7 Ways Congress Can Help Small Businesses During The COVID-19 Outbreak

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The coronavirus (COVID-19) outbreak has hit every American institution. Some, like most American households, can hibernate and wait while we try to “flatten the curve.” However, one pillar of our economy that cannot simply take a break is small businesses.

Small businesses employ 47 percent of the private sector workers in the United States, which means nearly 60 million people depend on them to support themselves and their families. These businesses range from your local, independent restaurant to your self-employed accountant. Unlike large corporations, these companies tend not to be full of liquidity, and an interruption or prolonged delay in cash flow will either force them to close or take on more debt through high-yielding lenders.

While lawmakers have taken some immediate steps, we believe lawmakers can still do more to help businesses and workers cope with the economic impact of COVID-19.

Tax and debt deferral: The postponement of the deadline for the federal tax return on April 15th should be extended by the following two quarterly tax payment deadlines, which mean a considerable financial burden for the self-employed. The government could also negotiate deferred mortgage and credit card payments for small self-employed businesses, many of which operate from home and finance themselves with personal credit cards. We encourage governors to postpone VAT remittance in support of small businesses.

Direct help: While the paid vacation credit included in the most recently proposed coronavirus relief package will surely help, it will fail to cover many of the costs currently incurred, including lost business, paid sick leave, individual health care expenses and fixed expenses. In addition to the direct payments under discussion for all Americans, Congress should create a complementary direct aid program for self-employed and micro-businesses to help meet these costs.

Unemployment protection: The federal government should immediately finance an unemployment protection fund for self-employed and gig workers who are not entitled to unemployment protection. This would enable them to receive benefits when their incomes fall.

Disaster relief: Many of the government’s disaster relief programs just don’t work for the self-employed and micro-businesses. Congress should raise funds for a Self Employment Support Fund under the Economic Development Administration’s Economic Adjustment Assistance programs and the Small Business Administration (SBA) Disaster Relief Loan programs to support them.

Adopt the 2020 SBA Business Stabilization Direct Lending Program Act: This legislation would create a new SBA program to provide interest-free loans to small businesses affected by COVID-19 directly for employee benefits, wages, taxes, rent and debt restructuring.

Income Tax Credit (EITC): The EITC is an important source of income protection and works equally well for gig workers and those in more traditional employment. Congress should expand EITC by raising the income threshold, including younger and childless workers, and abolishing the marriage penalty. Legislators should also allow for quarterly credit calculation and management, which would better assist individuals struggling to cope with short-term income volatility.

Introduce long-term family and medical programs for owners, employees and caregivers:

Now is the time for Congress to thoughtfully develop a national program that includes partial wage replacement for small business employees (especially those with fewer than 50 employees) and the self-employed to help manage serious health problems for themselves, family members, or loved ones Care, including parental leave. Establishing a program that includes the self-employed and micro-businesses requires a real vision from members of both parties and both chambers, but not doing so will continue to harm American families and further ensure that this population remains vulnerable to the ebb and flow of the tides financial insecurity and global health pandemics.

A thriving small business community is the indicator of a strong economy, and we know from history that it will be the small business community that will ultimately get us out of any recession. Legislators have the ability to give them the tools they need to recover faster and make them more resilient.

Rhett Buttle is a former member of the White House Business Council, founder of Public Private Strategies and a Senior Fellow at the Aspen Institute. Follow him on Twitter @rhettbuttle.

Katie Vlietstra Wonnenberg is Vice President, Government Relations and Public Affairs for the National Association for the Self Employed (NASE). Follow her on Twitter @GAatNASE.

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