President Biden and Vice President Harris will be sworn in on January 20th, it appears. How will a Biden administration impact small business?
We’ve compiled policy promises made by the Biden-Harris campaign. Similarly, the former vice president has a three-and-a-half-decade history as a legislator. These promises and his history should provide insight into what small businesses should expect from a Biden administration.
Light on direct small business legislation
In an analysis of Biden’s legislative record, Inc. discovered that he’s light on small business policy. Biden has had 42 bills he sponsored that were enacted. Among those, not a single bill was directly concerned with small businesses. Only a few of the 491 unpassed bills he sponsored “had a pro-entrepreneur, pro-small business bent,” Inc. reports. That’s not to say he will not affect small businesses. This record just says he may not do it directly through pushing for laws that target the sector. There’s more than one way to affect small business. It’s not like Biden is completely out of touch with the struggles of entrepreneurs. He was once one himself, according to the same Inc. report.
It’s not like Biden is completely out of touch with the struggles of entrepreneurs — he was once one himself
Increasing taxes on business owners
A Biden administration will likely spend big on healthcare, infrastructure, and clean energy. There’s no other way those plans get funded other than to take some from higher taxes. That’s both on the top earners in America, those earning more than $400,000, as well as on business owners. The increase in federal revenues is estimated to be $4 trillion over the next decade, so it’s a substantial undertaking. On the other hand, that money will be spent by the government. Nobody is sure how it will be spent and where exactly it will go, but it will go. Needless to say, Biden’s tax plan has complex implications for small businesses, good and bad.
Biden administration and higher employment costs
Biden has long been pushing for a $15 minimum wage. He also supports mandated paid family leaves. He has also unveiled a plan to strengthen unions and ban all but the most essential non-compete clauses. All of these would undoubtedly raise employment costs for employers. They would also empower workers, for example to seek higher pay and more rights, his campaign says. That could ultimately be a boost to communities that small businesses serve as people get more money to spend, so make of these what you will.
Ensuring true small businesses get support
The pandemic will likely be the first priority of a Joe Biden administration. In terms of support for small businesses, Biden is an advocate for the creation of a “True Small Business Fund,” which will serve businesses that have 50 or fewer employees. He says this is to ensure real small businesses, and not bigger and more sophisticated businesses, benefit from the Paycheck Protection Program administered by the Small Business Association. These businesses will be the mom-and-pop shops like salons and barbers, diners, local auto repairers, his campaign says. To help fund the support intended for true small businesses, he wants unused funds intended for large corporate bailouts to be redirected to small businesses.
Equality in distributing pandemic aid
In addition to ensuring real small businesses will get support, Biden has also pushed for a weekly update that shows what small businesses are accessing loans. His campaign said that this is to ensure that businesses lead by minorities and women are not left behind. A congressional staff report this month shows that the program failed to get enough support to the most vulnerable business owners. That’s including women and minorities.
Against abusing government support
To be clear, Biden wants the support small businesses will get during the pandemic to be closely observed. He is explicitly against what he calls “unjust enrichment.” His campaign says that he would “expedite loans with less unnecessary paperwork to hard-hit businesses, and never punish firms or banks for good-faith mistakes.” However, he is also adamant that “no business owner should be receiving more than their lost revenue.” He also advocates more scrutiny of certain small businesses, including consulting, accounting, legal, tax advice, hedge funds, and those that pay owners and executives more than $500,000.
Biden administration and racial wealth gap
Speaking of broader government support, the former vice president is pushing for the creation of a “Small Business Opportunity Fund.” Initially funded by a $30 billion seed from the government, the fund will invest in minority businesses and workers. The fund aims to narrow the generational wealth gap between White Americans and communities of color. It means investments in businesses led by, as well as workers who are, Black, Latino, Asian, and Native American.
Massive “Buy American” push
Here’s another Biden administration government spending proposal that could boost communities. He proposes a $400 billion increase over four years in the government’s purchase of American goods and services. He also wants $300 billion in new research and development funding for US technology concerns. That’s $700 billion. He also wants government agencies to less easily flout “Buy American” policies. This doesn’t necessarily impact mom-and-pop shops directly. However, more sourcing in US communities will only mean more indirect business for these smaller businesses that serve larger ones.