Small biz in line for big help in $2 trillion stimulus bill
Most companies with under 500 workers, including the self-employed, will get their costs covered for eight weeks by the government if they keep workers on the payroll, U.S. Rep. Raja Krishnamoorthi says. What happens after that?
That $2.2 trillion federal stimulus bill does a lot more for small business than many people realize, at least for the first eight weeks of the COVID-19 pandemic. But almost certainly more will be needed for that group and a host of others, including cash-strapped state and local governments.
That’s the word from U.S. Rep. Raja Krishnamoorthi, D-Schaumburg, who has focused on small-business issues in his time in D.C. and had some influence on the final stimulus package.
Krishnamoorthi said the bill specifically carves out $377 billion available to almost any small business—defined as a company with fewer than 500 employees, plus nonprofits, sole proprietorships and self-employed individuals. All are entitled to loans equal to two and a half times their costs over an eight-week period. Costs include rent, health insurance and, most important, payroll for workers, including tips.
Those loans will become grants if the business continues to pay its costs, he said. With payroll the biggest cost for most firms, operators will have a big incentive to keep their workers on, converting the loan into a grant, Krishnamoorthi said.
Loans technically will be through the U.S. Small Business Administration but will be administered by local financial institutions, including credit unions, Krishnamoorthi said. That’s deliberate.
“We want to make obtaining this help as simple as possible,” said Krishnamoorthi, noting that after the subprime crisis a decade ago, he and other business owners—his small firm made night vision equipment—had extreme difficulty actually getting available federal funds and boosting their liquidity. “We want people to keep their business running.”
The American Business Immigration Coalition tells a similar story of the help that’s available. Working with the Illinois Restaurant Association and federal lawmakers including U.S. Sen. Dick Durbin, D-Ill., and U.S. Reps. Jan Schakowsky, D-Evanston, and Jesus “Chuy” Garcia, D-Chicago, the coalition says provisions of the bill will allow small companies and in particular restaurants to “cover payroll and overhead.”
The group will hold a webinar at noon tomorrow to discuss details and answer questions about how to get the cash.
Krishnamoorthi said additional funds almost certainly will be needed in another stimulus bill later this spring. “We’re probably going to have to do more,” he said. “Our economy has gone in a medically induced coma, and we’re going to have to pull it out of it.”
The later stimulus bill also will need to further extend unemployment benefits for those who have lost their jobs because of the pandemic, include more help for state and local governments whose tax receipts have dried up, and possibly have an infrastructure component, Krishnamoorthi said.
Illinois and local governments combined will get about $5 billion out of the stimulus bill, Krishnamoorthi said, with the city of Chicago alone in line for an estimated $600 million to $1 billion. But though officials here have not yet given detailed projections, outside financial watchdogs say much more ultimately may be needed.
UPDATE, NOON TUESDAY:
A little more detail on the forgivable loans: The costs eligible to be covered via borrowing are based on average payroll over the 12 months preceding the pandemic. Covered salary is limited to those making no more than $100,000 a year. The total loan is capped at $10 million per enterprise—each restaurant location is considered separate, even for big chains, according to industry trade groups—but there is no requirement for the recipient to post collateral or make a personal guarantee.
For even more details, check with the Small Business Administration or, even better, your financial institution, most of which will be able to directly make the loans, according to Krishnamoorthi. And, good luck. Officials say they want to get this relief out the door really fast. Hope so.
Author: Greg Hinz