The 2020 holiday season has finally brought many benefits to the 30 million small business owners and their employees in the United States. On Sunday, after days of hard work by small business advocates including the Jobs Creator Network, President Trump signed a $900 billion COVID-19 legislative plan that includes nearly $300 billion in additional compensation protection plans funds.
This PPP expansion is the lifeblood of troubled American small businesses that are bravely fighting the surge of the virus and related business restrictions imposed by state and local governments.
Although the bill was passed in the second half of this year so that it could not affect the level of employment during the Christmas period, small business owners will now be able to use these new funds to make wage decisions in the first quarter of 2021
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In 2020, PPP issued approximately 5 million exempt loans worth more than US$500 billion, saving more than 50 million jobs. Up to 84% of small business employees should be attributed to this federal program, which has finally been expanded. As we said, with the COVID-19 vaccine quickly falling into the arms of Americans, this pandemic is about to end.
In just a few months, small businesses can get rid of heavy capacity constraints and operate as in 2019 again.
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These PPP funds will act as a bridge for small businesses from here to there. If conditions permit, the purchasing power parity agreement on Sunday will also accelerate economic recovery by keeping employers floating.
These funds will not be available soon.
According to Yelp, since March 1, 163,735 US companies have closed their doors. The National Restaurant Association estimates that 110,000 restaurants are permanently closed-about a sixth in the country.
According to Harvard University’s “Opportunity Insights” economic tracking report, the total income of small businesses in November fell by about a third from January. A Goldman Sachs survey of small businesses found that four in ten respondents fired employees or cut wages. The PPP extension on Sunday will stop the bleeding.
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More importantly, the legislation clarifies that past and future PPP expenses are tax deductible, which makes these forgivable loans more beneficial to employers.
According to the Brooking Institution, this tax provision will save companies about $200 billion. This will also make tax declaration easier. JCN and other small business groups directly presented reasons for PPP tax cuts to officials of the Ministry of Finance in September.
It is almost the same as the important content in Sunday’s COVID-19 assistance plan.
The Republicans succeeded in preventing the Democrats from providing hundreds of billions of dollars to bail out pension funds in blue countries, whose financial problems existed before the pandemic. Taxpayers in Texas do not have to pay for a debt disaster that California has no funds for.
Republicans have also successfully adopted legislative language to end the Fed’s emergency procurement power. This restriction will prevent Democrats from using the Fed to monetize blue Treasuries next year, thereby protecting small businesses from the harmful threat of inflation.
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In contrast, purchasing power parity funds are not a rescue plan. Small businesses are fulfilling their civic duties by reducing capacity, investing in safety measures, and expanding outdoor activities to reduce the spread of the virus. PPP expansion is an investment in the U.S. economy, and when small businesses get the rewards of pent-up consumer demand after the pandemic, this investment will reap handsome returns.
The lifeline of small businesses on Sunday, coupled with the continued launch of the COVID-19 vaccine, means that 2021 is bright for small businesses.
That was the happy ending of a terrible year.
Alfredo Ortiz is the President and CEO of Job Creators Network.