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Winter will devastate small businesses unless federal aid delivers a lifeline

Winter will devastate small businesses unless federal aid delivers a lifeline
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With another round of federal coronavirus relief stalled in Congress, small businesses are being left out in the cold. Millions of additional jobs will be lost unless Congress takes immediate, targeted action to help these businesses make it through the winter.

Nearly 98,000 U.S. small businesses have closed permanently during the pandemic and 8 million Americans have fallen into poverty, but the worst may still be ahead. With its triple threat of COVID-19, cold weather and flu season, this winter could reverse economic progress made since the spring and devastate the small businesses still holding on.

None of the solutions discussed in Congress thus far does enough to address small business owners’ most urgent concerns — low consumer confidence and a lack of financial reserves. The government must immediately pass an aid package that gives business owners the resources and flexibility to operate safely through the winter and restore that confidence within their communities. Here are three specific areas the package must address.

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  1. Include winter expenses like outdoor heaters in forgivable loans and tax incentives

Businesses in hard-hit industries like retail and hospitality have adjusted to COVID-19 by embracing outdoor dining and in-store customer limits. These models won’t be feasible during the winter without significant investments in equipment.

One rooftop bar in Seattle operated through the summer by relying on outdoor dining and meal kits. But the winter holds new challenges. Just one awning to shield guests from wind and rain would cost $150,000, not to mention the necessary building permits and compliance with fire codes. The bar’s owners are concerned about keeping staff employed in the coming months.

They’re not alone. Data from our company, Gusto, shows that the U.S. could lose 1.4 million jobs because of winter weather that is just weeks away. Businesses need help now and can’t afford to wait.

The next federal aid package must make winter weather equipment like heaters, awnings and tents more affordable by offering tax credits. Payroll Protection Program (PPP) loans must be more flexible and extend to reimbursing businesses for these non-payroll expenses. The aid package should also allow businesses to obtain a second PPP loan to help them meet these new challenges.

  1. Provide funding for masks, gloves and shields

In addition to cold weather, the winter will bring flu season and a burgeoning third wave of COVID-19. The outdoor social distancing that’s helped protect employees and customers in warmer weather won’t be possible in much of the country. Some business owners, recognizing that operating through the winter isn’t feasible, have chosen to “hibernate” until spring.

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Those that remain open will bear the burden of protecting employees and patrons, and they need support. Personal protective equipment (PPE) is crucial for safer indoor operations, but we’re hearing from small business owners that they’re struggling to afford it.

Like winter equipment, federal aid must fund PPE through forgivable loans and tax incentives. Small businesses are fueling economic recovery, and they shouldn’t have to choose between keeping staff on payroll or protecting their health — especially when protective equipment is required by law. Funding PPE will keep employees healthy, support reopening and ease consumers’ concern about returning to shops, salons and restaurants.

  1. Offer a general winter tax credit for the hardest-hit businesses

Small business owners are struggling with a lack of financial reserves. Those crucial savings could dwindle even further as seasonal and holiday sales are no longer a given.

One of our customers, a cupcake delivery truck, makes nearly all its revenue from holiday parties. Eight months into the pandemic, the business is running low on reserves, and — with no holiday parties — its owners now face the fact that their business could disappear in just a few weeks. Targeted aid to businesses like this would provide a buffer while they adapt their business models to our new normal.

The federal aid package should include a general winter tax credit for businesses that show at least a 30 percent reduction in gross receipts in winter 2020 relative to the same period in 2019. This will be a critical lifeline, particularly for the many businesses that make the lion’s share of their revenue during the holidays.

There’s no reason to lose thousands of small businesses this winter when targeted aid can help them survive and figure out a long-term recovery strategy.

Congress must act now to get small businesses through the winter

Small businesses are incredibly resilient, but they can only bear so much.

If Congress and the White House don’t support them through the winter, we will see the devastation of millions more jobs and livelihoods. The last eight months have been grim, but it could get much worse.

Small businesses needed to prepare for winter yesterday. It’s time for the government to deliver a lifeline that addresses their most urgent needs and gives them the power to find safe and creative ways to operate through the winter.

Lexi Reese is the chief operating officer for Gusto, a payroll and benefits service employed by more than 100,000 businesses in the U.S. Before Gusto, Reese worked for Google and for American Express.

Jeanette Quick is lead counsel for financial services at Gusto. She previously served as senior counsel to the U.S. Senate Banking Committee, where she was lead advisor on consumer and small business finance.