Whenever we're faced with the prospect of a new presidential administration, some amount of attention naturally turns to how their policies and proposals will impact small businesses across the country. According to a study conducted by the Small Business Administration in 2019, there are currently 30.7 million such organizations across the country – accounting for 99.9% of all businesses in the United States and making up the backbone of our economy.
All told, small businesses create approximately 1.5 million new jobs every single year, a number that equates to about 64% of all jobs created annually. So, it's always important to get an understanding of how a new president will approach supporting and empowering these organizations – but it's especially true this year, given the ongoing COVID-19 pandemic and economic recession.
Another study conducted in September revealed that out of all businesses that were forced to close "temporarily" during the onset of the pandemic, about 100,000 of them are now permanently out of business. This number is only expected to increase as time goes on, even as more good news about a potential vaccine hits the press daily.
All of this is to say that the stakes are incredibly high for the incoming Joe Biden administration to "get this one right," and that the country is watching what their approach to small business support will be. Thankfully, the campaign's own website sheds some light on Biden's thoughts on the matter, and what actions he plans to take as soon as he is sworn in on January 20, 2021.
(Note that our aim is to provide an unbiased summary of Biden’s publicly available small business proposals and this does not indicate an opinion on any political figure or party.)
The Biden campaign's website makes it clear that Joe Biden himself "believes that the story of America is one of ordinary people doing extraordinary things." Biden says that the small business and entrepreneurship community is a core element to the American community itself, and that their contributions and successes are crucial to our continued success both as a society, and as a nation.
This is a big part of the reason why Joe Biden's proposals to set up support for deserving small businesses begins with establishing a true small business trust fund. Congressional Democrats have already secured $60 billion in funds that are intended to go to smaller lenders and community-based institutions, as those are the organizations best positioned to get these types of resources into the hands of the small business owners who need them the most. Biden also wants to go one step further and reserve half of all new PPP funds for small businesses with 50 employees or less, all to make sure that support during COVID-19 doesn't turn into a "first come, first served" horse race.
Along the same lines, Biden wants to guarantee no unjust enrichment by keeping well-off business owners from using any type of financial support program to ultimately enrich themselves. Biden wants to be certain that absolutely no business owner is receiving more from things like PPP funds than they are losing in revenue. Likewise, he wants heightened scrutiny of certain types of firms in categories like consulting, accounting, legal, and tax advice where business owners and executives are making more than $500,000 per year. But at the same time, for those business owners who do need this type of assistance, Biden wants to expedite the loan process with fewer amounts of "unnecessary paperwork" – particularly with regards to those businesses who have been hit the hardest during the pandemic.
Finally, Biden wants to provide a guarantee that every qualifying small business will get the relief that it needs, regardless of how much it needs – rather than capping a fund in a way that essentially forces one small business to compete against the next.
This means authorizing what the campaign website calls "more generous loans" for small business owners to help cover their costs and keep as many workers on their payroll as possible. It also involves extending the eight-week limitation on payroll forgiveness to make sure that it goes through for the entirety of the COVID-19 pandemic. Biden also wants increased flexibility in terms of letting the businesses themselves decide when that covered period begins.
Finally, Biden wants to establish what he calls "look-back audit mechanisms" to help fight abuse based on a review of a business' net income.
In the end, Biden's website makes it clear that he wants to do whatever it takes to support and empower the small business community in the United States. He continues to emphasize those "mom and pop" organizations – the beauty shops, the barbershops, the diners, the local auto body shops, etc. – that give so much to the communities they operate in.
Even going as far back as April 3, Joe Biden called upon the current administration to "produce a weekly dashboard to show which small businesses are accessing loans" in an effort to make sure that the program isn't overlooking the communities that need it the most.
Exactly how much of this agenda the President Elect is able to accomplish – and how quickly the relief will come after he is sworn in during January of next year – are things that remain to be seen.
About Martinez & Shanken, PLLC
Martinez & Shanken, PLLC is a Certified Public Accountant (CPA) firm based in Gilbert, Arizona. We provide a full range of accounting, bookkeeping, consulting, outsourcing and business services. Partners Deborah Martinez and Earl Shanken work to ensure your business accounting is done with integrity and to your satisfaction.
