This week, the Biden administration will revise the Paycheck Protection Program, the main U.S. coronavirus relief program for small businesses, to focus its reach to smaller, minority firms.
Tom Schryver, visiting lecturer at Cornell University’s SC Johnson College of Business, says small firms have lacked the resources available to large companies. As such, providing them with targeted loans is crucial for their survival.
“2021 is looking like a year of recovery, but it also looks like an extended period of a ‘messy middle’ in between full pandemic precautions and going back to the way things were. Large companies have found the resources to keep going, and many have thrived. Other businesses, in particular small location-based businesses – tourism, hospitality, storefront retail – have suffered.
“We are also coming off of a period of increased savings rates, and, while there has been tremendous suffering by people in the lower portions of the income strata, there are a large number of middle- and upper-class Americans with money to spend. Without additional support, these location-based small businesses, which have suffered the most, will be behind the eight ball once again compared to much more well-capitalized large businesses as the country starts to reopen.
“Providing targeted loans to small businesses so that they can ramp up hiring (and re-hiring of furloughed workers) and build back up inventory and working capital will be critical for the equity of this country’s recovery.”