Stimulus package fails to bring justice to small businesses

Faizan Azhar, Assistant Web Manager

President Donald Trump signed a $2.2 trillion stimulus package on March 27 to provide relief for Americans amidst the COVID-19 pandemic.

In times of economic downturn, governments turn to stimulus packages in efforts to reinvigorate their economies. Due to COVID-19, the unemployment rate has been increasing with terrifying speed and as the economy spirals into a possible recession, this package serves to mitigate these consequences and stabilize the economy. 

Unfortunately, the package does not serve the businesses that are suffering the most—such as mom and pop shops. This is one of the poorer aspects of the bill. 

The money in this package is split up into many aspects of our economy. While it includes $350 billion in loans for small businesses, the definition of a small business is any organization with fewer than 500 employees. This poses serious difficulty to the local businesses who are suffering the most because businesses with greater amounts of employees took all the funds first— in a first come first serve system. 

Azhar Mahmood, CEO of 21Tech and managing partner of several small businesses in the Bay Area, believes that this bill has deep flaws which result in the unequal distribution of funds and easy misuse of the system by larger businesses.

“They did not even take into account the profitability or revenue of the business,” Mahmood said. “They should have focused on the taxes the business filed and focused more on that rather than the size of the company.” 

Since receiving funding comes on a first come first serve basis, companies with sizable resources precure the aid first, leaving the smaller businesses to suffer. This, in a way, counters the bill’s purpose. 

“The banks went to the bigger customers and started giving them money first, so the little guys started getting almost nothing until [the banks] got called out,” said Mahmood.

Additionally, the process to receive specialized aid is simply impossible for mom and pop shops, running operations such as small restaurants. It requires countless hours of effort, and the application is something many owners of these types of establishments do not have the ability to fill out due to their sheer lack of resources. 

With just around half of the American workforce being employed by small businesses, these organizations are a central part of the American economy, which is why the bill should be geared more towards them. 

However, it seems that this bill gives light to large-scale corporate bailout. This then leads to increased profit for corporate golden collar workers, while the majority of the population sees no change in condition—similar to the corporate bailouts accompanied with the 2008 financial crisis. 

The pure act of the bailout during the 2008 crisis was not the source of the issue; it was who was being bailed out that created controversy. During times such as these, the government should be bailing out the working people instead of increasing profit for large corporations. Therefore, the corporate bailout accompanied with the 2020 bill raises deep concerns.

Business is a lucrative game where everything is a statistic; if money is dropped at the feet of these corporations, there is no reason for them to turn it down, even if they do not need it. Mahmood agrees; he believes that businesses nowadays lack proper ethics.

“We can’t expect businesses to have that level of ethics to walk away from funds, and some businesses did, but only after they got called out by the media,” said Mahmood.

However, there are certain aspects of this bill that provide positive reinforcement for the population as a whole. For example, the $1,200 stimulus check written to all persons over the age of 18 who have filed their taxes in 2019 and earn under $100,000 a year provides relief for those who are facing financial hardship. 

Now, the question is: how long will this suffice? It seems that the answer is “not that long,” with Congress already considering the possibility of a second wave of stimulus checks being sent out in May. 

As one of the largest economies in the world, it will require much more than a mere $2.2 trillion dollars to stimulate our economy effectively if the conditions associated with COVID-19 continue. Currently it is predicted that 17% of all small businesses are set to fail this year and in San Francisco, half of all restaurants are likely never to open their doors again. 

While there are countless flaws to the initial stimulus bill, the House of Representatives recently passed the HEROES Act Bill, which gives $3 trillion in relief. It is safe to say that the government is making efforts to better the situation and Chairwomen Nita Lowey, the main sponsor of the bill, agrees.

“The Heroes Act is a bold step to provide that support and ensure our nation meets the challenge of the pandemic and the ensuing economic recession,” said Lowey.