Stimulus Package Offering Billions in Relief for Small Businesses Advances to Senate
TLDR: Following House passage of President Joe Biden’s stimulus package this weekend, Senate Democrats are pushing forward with the measure that would provide billions of dollars to Americans and small businesses affected by the pandemic. As the Senate prepares to vote on the stimulus plan, it is important for policymakers to guarantee that the money set aside for struggling small businesses effectively provides the entrepreneurial community with the targeted emergency assistance it needs to drive the nation’s long-term economic recovery.
What’s Happening This Week: The Senate could vote as soon as this week on a $1.9 trillion stimulus package to support Americans affected by the pandemic after the House this weekend passed its version of the relief bill in a largely party-line vote.
The relief package passed by the House would allocate billions of dollars for COVID testing and vaccine distribution, give direct payments of $1,400 to qualifying Americans, increase expanded unemployment benefits to $400 a week through Aug. 29th, and would enhance the child tax credit. The House legislation would also allocate billions of dollars for small business relief, including setting aside $15 billion to the Targeted Economic Injury Disaster Loan Advance (EIDL) program to provide assistance to “severely impacted” small businesses. The House legislation would also establish a Community Navigator Pilot Program to help small business owners—particularly underrepresented founders—better understand and access available relief programs, and would reauthorize and provide billions of dollars for the State Small Business Credit Initiative (SSBI) to spur on long-term entrepreneurial growth and job creation.
Democrats are hoping to pass the relief package and have it signed by President Joe Biden before March 14th, the date when the current unemployment benefits implemented by the $900 billion relief bill passed in December expire.
Why it Matters to Startups: Many Americans are struggling as a result of the pandemic, and it’s critical for policymakers to swiftly move forward with a far-reaching and effective relief package—particularly one that keeps the needs of the startup community in mind. Although the current legislation includes needed relief for small businesses, policymakers must continue to take the necessary steps to ensure that emergency relief is being targeted to the startups and nascent companies who need it the most.
Small businesses and startups, in particular, are in immediate need of assistance in order to keep their doors open. Startups are responsible for creating approximately three million new jobs each year, and policymakers cannot fail to address the long-term concerns of the nascent companies that will help fuel the nation’s recovery. Unfortunately, many of these job creators are already in dire straits and looking to the government for relief. A report released by the Federal Reserve last month found that roughly one in three small businesses did not believe they could stay open without federal assistance. If Congress wants to ensure that the U.S. economy is well-positioned to recover from the pandemic, then policymakers must work to give early-stage companies the assistance they need now in order to drive future job growth and innovation.
While the current stimulus package takes some steps to move the needle for the U.S. startup ecosystem, it’s important for Congress to actively pursue additional legislative proposals that can direct more targeted relief and long-term support to entrepreneurs. Since the start of the pandemic last year, Engine has been engaging with policymakers and the broader startup community to identify some of the relief measures that are needed to drive long-term entrepreneurial success. These discussions formed the basis of Engine’s roadmap for recovery, which outlines a variety of alternative policy proposals that would strengthen the effectiveness of current and proposed pandemic relief efforts.
These steps—such as offering investor tax credits, providing more expanded long-term, low-interest loan programs beyond the Paycheck Protection Program (PPP), and incentivizing joint public-private equity investments in startups—would further embolden the startup community during this economically fraught period. When Engine conducted a survey of startups in our network last October, entrepreneurs also indicated their support for a designated startup fund to help alleviate the burden of competing with more established businesses for limited financial assistance. By moving forward with just some of these alternative policy proposals beyond PPP loans, policymakers can have a significant—and positive—long-term impact on startup creation and activity.
As the Senate takes up the stimulus legislation this week, we urge policymakers to consider some of the additional policy steps that can be taken to strengthen entrepreneurial relief efforts. And, moving forward, we hope that Congress will continue working to ensure that the startup community receives the long-term relief it needs to drive the nation’s economic recovery.
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