First 100 Days for Main Street

Summary


Main Street small businesses are the mainstay of our jobs, our economy, and our community life. They are also the
most trusted institution in our country. Yet, since January, more than a quarter of the country’s small businesses have shuttered, and small business revenue is down by 32 percent (as of November 26, 2020). COVID-19 continues to present the greatest threat in generations to the country’s more than 30 million small businesses, particularly businesses in Black and Brown communities, micro-businesses, and businesses in rural communities. We have an opportunity to rethink entrepreneurship in the United States, focusing on support for the very small businesses that contribute opportunity, vitality, and equity to our communities.

Main Street Alliance applauds President-elect Biden and Vice President-elect Harris for placing true small businesses at the center of the Biden-Harris Administration’s Build Back Better Agenda. The Biden-Harris Administration’s focus on combating COVID, together with a comeback package for Main Street businesses and entrepreneurs, is key to putting small businesses on track toward recovery. Small businesses have a unique role to play in addressing racial equity and climate change as well as unique needs in these areas. 

We are eager to work with the Biden-Harris Administration toward creating a pandemic-resilient Main Street economy by:

  • Protecting and rebuilding businesses devastated by COVID, focusing on hardest-hit businesses and those excluded from earlier relief programs.
  • Addressing capital, credit, and business development needs of the country’s small businesses.
  • Leveling the playing field for small businesses by supporting a safety net for small businesses and their employees.
  • Reining in monopolies and reversing corporation concentration.

Protect and rebuild small businesses devastated by COVID, focusing on hardest-hit businesses and those excluded from earlier relief programs. A recent Main Street Alliance and Color of Change survey and numerous other studies have identified significant racial, gender, and other disparities in the distribution of federal relief. Moreover, with the lengthening and worsening pandemic, many Main Street businesses, especially in services industries, need additional payroll support and the federal government to mobilize resources and guidelines for supporting pandemic-resilient businesses. These measures include:

  1. Expand direct grants to small businesses most excluded from early rounds of funding, as in the Saving Our Street Act sponsored by Vice President-elect Harris, and funding to cities and towns for small business relief, as in the RELIEF for Main Street Act sponsored by Sen. Booker.

  2. Provide debt relief to small businesses through forgiveness of all Paycheck Protection Program (PPP) loans below $150,000, Economic Injury Disaster Loans (EIDL) forgiveness for hardest-hit businesses and those with personal asset exposure, and extension of the Small Business Loan forgiveness program.

  3. In any renewal of the Paycheck Protection Program (PPP), ensure that the program prioritizes and reaches very small and underserved businesses (and is available to all that need it, including those not reached in the initial rounds), expands eligible expenses, includes clear forgiveness, is available to returning citizens, covers the duration of the pandemic, and allows small businesses to take a second draw, as in the Prioritized Paycheck Protection Program Act sponsored by Sens. Cardin, Coons, and Shaheen.

  4. Extend and expand the Families First Coronavirus Response Act, a key part of COVID relief, to the end of 2021.

  5. Expand flexible programs that target support to those hardest-hit, ensuring that support is dependable and lasts the duration of the crisis. Such programs include the Employee Retention Tax Credit, workshare through unemployment insurance (as reflected in the bicameral Rebuilding Main Street Act sponsored by Sens. Merkley, Van Hollen, Murphy, and Baldwin and Rep. Pocan), the Restaurants Act, payroll guarantees, and child care funding through Community Development Block Grants. Expanded unemployment benefits also should be extended and paired with federal support for rehire bonuses.

  6. Ensure that programs focus not only on payroll support but also fixed costs (including, but not limited to, rent, mortgage, and utilities) and costs associated with adapting to the pandemic (such as PPE, ventilation, and sanitation).

  7. Stabilize state and local budgets to ensure the availability of vital services and provide funding for programs that keep small businesses and communities intact, including commercial rent relief.


Address capital, credit, and business development needs of the country’s small businesses
. We now have an opportunity to rethink entrepreneurship in the United States, moving away from favoring mid-range businesses to focusing support on true small businesses, including micro-businesses. The COVID crisis has revealed and exacerbated pre-existing barriers to capital for such firms, including small business redlining, usury credit rates and practices, and lack of other supports and technical assistance needed to launch and grow a successful business. This especially harms minority-owned and women-owned businesses, micro-businesses, and rural businesses. Essential areas include:

  1. Expand Small Business Administration programs and authorities to serve minority-owned businesses, micro-businesses, rural businesses, and other underserved Main Street businesses. This should involve a thorough examination of SBA lending, technical assistance, and other programs to assess their effectiveness for supporting very small businesses, including the disbursement of PPP funds. Programs such as Community Advantage should be made permanent and expanded to reach more borrowers, and technical assistance programs should be improved and expanded.

  2. Revamp the Minority Business Development Agency with the Department of Commerce to fulfill its mission of fostering minority-owned businesses.

  3. Expand consumer protections to small business borrowers, guaranteeing that: small business borrowers receive clear, accurate information that allows them to compare financial products; financial corporations cannot charge excessive interest rates and fees or engage in abusive debt collection practices; and, small business owners can retain personal assets while financing their businesses. Ensure full implementation and enforcement of Section 1071 of the Dodd-Frank Act to monitor and assess access to credit for small businesses.

  4. Protect small business borrowers from nonbank regulatory arbitrage by setting a moratorium on new Industrial Loan Company charters, closing loopholes that permit nonbank actors to evade state consumer protections and other oversight (such as “rent-a-bank” schemes), and taking other steps to promote fair and transparent financing for small businesses. (MSA further supports recommendations made by Americans for Financial Reform.)

  5. Create a new public entity to dramatically expand access to capital for small businesses by better assessing small business needs, exploring alternate measures to credit history, and delivering support along with technical assistance on the scale they need. Proposals include a public infrastructure bank and/or a small business clearinghouse. Funding from the Federal Reserve Main Street Lending Program could be repurposed to meet this need. 


Level the playing field for small businesses by supporting a safety net
for small businesses and their employees. Main Street prosperity depends both on: small business owners’ ability to compete with big business for talented staff; and aggregate demand -- people in their communities having enough disposable income to spend on local businesses. For these and other reasons, Main Street business owners widely support a robust safety net and investment in their communities.

  1. Extend and expand the Families First Coronavirus Response Act to provide fully reimbursed paid sick time and paid leave to small business employees and ensure these benefits are available to employees in companies of all sizes. Pass national policy for permanent paid sick, and family and medical leave (e.g, FAMILY Act and Healthy Families Act).

  2. Ensure the availability of child care and the sustainability of child care small business, as in the Child Care Is Essential Act sponsored by Rep. DeLauro, Rep. Scott, Sen. Murray and others, providing $50 billion to stabilize the child care industry via CDBG funding.

  3. Provide universal health coverage through a public option (with automatic Medicaid enrollment), use available authorities to lower prescription drug prices, ensure equitable access to Covid vaccines, and prevent drug corporation pandemic profiteering (as in the MMAPPP Act).

  4. Adopt a fair-tax agenda that closes loopholes for large corporations, requires large corporations and the very rich to contribute equitably, curbs Wall Street speculation (through a sales tax on every trade) and corporate offshoring of jobs and profits, and invests in schools, homes, health care, infrastructure, child care, and other community essentials that help small businesses thrive.


Rein in monopolies and reverse corporate concentration.
While Covid wipes out many small businesses, large corporations continue to profit and grow exponentially off the crisis, taking advantage of years of weak antitrust enforcement and threatening recovery and long-term viability for Main Street. In important progress, this fall the majority staff for the House Subcommittee on Antitrust released a report and recommendations related to competition in digital markets. Main Street Alliance supports action to reinvigorate antitrust enforcement, including returning antitrust agencies to their original focus on market structures, strengthening merger policy, and adopting legislation to strengthen antitrust policy and break up Amazon and other tech giants. (MSA further supports recommendations put forth by the Institute for Local Self-Reliance.)

 

Acknowledgments

Main Street Alliance thanks the Institute for Local Self-Reliance and Americans for Financial Reform for consultation in the development of this memo.

Main Street Alliance, December 2020