At a time when so much feels out of control, Congress is hoping small businesses can get back in the driver’s seat. In response to the coronavirus pandemic, lawmakers on Friday officially approved a sweeping stimulus package, with some $350 billion allocated specifically for small business relief. The stimulus package gives small business owners options about how to best weather the unprecedented storm.
The pandemic has already had devastating consequences for many of the country’s small businesses. By one estimate, a staggering 50 percent of small businesses across the United States have issued layoffs or furloughs in response to the outbreak. Many small businesses have had to close or drastically scale back their operations—with no reopening date in sight. Without any revenue coming in, small business owners find it nearly impossible to compensate employees, cover their commercial rent or otherwise invest in the community.
Friday’s stimulus package offers some much-needed relief. Under the new law, small businesses that continue to employ and pay their workers throughout the coronavirus crisis can elect to defer their payroll tax liability or obtain loans to cover the cost of payroll and other expenses. The first option allows small businesses to pay their 2020 payroll taxes on a delayed basis: 50 percent in 2021 and 50 percent in 2022. That way, businesses can continue making payroll right now without worrying about the tax burden usually associated with those payments.
Alternatively, small businesses can choose to apply for an emergency relief loan that can help cover the cost of payroll, rent and other obligations. The loans, which would be facilitated local banks and existing lenders, could be forgiven if the small business borrower continues to compensate employees throughout the duration of the crisis.
Ultimately, the goal of the stimulus package is to keep American workers employed. Small businesses are necessarily on the front lines of that fight, employing nearly half of all American workers. By helping small businesses make payroll, the stimulus package aims to keep more Americans financially stable throughout this uncertain time.
The measures approved in Congress’ stimulus package come in addition to the loan programs already in place at the Small Business Administration and at the state level. For more information about such programs and how to apply, small businesses should consult www.sba.gov for updates.