It is often said that small businesses are the backbone of the American economy. They include hair salons, restaurants, dry cleaners, convenience stores, accounting and law firms, and many businesses in various industries that until recently filled our daily lives.
According to 2019 data from the U.S. Small Business Administration, the United States has 30.7 million small businesses with 59.9 million employees. Those small businesses employed nearly half of the country’s private workforce.
And those businesses and the people who work for them, like so many of us, are struggling financially under the burdens of the coronavirus pandemic. Some of those businesses have had to close their doors or curtail their operations, and for most, revenues have been reduced — even as payroll, rent, utility and debt-service expenses have continued. For small businesses, even just a few weeks of reduced revenue and continuing expenses could be devastating.
So we were glad to see the support small businesses will receive in the $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act, which was passed by Congress and signed by President Donald Trump last week. The bill is meant to help keep the economy afloat when so much of it is on hold, and to help save lives and prevent runs on our health care system. And though passage of the bill was certainly not easy, it was a much needed move. In that regard, we were pleased to see a rare level of congressional bipartisan cooperation in the service of the needs of the American people.
The bill, among other things, provides payments to individual Americans, allows more people to qualify for unemployment, gives money to hospitals and health care centers to deal with an influx of patients, and provides badly needed support to small businesses. That last piece includes the $350 billion Paycheck Protection Program, an expansion of the SBA’s 7(a) loan program. The 7(a) loan program is, according to the SBA, its “primary program for providing financial assistance to small businesses.” The expansion allows more small businesses to qualify for the loans, raises the maximum loan amount that can be taken, caps maximum interest rates and provides much valued government guarantees for the loans.
This expansion of the 7(a) loan program will hopefully help small businesses keep their employees on for the duration of the crisis, and help them pay rent, mortgages, utilities and debt. And when this crisis is over and lockdowns begin to be lifted, that support will help the small businesses bounce back and resume operations.
Difficult problems require difficult solutions, and the COVID-19 crisis is perhaps the most difficult problem we have faced in generations. We are glad to see that, in this emergency situation, legislators worked across the aisle to ensure this support for individuals, the health care system and our country’s small business backbone.