Small businesses have been hit hard throughout the pandemic, and President Joe Biden intends to provide relief through his stimulus proposal unveiled last Thursday. But questions remain on the timeline for businesses to recover and how effective Biden's plan will be once implemented.
In the American Rescue Plan Biden unveiled last week, $15 billion in grants will be allocated to small businesses employers, along with $35 billion in low-interest loans. On top of this, the Small Business Administration's Paycheck Protection Program will continue, which consists of $284 billion in loans to help businesses keep their worker employed during the pandemic.
As Insider previously reported, 82% of Americans view small business aid as the most important part of any new economic relief package. Richard Prisinzano, director of policy analysis at the Penn Wharton Budget Model - a nonpartisan economic analysis initiative - told Insider in an interview that until the pandemic is under control, small businesses will be at risk.
"The way that I think about this is that this money is a relief package," Prisinzano said. "We know that we're going to be in this for a few more months, how long is unclear at this point, and this money is designed to help folks get through the next few months."
In terms of a timeframe in which small businesses can expect to see relief, Prisinzano said that a lot of businesses have already gone through cash reserves, so the new aid, combined with the Paycheck Protection Program, will help businesses in the short-term.
Other components of the plan are also likely to assist small businesses, such as extended unemployment insurance.
"A lot of small business owners are worried about what happens to their employees, and they worry about being unable to keep employees on full-time," Prisinzano said. "They know that if they have to lay somebody off, there's this extra unemployment support."
The stimulus checks will also provide some relief, Prisinzano said, along with an extended moratorium on evictions.
Treasury Secretary nominee Janet Yellen said in her confirmation hearing on Tuesday that Biden's stimulus proposal would provide "the biggest bang for the buck" and is confident that the funding relief, including relief to small businesses, will benefit the economy overall. Prisinzano agreed and said that providing relief, although it may increase debt, is important because if the money is not spent now, "the danger is that the economy will completely collapse."
"We need to get through this to then evaluate what we need to do in the future to make up for the extra debt that we've increased," Prisinzano said. "This is a needed relief to get businesses through a tough time, and if we don't help them, there's a potentially very big negative effect on all of these businesses collapsing."
A survey of small business owners in December revealed that 57% believe they will not be able to make it through June, highlighting the urgency for further aid.