A bill has been introduced in the US Senate for the federal government to issue another round of COVID relief to aid small businesses. The bill introduced by Ben Cardin (D-Md.) chair of the Senate Committee on Small Business and Entrepreneurship aims to provide grants to hard-hit small businesses that can demonstrate substantial losses in 2020 and 2021 due to the COVID-19 pandemic.
More support for Small Businesses
The bill will establish the Hard-Hit Small Business Relief Fund, which would transfer the remaining funds from the U.S. Small Business Administration’s (SBA’s) COVID-19 relief programs. The bill is planned to make grants amounting to $6 billion available to small businesses.
The Hard-Hit Small Business Relief Fund authorizes the SBA to define the eligibility of businesses that are sole proprietorships, independent contractors, self-employed individuals, and tribally-owned small businesses. The bill also requires the SBA to track and report all grants publicly and establish an auditing process to ensure that the program is administered transparently.
“American small businesses are still struggling under unsustainable debt, ongoing supply chain delays, and workforce challenges that inhibit their ability to operate and grow their businesses. The Hard-Hit Small Business Relief Fund Act would make the approximately $6 billion in unused federal COVID-19 small business aid available to the small businesses that need help the most”, said Cardin.
The Hard-Hit Small Business Relief Fund follows a slew of relief packages being rolled out by the government. In March President Biden enacted a coronavirus stimulus bill that is designed to help, providing $1.9 trillion in assistance to businesses and individuals. The bill includes aid in the form of tax credits, loans, and grants.
Inflation, Fuel Hikes, and Supply Shocks add to Businesses’ Troubles
Small businesses had seen challenges emerge as they try to transition into the post-COVID era. Among the merging challenges include inflation reaching a historic 8.6%, rising fuel prices, and supply chain issues. All creating challenges for small businesses to remain on track towards recovery. Inflation saw across-the-board increases in May, with shelter, gasoline, and food being the largest contributors.
After declining in April, the energy index rose 3.9 percent over the month with the gasoline index rising 4.1 percent and the other major component indexes also increasing. The food index rose 1.2 percent in May as the food at home index increased 1.4 percent. With less to spend, customer demand for goods and services is seeing a decline.
Businesses too are feeling the pinch. A report by SCORE indicates that a majority of small businesses (62.7%) have seen their profits decline to much lower than expected, or somewhat lower due to lower sales and higher expenses. Only 15.5% have reported that their profits were higher than expected.
Slower sales, rising supply costs, supply disruptions, labor shortages, the pandemic, and global instability have all been factors. Some 58.6% of businesses report much lower or somewhat lower sales than expected, and at the same time over half report (59.5%) expenses being somewhat or much higher than expected.
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