Thousands of small businesses have been seriously impacted by the pandemic. It’s been reported that more than 100,000 small businesses closed permanently in New York. Nationwide statistics aren’t available, but anecdotal evidence shows that despite Congressional action so far—with the Paycheck Protection Program (PPP) and other measures—it just hasn’t been enough to sustain many small companies. On top of the pandemic, a great number of small Main Street businesses have been damaged or destroyed by recent rioting. Small business is in trouble. What can help?
Additional Congressional action in the works
At the beginning of June, Congress made favorable changes to the Paycheck Protection Program. But more changes are in the works. Congress is considering various approaches to helping small businesses. In mid-June, the Ways and Means Committee held hearings on more COVID-19 tax relief. Discussions focused on helping “smaller” small businesses, but how this would be done remains to be seen. Consideration is being given to allowing deductions for expenses covered by PPP loan forgiveness to counter the ruling from the IRS ruling that no deductions can be taken. And the Safe Reopening Tax Credit Act (H.R. 7222) under consideration in the House would allow a 30% credit for such expenses as building barriers between customers and employees, installing “contactless” point-of-sale systems, and equipping employees with protective equipment.
And, at some point, Congress must consider whether various measures effective only through 2020, including the 5-year carryback for net operating losses and the work opportunity tax credit, will be extended. The sooner these extenders are known, the better it will be for tax planning.
Federal departments and agencies
Various federal departments and agencies are using their existing resources to help small businesses, including:
- Department of Commerce. The department’s International Trade Administration and Foreign Commercial Services are reducing or eliminating the cost of various export services to encourage exporting of “Made in the USA” products (other than those related to COVID-19 treatment). This fee change runs through the end of September.
- Department of Agriculture. Direct relief is being provided to farmers through the Farm Services Agency. This is in the form of loan guarantees to help rural businesses.
- Internal Revenue Service. There are several tax breaks to help small businesses put cash in their pockets now. More specifically, certain prior-year returns can be amended now to obtain refunds. Learn more about your refund opportunities from the IRS and discuss them with your CPA or other tax adviser.
- Department of Defense. Payments can continue to be made to contractors who are barred from working due to COVID-19.
State and local action
A number of localities are offering or considering new programs designed specifically for small businesses. Examples:
- New York launched a $100 million small business loan program (Forward Loan Fund) aimed at minority- and women-owned small businesses.
- Orlando, FL, offers grants for small businesses through the Orange County CARES program and the Small Business Assistance Fund.
Ondeck has a listing of government assistance programs for small businesses at the state and local levels.
Steve Jobs said: “I’m convinced that about half of what separates successful entrepreneurs from the non-successful ones is pure perseverance.”
Certainly, many businesses will come through these unprecedented times only to be stronger and better. But the bottom line for some business owners is whether it’s worth the struggle now to continue. This issue is particularly relevant to older business owners who have retirement savings and Social Security available. Of course, their departure will leave a big hole in the small business community. How many years will it take for the number of small businesses and the jobs they create to return to pre-COVID-19 levels?