Any serious discussion of rebuilding the US economy needs to start with rebuilding small businesses. Small businesses make up most of the American economy — nearly 90% of US businesses are small businesses with 20 employees or fewer, and those small businesses employ almost half of the country’s workforce. The Paycheck Protection Program loans were a nice short-term life preserver, but that aid is starting to look threadbare as lower consumer demand spreads to more small business sectors.
That’s why small business will be a big issue in the November 2020 election, whether the candidates know it yet or not.
Both President Donald Trump and former Vice President Joe Biden (the presumed Democratic candidate) have solid résumés on the economy. Trump oversaw strong economic growth prior to the coronavirus recession. Biden served as vice president when the economy pulled a historic rebound to record growth and low unemployment after the Great Recession of 2007–08.
But there’s a pretty obvious difference this time. The coronavirus public health crisis has also created a parallel economic crisis for small businesses. It’s no exaggeration to say the stakes in this year’s election are higher than any other in our lifetimes, both for the survival of your business and for the survival of you and your fellow Americans who work at small businesses like yours.
Mitigating the coronavirus is the most important issue in this election. The American economy will not enjoy a full economic recovery until the public is confident of their safety.
But the COVID-19 infection rate is going in the wrong direction, as cases are rising alarmingly across the country.
President Trump has advocated reopening the economy at full speed to minimize economic pain while science catches up to the virus. Joe Biden’s COVID-19 plan calls for more free testing, elimination of “cost barriers” to COVID-19 medical care, and expanded paid leave benefits.
President Trump enacted the 2017 tax cuts, but some entrepreneurs found these to be a mixed bag for smaller businesses. Current circumstances call for more tax relief for small business owners facing serious tax payment challenges.
Biden’s “build back better” plan would certainly raise taxes on larger businesses and very wealthy individuals. He recommends “common-sense tax reforms that finally make sure the wealthiest Americans pay their fair share,” but he makes no mention of the middle class tax rate. President Trump has lowered the income tax rate before and might do so again in a second term. It is at least unlikely that any business taxes would go up under a Trump second term.
For certain types of businesses that were forced to close during stay-at-home orders (many of which are still shuttered), a small business loan or line of credit may be the only source of revenue available right now. The Paycheck Protection Program (PPP) loans may have nearly run their course at this point, but the 2 presidential candidates differ on the next steps to take and which industries the government should bolster.
The Trump administration is in the process of launching the Main Street Lending Program, a sort of sequel to the PPP loans, with loans that are not forgivable but do provide generous interest terms and a lengthy payback timeline. Trump has also singled out the cruise and airline industries for possible future bailout packages.
Industries that can anticipate more credit under a Biden administration include clean energy, construction or infrastructure, and 5G telecommunications, as those sectors are key to his economic recovery plan. And it’s important to mention Biden’s support for a national $15 minimum wage, which could require businesses to take on additional debt but might also significantly boost consumer spending.
Healthcare coverage costs have been skyrocketing for small businesses and were a top concern for business owners even before COVID-19 arrived. President Trump’s rollback of parts of the Affordable Care Act (ACA) during a pandemic is a cause of concern for many employees and some owners, too. Meanwhile, prescription drug costs have continued to rise unabated.
Biden proposes what he calls a “caregiving economy.” This sizable healthcare investment would utilize large-scale government spending to invest in healthcare providers and to expand healthcare access and benefits to more of the workforce. The question, of course, is what all this would cost and the size of any additional bureaucracy that would manage it.
Trump has expanded Medicare significantly during the pandemic period and has indicated the possibility of providing additional medical benefits to COVID-19 victims. He also argues that removing the last vestiges of the ACA would provide a boost to the healthcare system by increasing competition and bringing about higher quality healthcare service.
Childcare has become an unexpectedly prominent issue during the ongoing stay-at-home orders. As Forbes argues in their writeup of presidential candidates and the small business vote, childcare “isn’t just a family issue, but an economic one. Access to stable, quality childcare can make a business more competitive by improving employee loyalty, reducing absenteeism, and increasing business productivity. A mom-and-pop business with few employees can be hobbled if just one of those employees is absent due to childcare issues.”
Last year, President Trump proposed an additional $1 billion for childcare and paid parental leave. Biden’s plan, meanwhile, hopes to make childcare generally more affordable while increasing the pay and benefits provided to childcare providers.
Either candidate could still shake up the race with a grand announcement on one of the above-named issues, and in fact, they probably should. Even the platforms they’ve both articulated still may not provide the vision to help the small business economy to recover.
You can always seek out more loans and grants for small businesses during the COVID-19 pandemic. But if 1 of the 2 presidential candidates can spell out a plan that excites Main Street, small business owners will vote with their wallets.