What should governments do, if anything, for small businesses going forward?

Small businesses have already closed, and are likely to suffer more as time goes on. With their importance to the economy (and this being an election year), government at all levels will be sorely tempted to do SOMETHING when the current situation abates. But throwing money and forgiving bills is a lot easier for individuals, not to mention that a closed business is much harder to resurrect than a struggling family.

So what can/should be done? Especially if, as some say, we might have to go through these shutdowns again periodically in the near future to help the medical industry?

Local and state governments could defer tax filing deadlines or waive late payment penalties. Or rather, accept applications for filing extensions and penalty waiver requests. The federal Small Business Association has what are called economic injury disaster assistance loans, which require a state of emergency and could be up to $2 million at 4% (they decide the actual amount based on need). The Department of Treasury can loan money to local lenders, who can then loan to small businesses and individuals in hard hit areas.


Is that going to be nearly enough, though? Is it generally known for situations like this? Is it as simple as giving the fund a shot in the arm?

The government should give everyone a big wad of cash. Say, $500 per month (or more) for the next few months. That way people can still pay for services like bills and buy necessities, which supports businesses, so they can pay their employees, and so on. That pretty much solves all the problems at once. Yes, it’s a lot of money for the government to spend, but this kind of spending is absolutely needed in situations like this.

What needs to be done is something much more fundamental, and politically almost impossible.

Almost all Western governments heavily favor large businesses over small ones. There are programs for small business, but they are inconsistent, piecemeal, and pale in comparison to the political access and influence that big business has. The idea of the government just bailing out a small business the way it often does with big business is inconceivable even though, logically, bailing out a small business is probably a smarter move (or at least less dumb.)

If you want to actually improve an economy, you’d flip this around. No business would have political influence at all, but such tax breaks and benefits as there might be would be entirely biased towards SMALL business. Then in a crisis like this, you’d still let small businesses die if that’s what the market dictated… but fewer of them would.

The wad-of-cash idea is, with due respect, extremely dubious. There is no guarantee people would spend it, and there is no reason whatsoever to think that what was spent would be spent at small businesses; why would it be? But anyway, even if it did work anywhere near in proportion to the costs - which I do not for an instant think it would - it’s just a temporary solution with a gigantic moral hazard. If they really wanted to fix things they’d do what I suggest.

For your 2nd paragraph, it should go even further – help CONSUMERS; especially the poor and working class. Spending drives the economy, and poor and working people spend nearly all the money they get. Give them more money and they’ll spend more, at all types of businesses.

The capitalist “social Darwinism” view: they fail because they’re failures lacking the “right stuff” just as the poor are poor because they’re not smart enough to be rich. Big businesses can’t be allowed to fail because they own so many politicians. We know the conservative healthcare plan: don’t get sick. A similar business plan: don’t be stingy with [del]bribes[/del] contributions.

one thing that would help small businesses immensely would be publicly funded health care. Big businesses can negotiate good contracts with insurance companies. Small businesses can’t or have a hard time. This makes it more difficult for them to hire.

Your plan is good. It’s almost exactly what the government did. Except for the flip part.

Your reply is rather far after my post… but the Canadian approach has proven I was right by doing exactly the opposite of what I suggested. The pandemic response has included some piecemeal help to small business but has for the most part been designed to help big business, and they have in many cases thrived while small businesses died in countless numbers. This is absolutely, unquestionably the worst possible outcome and will cost us billions and billions, and literal human lives.

The mind boggles.