With Joe Biden assuming the presidency next January, you might be wondering how the political shift will impact your business. The COVID-19 pandemic triggered a recession for the United States, as many businesses closed and individuals lost their jobs. Watching from the sidelines, the Democratic president-elect formulated a list of policies to address the turbulence.
Biden plans to support legislation that will award small businesses with $377 billion in aid. While the Federal Reserve has already authorized $600 billion for low-interest loans, Biden plans to take this action one step further by providing small businesses with full grants instead of loans. Due to the uncertainty of how long the Coronavirus-related economic slowdown will last, Biden’s plan will allow small businesses to adjust to the changing economic landscape without worrying about loan payments or interest rates.
Biden also plans to redirect the vastly unused amount of funds intended for loans back to small businesses. Many of these funds are on standby to support larger corporations, but Biden intends to shift their intended direction.
Additionally, Biden intends to support small business development by forming programs to assist small business startups. These include technical assistance and legal help in order to survive the first months after opening. This support for new businesses includes a plan for $50 billion in venture capital to aspiring entrepreneurs.
These initiatives are intended to keep American entrepreneurial morale as high as possible despite the great unknown of what the economy will look like next year. But with these programs in place, one cannot help but notice that small businesses will have a lot of support and resources at their disposal.
On the flip side, Biden intends to help finance these initiatives by raising taxes on high-earning individuals and corporations. For individuals, the proposed tax hike will only affect those earning more than $400,000 per year.
The corporate tax rate will experience the largest increase, with Biden proposing to raise it to 28 percent from the current 21 percent. This tax rate is intended to help finance much of the aid to small and medium-sized businesses. With such a raise on the table, it is best to keep in mind how the bottom line of your business can be affected. While these increases in taxes are intended only for higher earners, the true impact is likely to stretch beyond the targeted demographic.
With so many planned benefits for small to medium-sized businesses, particularly small business startups, opening a business is likely to be highly supported by these federal programs. However, as seen with the immense deliberation surrounding the second stimulus check, bipartisan clashes are likely to impede the implementation of any proposed legislation.
With a 60 percent majority needed for the passing of any major bill through the Senate, it is unlikely that even a Democrat-controlled Senate will be able to bypass bipartisan politics. However, should the Democrats indeed win a greater majority of Senate seats, Biden’s policies will be much more likely to enter into effect with their original proposals maintained.
The likely scenario will be a Senate controlled by a majority party with still fewer than 60 seats, meaning that any proposed bill will be vulnerable to defeat until both parties reach some kind of mutual agreement. This kind of holdup can be devastating when businesses need support now.
A Biden presidency looks promising for small businesses and startups, but only time will tell how many of his promises he can make good on.
Business owners should never rely on the promises of politicians whenever it affects their livelihood. With the extreme levels of bipartisan disagreements likely to continue into Biden’s term, entrepreneurs and businesspeople must find security today before they can even think about tomorrow.
Some sort of government assistance will more than likely come through at some point, but the real question remains as to when we can expect to see anything concrete. Until then, businesses should always look for ways to improve their situation now. A little government assistance will just be the cherry on top.