The holiday season in 2020 has finally become much happier for America’s 30 million small business owners and their employees. On Sunday, following days of efforts by advocates for small businesses, including the Job Creators Network, President Trump signed a $ 900 billion COVID-19 legislative package that includes nearly $ 300 billion in additional funds for the Paycheck Protection Program. .
This PPP expansion is a lifeline for beleaguered U.S. small businesses that are bravely trying to fight off yet another increase in the virus and the associated business constraints implemented by state and local governments.
Although the legislation was passed too late in the year to affect employment levels during the Christmas season, small business owners will be able to use these new funds in the first quarter of 2021 to take payroll pay.
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By 2020, PPP had distributed about five million bad loans worth more than $ 500 billion, saving more than 50 million jobs. Up to 84 percent of all small business employees owe their jobs to this federal program that has eventually been expanded. With COVID-19 vaccines falling into our arms, the pandemic will soon be over.
In a few months, small businesses may shake off their burdensome capacity constraints and work again as they did in 2019.
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These EMP funds will serve as a bridge to get small businesses from here to there. By keeping employers going, Sunday’s expansion of EMP will also accelerate economic recovery when conditions allow.
These funds cannot come soon enough.
According to Yelp, 163,735 U.S. businesses have closed since March 1st. The National Restaurant Association estimates that 110,000 restaurants have closed permanently – about one in six nationwide.
According to the Opportunity Insights Economic Tracker at Harvard University, total small business income in November is about one-third less than in January. A Goldman Sachs survey of small businesses found that four out of ten respondents laid off employees or cut their wages. Sunday’s PPP extension will stop the bleeding.
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What’s more, the legislation states that OOP expenses are past and future tax deductible, making these forgivable loans even more advantageous to employers.
According to the Brooking Institution, this tax provision will save businesses about $ 200 billion. It will also make tax filing much simpler. In September, JCN and other small business groups spoke directly to Treasury officials directly at PPP’s tax deductibility.
Almost as important as what is in Sunday’s aid package COVID-19 is what is not.
Republicans have managed to prevent Democrats from including hundreds of billions of dollars to save blue state pension funds, the fiscal problems of which were before the pandemic. Taxpayers in Texas do not have to pay for the unfunded liability disaster in California.
Republicans also managed to include legislative language to end the Federal Reserve’s emergency purchasing authority. This restriction will prevent Democrats from simply using the Fed next year to earn blue government debt, which protects small businesses from the damaging threat of inflation.
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OPS funds, on the other hand, are not a salvation. Small businesses are doing their civic duty by reducing their capacity, investing in security measures and expanding outreach operations in an effort to reduce virus spread. The PPP expansion is an investment in the US economy that will bear fruit well when small businesses reap the rewards of pent-up consumer demand following the pandemic.
Sunday’s lifeline for small businesses, combined with the ongoing COVID-19 vaccination of vaccines, means that 2021 looks bright for small businesses.
It’s a wonderful end to a horrible year.
Alfredo Ortiz is the President and CEO of the Job Creators Network.