I think we can all agree that swift and decisive action is needed in Washington to address the COVID-19 crisis. Yet policy decisions being made in Congress right now are neglecting the true needs of small businesses and the people who work for them.
To give some perspective: According to the Small Business Administration (SBA), small businesses account for 45 percent of the nation’s gross domestic product and employ 48 percent of American workers. Thus, we are talking about one of the main drivers of our nation’s economy.
Policymakers will say they are trying to help small businesses through this crisis: For example, SBA Administrator Jovita Carranza said that small businesses “can now apply for economic injury disaster loans, and [we are] changing the terms of new economic injury loans to allow for one-year deferments.”
The problem is, and you can read it right there: Ultimately what the government is offering to small business owners are Small Business Administration loans—even if the government might ultimately forgive them under the right circumstances, those are loans that come with many strings attached. Meanwhile, big companies are poised to receive massive bailouts—straight-up handouts with little bureaucracy to impede the infusion of money into their operations. The SBA says decisions on the loans for small businesses take an average of two to three weeks to process—that’s two to three weeks of uncertainty when business owners could use immediate assurances that they’ll be able to weather this storm, and their employees could use assurances that they’ll be able to pay their household bills.
Moreover, many main street businesses don’t want loans. Indeed, many business owners make a point of operating without debt because they run on such slim margins, and debt would make them vulnerable. The assistance that businesses could use right now is direct relief—for example, in the form of payroll tax credits that would allow them to keep paying their employees. Think about it: The credits would be the great equalizer of accountability—they would benefit the small business only in the area of labor, but that is usually the largest expense and first that feels the impact of an economic crisis. The small businesses would feel the credits directly through labor savings, and the money would end up in the pockets of the employees who need the ongoing income—truly a win all around.
We have heard that individuals might soon receive direct checks from the government, which is a great short-term measure, because our economy is very much consumer driven, and small businesses rely on consumer activity. Yet as good as it is to spur the economy by pumping up consumer spending, policymakers are leaving behind the engine that drives the American economy—small business.
Unfortunately, right now the rhetoric from the media has created an opportunity for government overreach, which we are seeing played out in Congress. The unabashed pork barrel spending that some politicians are trying to inject into the COVID-19 relief bills ultimately will be a burden on every small business and will do very little to stimulate the economy.
If policymakers in Washington truly want to help American workers—the people who form the backbone of our economy—they should focus on immediate, real relief for small businesses. We must see to it that small businesses emerge from this crisis intact and unencumbered to propel our economy into a massive recovery.
Brian Slipka is president and CEO of the Minneapolis-based Business Brokers Investment Company and founder of True North Equity Partners through which he is sole or controlling owner in over a half dozen main street and lower middle-market businesses.