Many small businesses struggled to survive during the pandemic. Many people did not. According to the Federal Reserve, 200,000 small businesses will be closed in 2020, of which about 130,000 are sole proprietorships. In March 2020, small businesses such as restaurants, lounges, and retail stores were forced to close their doors to the public to comply with strict stay-at-home orders. Many people thought these closings would be weeks, but unfortunately, for many businesses in the United States, this turned into months. This is just the tip of the iceberg of the many decisions that hurt small businesses during the pandemic.
4,444 businesses were forced to close 4,444 home orders are a tool used to prevent the spread of the coronavirus, but many Americans want to know why large companies such as Wal-Mart and Amazon can continue to operate, while small businesses have been ordered to close. These closures will only help these already large companies gain more profits at the expense of small businesses. During the pandemic, Amazon’s profits increased by nearly 200%, while Wal-Mart grew by 45% in the first three quarters to reach 15.6 billion. US dollars.
Large companies received assistance
Shortly after the stay-at-home order, the Aid, Relief and Relief Act issued the Coronavirus Economy Security (CARES Act)), the US$2.2 trillion economic stimulus bill was passed to provide relief to individuals and businesses affected by the pandemic. The Salary Protection Program is the largest loan program, with nearly $350 billion in funding available for small business owners to apply for. The goal is to provide small businesses with fewer than 500 employees with forgivable loans to cover eight weeks of wages.
However, when the program was launched, it was difficult for small businesses to apply for loans because many large businesses that had established good relationships with lenders were favored more than small businesses. In fact, a survey conducted by the American Small Business Association in April 2020 found that 52% of small businesses that applied for PPP loans did not receive them.
As the year progressed, more information was released, highlighting the challenges small businesses face when trying to obtain loans. According to information released by the Small Business Association in December 2020, more than half of APP funds went to 5% of the recipients, who are large companies. When the second wave of funding became available earlier in the year, the requirements for the second PPP loan were changed, allowing only businesses with fewer than 300 employees and a total revenue reduction of 25% or more to qualify for the loan.
It sets aside $15 billion for community financial institutions and business owners in low-income communities. Unfortunately, for more than half of small businesses that cannot obtain loans nearly a year in advance, these changes come too late.
After more than a year of challenges, small businesses are more vulnerable than ever before and are still struggling to recover. The MetLife Small Business Index and the U.S. Chamber of Commerce found that in the first quarter, 59% of small businesses predicted that it would take six months to a year to return to normal. Although small businesses are struggling to recover, the tax policy proposed by President Biden is about to become the next hurdle for industry leaders to overcome. We will discuss the impact of the capital gains tax proposals on small businesses in the next article.
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