Skip to comments.The Federal Stimulus Is Helping Individuals, But It’s Killing My Small Business
Posted on 04/13/2020 10:43:07 AM PDT by Kaslin
While it looks like everyone is taking seriously the average workers needs, no one at the decision-making level has thought of the small business owner.
If youre a small business owner like I am, youve been closely following the stimulus efforts of the federal government, looking for a lifeline out of the mess of delayed payments, lost revenue, and furloughed employees. Unfortunately, while it looks as though everyone is taking seriously the average workers needs, no one at the decision-making level has thought of the small business owner.
Congress passed the Families First Coronavirus Response Act on March 18, providing the first ever federally mandated sick leave program and a corresponding payroll tax credit for employers. Employers are somehow expected to pay those employees cash up front for up to 80 hours of work and then retain payroll tax payments instead of delivering them to the Internal Revenue Service.
Form 7200 can be filed to request payment from the IRS for any shortage, but this is likely to take weeks or months to arrive given the IRSs current focus on stimulus payments to virtually everyone in America. Keep in mind that unless business owners argue exemption, this is a required program for any business with fewer than 500 employees.
In addition, credits are being offered in similar fashion for employee retention and expanded family and medical leave. So employees can expect up to 10 days of regular pay from their employers while those same employers can expect a further temporary reduction in cash flow. But thats not all.
On March 27, Congress passes the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provides for the bulk of the remaining stimulus to workers. First, individual tax refund advances are prescribed at $1,200 per adult filer ($2,400 for joint filers) and $500 per qualifying child. This gives all employees in America at least $1,200 in cash at some point.
Second, the Payroll Protection Program was created through the Small Business Administrations 7(a) loan program that provides for 2.5 times the average monthly payroll of a small business in the form of a forgivable loan. Because of the way the Treasury and the Small Business Administration implemented the Payroll Protection Program, this turns out to be a pretty bad loan for a small business owner due to its short two-year term, and must therefore be considered for its forgiven provisions.
Unfortunately, those same administrators added restrictions on the forgiveness criteria, requiring at least 75 percent of the forgiven amount to be used for payroll. This payroll cannot be the same payroll used for the sick leave credit from the Families First Coronavirus Response Act. So the vast majority of these funds will go to employees who will receive those payments in addition to everything else Ive already mentioned.
Third, the CARES Act expanded regular unemployment benefits by adding $600 per week to each eligible employees other benefits. In some cases, people on unemployment will receive even more cash weekly than they would have on payroll.
The only widely available stimulus benefit that is not required or heavily incentivized to be used for payroll or to otherwise go directly to the worker is the CARES Act funding allocated to the Small Business Administrations Economic Injury Disaster Loan (EIDL) Program. All owners and managers know the host of general and administrative cash outflows related to running a small business, including rent, utilities, insurance, internet, benefits, interest, and minimum payments on credit cards and other loans, sales tax payments, memberships, advertising agreements, contractual obligations, inventory purchasing agreements, and more.
While the Payroll Protection Program loan allows 25 percent of the forgivable amount to apply to rent and utilities, most of the time this may not be enough to cover the expense. Nor are any of the other cash flows accounted for. To make matters worse, EIDL is the one program struggling to get payments into the hands of business owners. It also received the least of the CARES Act funding at just $562 million.
What are small business owners expected to do? So far, we are acting as conduits for further payments to our employees, putting our credit and our assets at risk, spending hours organizing financial data and applying for loans, all of which go through our hands and into the hands of those working for us who have other options at their disposal. To be sure, small business owners want our employees taken care of during this crisis, but we have other concerns too.
We need Congress to consider our infrastructure at least as much as it has shown interest in subsidizing individuals. The EIDL program must be funded properly, or our employees wont have any jobs to return to after the stimulus periods have passed.
They don’t care about small business. They want the economy to crash. The sooner the better. They know the people do not have the will to resist their evil schemes.
Where’s my free money?
More More More!
How d’you like it? How d’you like it?
More More More!
My bet is that the vast majority of people in Congress have never had to make a payroll.
I come from a family of self employed business people. One of the first things I was taught before entering into my business is to make sure there are ample cash reserves to sit out a downturn or other unforeseen situations. I thought six months to cover all expenses including rent, utilities, salaries (mine included) insurance, etc. would suffice and it did. I also had a line of credit available at my local bank but very seldom ever used it.
The number one cause of business failures is lack of cash.
Americans have paid in taxes for forever- much of that goes to necessary things, like the military, roads, bridges, upkeep on shipping ports etc- essentials that make life much better, but much goes to things like illegals, (over $1 Trillion per year), to nations that hate us like palestine, saudi arabia, etc- all over the world- to planned parenthood, to NPR- on and on and on it goes- The government is very very free with our money-
It’s not ‘free money’ we’re going to get- it’s our money coming back to us during a crisis when people are suffering financially- The government’s purpose is to use our money to help our country- BUT they have long ago lost sight of that- We the people hired them to be fiscally responsible with the money we give them for the good of the country- but they instead give our money away to hostile foreign nations, and to illegals, and all manner of disgusting causes- If it wasn’t for taxpayers, the government would have no money to function- We support our government so our government can in turn support us (via military, roads etc)
You didn’t answer my question.
Small business people are generally not the ones who give huge donations to political candidates, parties, and PACs.
They’re not in position to buy favors.
Curious to see how much stimulus money is spent at the local gun shops.
You could be right. Especially someone like Joe Biden or Chuck Schumer
Why dont business that can simply reopen? I will would drive out of my way to support them....and also stand in the way when the authorities arrive.
Yea, but you are not in Politics, especially in DC. That’s the difference.
Businesses need to contact their Senators and Congressmen and make these shortfalls clear to them. Nothing is inevitable. Mnuchin and Trump have committed to doing whatever it takes to lessen the self imposed blow to the economy but they can only do it by getting bi-partisan extensions to the funding. If you live in a blue state this is especially important because the Dems are doing everything they can to undermine these critical programs. Remember who is helping and who is hurting your business the next time you vote.
I don’t really care if I don’t end up getting any real help from these programs - but it burns me to see Mnuchin and the politicians standing up there and bragging about everything they are doing for small business, when they have accomplished precisely nothing to date.
What are you expected to do?
You’re expected to go broke, that’s what. That’s the plan.
This entire LockDown has, is bringing America to our knees.
Blame Communist China, blame SorozNazi, blame some USA politicians who’ve shut us down, blame them all (which is imho most probable), but short of those Obama-enabled Iranian nuclear bombs hitting us, this Virus scare LockDown is inflicting the greatest damage on us in history.
We simply MUST stop hiding under our beds and get the politicians to restore our country, businesses, jobs, and liberty.... NOW!
Why attack small business you ask? Because that is where you find the Trump vote. That is where you find opposition to big government regulation and the deep state. Small business is where you find the heart and soul of American exceptionalism. The left hates small business as they hate America. Is it any wonder why Amazon and Facebook are not in the crosshairs of government? I think we all know why.
I agree. They have completely focused on the PPP while the SBA completely screwed small small business. I dont want a fricken loan.
A downturn or unforeseen expense is something that can be planned for but no business can realistically plan to be shut down completely for an indefinite time period, none.
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