. “Fears about customers returning continue to increase, as well, while fewer poll-takers are worried about government reclosures.”
There’s still confusion about business revenue levels for grants as well as timing for applications. Businesses need to be proactive with their financial advisors.
Who is helping small businesses survive?
Some big companies are making significant efforts to help SMBs survive.
Visa commits $1,000,000 in hyperlocal grants and mentorship
Visa announced a new $1 million locally-focused grant program tailored to support Black-owned small businesses, emphasizing those owned by women in cities with the highest concentration of Black-owned businesses (Atlanta, Chicago, Detroit, Los Angeles, Miami, and Washington, DC).
“The pandemic has impacted all small businesses – but those run by women and people of color have been disproportionately affected,” said Kimberly Lawrence, head of US, Visa. “With this hyperlocal focus on some of the hardest-hit cities, Visa aims to make a meaningful difference, quickly, for the communities and their business owners who need it most.”
Visa’s program also supports Black women entrepreneurs with mentorship, a partnership with Black Girl Ventures, and local marketing campaigns to encourage local businesses’ consumer support. In 2020, Visa helped digitally-enable 50 million small businesses through partner offers, street team visits, virtual education seminars, and mentorship opportunities.
Mastercard supports minority-owned business
Mastercard previously announced a half-billion-dollar, five-year commitment to support Black communities with products, services, technology, and financial support. It also offers localized, concentrated investments providing Black-owned businesses and consumers access to affordable financial tools and capital.
The company’s Strivers Initiative is a consumer program supported by singer, songwriter Jennifer Hudson, to elevate Black female business owners’ visibility overcoming obstacles to maintain and grow their business. Its Fearless Fund connects VCs and investors with deserving minority-owned businesses and entrepreneurs.
It also created the “The Main Street Love Small Business Grant Contest” to help founders survive across the US.
Small business lender Fountainhead and e-commerce platform Womply partnered to streamline SMB PPP loans and applications.
Hundreds of other big and smaller companies provide support for small businesses with services, products, technology, and funding to help keep them alive.
GOP ghosts?
So what were Republicans doing during the crisis? Certainly, nothing to help consumers and businesses recover while delaying or placing barriers in the way of faster relief. The GOP certainly wasn’t listening to 70% of Americans who support the relief program and 63% of businesses who say the Biden plan will help them survive.
I wonder how long it will take Republican leaders before they start claiming “they” delivered this desperately needed relief package. Time will tell whether the expected consumer spending rebound will happen fast enough to keep some businesses afloat, but it’s a great start, isn’t it?
Recent stories on Covid impact on payments:
$1400 stimulus check won’t cover one month of bills