The pandemic has been around for more than a year now, and financial experts believe that the damage it has done to the economy will still be around for years to come. However, it’s only been this year when the economy has started to recover from the losses it experienced last year. One way the country is doing this is by incentivizing more investments into small businesses.
It’s a severe understatement to say that small businesses run the US economy. The Small Business Association (SBA) claims that the majority of the companies in the USA are small businesses. These businesses employ more than half of the entire country’s workforce, producing a decent chunk of the country’s gross domestic product. However, small businesses such as restaurants, retailers, and privately-owned beaches, are the first to experience the significant damages of the pandemic to the economy.
The Massive Closure
The US received a massive closure of small businesses during the first few months of the pandemic. More than 200,000 small businesses closed down during the first few months of the lockdown, with thousands more closing as the year ended. The government realized that the economy was bleeding, and it needed help fast.
This trend in small business closures contributed to the overall economy shrinking by 3.5% last year. Such a percentage hadn’t been seen since the great depression. Suffice to say. The government is trying various ways to restart the economy, with some failing before it even started.
When we look back to last year, the government decided that direct financial aid was the best solution to fix the economy. So a four trillion stimulus plan was signed and implemented. But no one knows the actual effect of this help to the US economy, with many experts calling it a bust.
This year we see a mixed bag of results. Some can start businesses from the $75,000 loan they got from the stimulus plan last year. Some were able to pay their bills to sustain their business. However, some decided to give back the money and prepare for the worse. Ultimately, the financial aid of the government came with a severe setback and eventually failed.
Safe Small Business Loans
Another way the government has tried to help businesses is through the help of the SBA and its safe loans. This started in June 2020, when the government gave out $349 billion to many entrepreneurs struggling to keep their businesses afloat. However, because of messy executions and problems with coordination and communication regarding these loans.
By the end of the month, many of those who had borrowed some funds from the plan had returned the money. However, many more struggled to get loans from banking institutions because even these institutions didn’t know how much to give.
By the end of the year, new implementations were given, which streamlined the process. As a result, some business owners eventually got the necessary funding to help them sustain their business. However, there are still those who argue that it took too long before the loans were fixed and that time cost their businesses and their livelihood.
You might be asking. There should at least be one way the government has successfully helped small businesses, right? Government grants have seen success in saving many small businesses this year, especially in the food industry. Typically, government grants work through a simple process. First, the government chooses your business idea among many others and gives you cash to run the business or a good credit line.
The US government often gives grants to many non-profit organizations. However, because of the pandemic, the government has diversified its portfolio and has given grants to one of the most damaged industries by the pandemic: the food industry. Many budding food entrepreneurs have built their restaurants this year because of these grants.
Chain of restaurants decided to join this trend by putting more restaurants for sale in various states. This chain of restaurants prioritizes those who have received a government grant this year to start their business. It’s also giving some Americans a chance to start their dream restaurant with barely little cost.
This trend is one of the reasons why the food industry is slowly recovering this year. The combined efforts of both the public and private sectors are helping more entrepreneurs to recover their losses from last year. Moreover, it’s helping small restaurants to have a fresh new start this year. But such grants are rare and far too few in between, which is why the government is asking for the private sector to help them deliver such grants.
The US government is certainly trying its best to help small businesses recover from the huge financial setback that the pandemic has done to the country. Some smaller projects had helped the economy recover, especially this year. Hopefully, these small successes will create a ripple effect that will help more small businesses in the future.