(This post originally appeared in the Washington Times)
Do small businesses need another stimulus? I guess that depends on the business you are in.
Some industries — restaurants, retailers, fitness, the arts — are still hurting and could definitely use a boost. But the great majority of the 30 million small businesses in this country seem to be holding their own, at least by my continuous communications with my firm’s more than 600 small- and medium-sized clients.
So for those small businesses that have survived all of this, now comes the rewards: They are about to boom, even despite the current anti-business climate in Washington. Why? Here are four big reasons.
* Capital is readily available.
The Paycheck Protection Program, refreshed last December with $280 billion in new funds still, at last count, has more than half ($143 billion) remaining. There’s already a call to extend its deadline from March 31 to June 30 because funds are still slow to reach recipients. The Small Business Administration’s Economic Injury Disaster Loan program is still well-funded and, thanks to temporary stimulus rules, certain principal and interest payments under its Section 7(a) and 504 loans are forgivable.
The $1.9 trillion stimulus plan — full of pork and beans — includes billions more targeted at small businesses in industries most hurt by the recession. Venture capital spending is strong (funding was up 4% year over year to $300 billion in 2020) as its banks are “flush with cash.”
Billions more have been targeted at minority businesses and those located in low- to moderate-income areas. Dozens of giant corporations, from Comcast to Wells Fargo, have put aside billions in grants and loans for small businesses and minority-owned firms.
* Manufacturing and construction are hot.
The Institute for Supply Management — an association of purchasing managers and other decision-makers across the country — said its manufacturing index climbed at the fastest pace since the onset of the pandemic and its growth rate reached a three-year high. The American Chemistry Council’s Chemical Activity Barometer, a barometer that measures the health of an industry that makes the raw materials included in most industrial products, is now at an all-time high.
And although industrial production has not yet returned to pre-pandemic levels, strong gains were recorded during the second half of 2020, which boosted the indexes for all of the major categories of consumer goods and for defense and space equipment above their year-earlier levels.
Meanwhile, it’s a great time for small businesses in real estate and construction. Interest rates are at historic lows. Builder confidence in the construction industry is at an all-time high. Housing inventories are at a record low — an indicator of a strong need for more product and a reason why housing prices are up over 10% year to year.
* Consumers are ready — and starting — to spend.
Travelers through our airports, according to the Transportation Security Administration (TSA), have tripled since the depths of the pandemic and are poised to significantly increase as “many people are already actively planning their next big trip,” one travel expert told NBC News. Diners at restaurants nationally are significantly increasing as more states relax their restrictions and people get vaccinated — but there’s much more room for growth to back to “normal” levels, which means another coming boom. Retail sales — driven by an explosion in online purchases — grew significantly last month.
Underlying this is household wealth and income. Of course, there are many people in this country who continue to suffer as a result of the shutdowns and the recession, but you can’t deny the data. And the data shows that household wealth — thanks primarily to the stock market — is at an all-time high, personal income is up (thanks in part to stimulus programs) and households currently have $1.5 trillion in excess savings.
The big, pending stimulus bill will also provide more checks for consumers and unemployment benefits for those who can’t yet, return to work and you better believe this money will be spent with local restaurants and merchants.
* Finally, there are a bunch of onetime tax perks that will put more money in the pockets of small business owners.
Throughout 2021, smart business owners will take advantage of the many tax perks available to them thanks to the numerous stimulus bills passed, and about to be passed. There’s the Employer Retention Tax Credit that gives businesses a giant refundable credit based on employee payroll. There are even more payroll tax credits available for those employers that continue paying their employees under the Families First Coronavirus Response Act.
There’s also the Work Opportunity Tax Credit, which rewards employers for hiring the long-term unemployed. Businesses that suffered losses this year can carry them back for potential refunds on prior taxes paid. Companies and individuals get generous tax deductions for charitable contributions.
The bottom line: As the weather warms and cases and hospitalizations drop, small businesses can expect big opportunities and growth in 2021. And you know what? These people have overcome a challenge not seen in this country for more than 100 years and kept most of their employees on the payroll. They’ve earned it. Good for them.