Stimulus Sets Aside Billions for Small Businesses
TLDR: Democrats are moving forward with President Joe Biden’s stimulus package that would provide billions of dollars in relief to small businesses and entrepreneurs affected by the pandemic. As policymakers finalize the proposal, they should work to ensure that economic relief earmarked for startups and other nascent companies truly provides long-term, targeted support for the U.S. entrepreneurial community.
What’s Happening This Week: President Joe Biden and congressional Democrats are continuing to move forward with a $1.9 trillion economic rescue plan to support Americans who have been affected by the pandemic. Although Biden has signaled his willingness to work with Republicans on areas of bipartisan concern, he said that he is prepared to move forward on the package without GOP support as a result of the pandemic’s crippling impact on the U.S. economy.
Last week, both chambers of Congress passed a budget resolution for Biden’s stimulus package, allowing Democrats to use the reconciliation process to pass a relief bill with a simple majority vote. The vote advanced the administration’s two-track strategy of advancing a stimulus package without Republican support, while also offering to hold bipartisan negotiations over the proposal’s amendments and scope. While Democrats remain divided over some aspects of the relief package—such as the income threshold for Americans to receive $1,400 stimulus checks—House Speaker Nancy Pelosi (D-Calif.) said the goal is to pass the bill in the next two weeks.
The relief package—as proposed by Biden last month—would set aside $440 billion for small businesses and communities that have been most affected by the pandemic. It includes a new $15 billion grant program for startups and other small businesses, as well as a proposal to “leverage $35 billion in government funds into $175 billion in low-interest loans to finance small businesses.”
Why it Matters to Startups: Biden’s relief package is a step in the right direction for the startup community, which has been calling for more targeted relief in order to ensure that early-stage companies have the support they need to drive the nation’s long-term economic recovery. While the proposal includes more assistance for entrepreneurs and nascent companies—including an assurance that minority- and women-owned small businesses will have equal access to needed resources—policymakers should continue to explore proposals that would be beneficial to the startup ecosystem.
Startups and small businesses remain in desperate need of emergency relief to keep their businesses afloat. A new report released by the Federal Reserve found that 30 percent of surveyed small businesses said they would not survive without additional federal assistance. As we noted in a recent Morning Consult op-ed, policymakers need to support early-stage companies in order to foster competition and innovation moving forward. Startups create approximately three million jobs each year, and this boon to the U.S. workforce will be especially vital once the pandemic has subsided.
In order to spur future job growth, startups and entrepreneurs need more targeted assistance to help them weather the economic uncertainty. Since the start of the pandemic, Engine has been working with entrepreneurs and lawmakers to identify critical relief measures needed to support and embolden startups. The roadmap for recovery that emerged from these discussions includes alternative policy proposals—such as investor tax credits, a “startup fund” to better direct relief to nascent companies, joint public-private equity investments in startups, and more expanded forgivable loan programs beyond the Paycheck Protection Program—that would maximize the effectiveness of COVID relief efforts.
The current relief package under consideration includes a number of positive steps for the startup community, including expanded grant and funding opportunities for early-stage companies. As policymakers work to finalize the stimulus plan, we hope that they will continue to examine the needs of the startup community and ensure that U.S. entrepreneurs are receiving the assistance that they need to power the nation’s long-term recovery.
On the Horizon.
Silicon Flatirons is holding a three-day virtual summit—today through Thursday—to discuss “Trust and Trustworthiness in the Tech Sector.”
Join Engine next Wednesday, Feb. 17th, at 4 p.m. ET for a webinar on the utility of Section 230 for startups, the risks posed by a policy environment without the liability framework, and how startups can get involved in the ongoing policy debate. You can RSVP here.
