All eyes in the business community have been on the American Rescue Plan this week, as it makes its way through the legislature. The House of Representatives approved President Biden’s $1.9 trillion rescue plan Wednesday, and President Biden signed it yesterday.
The good news for many companies is that it will provide $50 billion in aid for small businesses. This includes more than $7 billion for the Paycheck Protection Program and nearly $29 billion in grants for restaurants and bars. The extension of the Employee Retention Tax Credit will also benefit many employers, as will the billions of dollars of aid to help K-12 schools reopen. It will be challenging for many companies to return to anything resembling “normal” operations until their teams can send their children to full-day school every day.
Although we’ve already had a couple of rounds of stimulus, it’s been a long hard slog for entrepreneurs – especially for those in troubled industries. Pumping some much-needed cash into the businesses that have survived to this point will allow them to start to rebuild as the economy opens up. Many entrepreneurs have tapped out their personal funds and company reserves this past year, and they need a chance to build financial momentum, pay off debts and start thinking about growth – something that was a fantasy in some industries until now. With the weather getting warmer, demand is going to rise in many industries, and businesses will be able to take advantage of that only if they have money to invest.
The stimulus plan will also extend the $300 in added weekly unemployment benefits until September. It is important that we, as a nation, take care of workers who have lost their jobs during the past year. Many are really hurting, and it is going to take a while for them to rebuild their lives, as well. Any relief they receive as unemployment payments will flow back through the economy as they get caught up on rents and mortgages, buy groceries, and fill up their gas tanks. Eventually and hopefully soon, most of these workers will be back on company payrolls, but in troubled industries like hospitality, food and beverage, and events, that may take a while.
In the meantime, it’s a good idea for all entrepreneurs to start thinking about the forecasts they made for their companies before vaccines became more widely available. It has not been easy for anyone to predict what federal, state and local officials would do – or how consumers would behave – as we hit various milestones in fighting the pandemic, rolling out vaccines, and re-opening schools. Now that more states are relaxing pandemic restrictions (the court is still out on whether that is a good move health wise), it will be easier for business leaders to make realistic projections that take the American Rescue Plan into account. If you need help in revising your forecasts to reflect new policy, I encourage you to pick up the phone or send an email to your Marcum professional.
Safe safe, stay healthy and remember, we are all in this together!