Small businesses: How Long Until Coronavirus Aid Arrives?
Thanks to Congress, the $2 trillion stimulus package includes significantly more support for the average U.S. citizen out there. While the Senate mainly focused on providing bailouts for large corporations such as Boeing, Congress pushed for unemployment and direct support for American households. But something that will be even more important for some people out there is that the bill also includes financial support specifically for small businesses.
Of course, $350 billion of the $377 billion dollars that are supposed to flow to small businesses are loans, which they are going to need to pay back in the future. But on top of that, there are also $17 billion for relief for existing loans, as well as grants over $10 billion dollars. But no matter which part of the business support package you hope to get a hold of, one of the most pressing questions as the COVID-19 related fallout becomes worse every day is, for small businesses: When will coronavirus aid arrive?
Although many large businesses, such as Adidas or the Cheesecake Factory, have already said that they are going to forego rent payments on many of their locations, small business owners can have it much worse when it comes to pending payments this month. Rent, mortgage, credit card debt, and many small businesses out there will undoubtedly also like to continue paying their employees if they can. Especially now things may get tight, as the crisis has breached into April. Because even if landlords are exercising kindness in many places, the daily necessities are not just going to stop being a thing, just because of COVID-19.
This is why right now, small businesses seem to have but one question to the government: When is the money going to come? With businesses losing revenue left and right, everyday matters and things are constantly becoming tighter. Because while many people have rightly questioned how it makes sense that massive corporations, who have been buying back their own stocks over the past months instead of creating safety funds, deserve stimulus payments now, the same argument is not true for small business owners. After all, many of these small businesses are just getting off the ground and, in some cases, operate entirely with cash and razor-thin margins.
On top of that, there are also solo-entrepreneurs and freelancers, who may not have the staff to pay, but that is still suffering from work that has suddenly all but vanished. Every part of the economy is affected by this and some of the only parts of the supply chain that are likely to still operate at a profit are those that are connected to either healthcare, sanitation or the food supply.
In a seemingly never-ending flood of worries that add to the fact that every day in which the stimulus package is not being paid out makes things significantly worse, many entrepreneurs and freelancers are faced with lots of refund requests. As it is normal in many parts of the economy to get payments in advance, and many people are now unable to access the products or services that they have pre-paid for, it is only natural that they are going to want their money back. It is equally understandable, though, that this throws yet another wrench in the already staggering economy.
So, when will coronavirus aid arrive, finally? Well, the aid package has been signed into law on Friday. All funds that are received from this aid can legally be used for payroll, mortgages, rent, and utilities, as well as small loans that can, depending on an owner’s credit score, be approved quickly. On top of that, there is the option of receiving tax credits, if you are an employer who tries to retain their workers, as long as you do not have an SBA-loan already. The thing is, SBA loans are exactly what many people are looking into right now, specifically economic injury disaster loans. Right now, there are reports that the Federal Reserve is working on a program that would allow for money to be lent directly to small business owners. Freelancers, on the other hand, can now sign up for unemployment.
But when it comes to the speed at which this aid is being paid out, everyone seems to be aware that time is critical, while pointing to how much the economy has contracted already. As layoffs continue, a 30% annual plunge for this quarter is being predicted by some experts, which would be the biggest contraction within a quarter since World War II. Many are not missing the irony that this just adds to the many questionable records that the Trump administration is collecting these days.
According to Treasury Secretary Steven Mnuchin, small loans should be ready to be paid out by Friday, with the required loan forms to be released before that. But this announcement has sparked even more concern. As Katie Vlietstra, an executive at the National Association for the Self-Employed points out, the inevitable lag from when an application is filed, until it is finally approved, is going to send even more people spiraling into financial ruin.
Adding on to that is that also the SBA’s track record is not exactly great since its performance after Hurricane Harvey. So, at the end of the day, everything seems to depend on how quickly the forms can be processed as soon as loans are set to be paid out by Friday. The only hope for small businesses now seems to be that the Trump administration can complement its set of negative records with a positive one for a change and payout those loans with maximum efficiency.