Startups Looking to Policymakers to Craft a Roadmap for Recovery
TLDR: As the year draws to a close, Congress has yet to cross the finish line on another much-needed relief package to provide economic relief for Americans, including small businesses and entrepreneurs. But even as a bipartisan group of policymakers introduces a two-part relief package this week, U.S. entrepreneurs are still eagerly waiting for assistance that will help ensure the long-term survival of the country’s startup ecosystem.
What’s Happening This Week: Despite months of negotiations between Democrats, Republicans, and the Trump administration, Congress has been unable to advance a relief package to provide Americans and small businesses affected by the pandemic with desperately needed economic support. But a new bipartisan push has rejuvenated speculation that a stimulus package will pass before lawmakers depart for the holiday recess.
A bipartisan group of House and Senate policymakers introduced a two-part, $908 billion coronavirus relief bill yesterday, with lawmakers splitting the measure into two bills in order to sidestep some of the more contentious issues that have hamstrung relief negotiations over the past several months. One bill allocates $748 billion for economic relief, including almost $300 billion for small business relief and additional funding for unemployment insurance, vaccine distribution, and education-related needs. The other bill allocates $160 billion for state and local governments affected by the pandemic, and also includes liability protections to protect businesses from coronavirus-related lawsuits.
Congressional leaders have set a deadline of Friday at midnight to pass a government funding bill, and policymakers are hoping to attach a COVID relief package to the measure. The path forward for the two-part relief package remains unclear, however, as parallel negotiations continue between House Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steven Mnuchin.
Why it Matters to Startups: As coronavirus cases continue to surge across the country—even as the U.S. begins distributing the COVID vaccine—startups remain in desperate need of emergency, long-term relief to keep their businesses afloat. Although Congress acted early on in the pandemic by passing the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March and offering small businesses Paycheck Protection Program (PPP) loans to help them maintain their payrolls, entrepreneurs have been waiting months for policymakers to offer relief that provides more targeted assistance to startups. As policymakers pursue one last bipartisan relief effort before the end of the year, it is critical that lawmakers pass legislation that re-ups PPP and supplements some of the previous relief measures in order to provide long-term relief to small businesses, including startups.
As we noted in a Morning Consult op-ed this morning, startups are critical hubs of job creation across the United States, and lawmakers should work to provide them with the targeted relief they need in order to keep America at the forefront of global innovation. Research has shown that startups create approximately three million jobs each year, and this type of job creation will be especially vital to the U.S. economy once the pandemic has ended. While PPP loans provided a critical lifeline to some struggling small businesses, many startups and entrepreneurs were left behind as a result of unclear qualification guidelines and limited payroll expenses. And since policymakers failed to extend many of the critical provisions included in the CARES Act, many Americans and small businesses are once again struggling to weather the economic uncertainty caused by the pandemic.
Startups and small businesses need long-term economic support in order to drive the nation’s recovery once the outbreak has abated. But congressional inaction over the past months means that many startups and small businesses are once again facing a perilous financial situation as the year draws to a close. When Engine conducted an October survey of startups in our network, a 46 percent plurality of the respondents said they needed emergency assistance to keep their businesses open through the end of the year. And entrepreneurs were in favor of policymakers taking decisive action to support startups, including by offering economic relief beyond PPP loans.
Engine has worked with entrepreneurs and lawmakers since the pandemic began to identify relief measures needed to effectively support the startup community. Through these discussions, Engine developed a roadmap for recovery to offer more target relief measures for startups in future stimulus packages. These alternative policy proposals—such as a dedicated “startup fund” to better direct relief to nascent companies, investor tax credits, more expanded forgivable loan programs beyond PPP, and joint public-private equity investments in startups—would help empower the startup community and maximize the effectiveness of COVID relief efforts.
As Congress attempts to pass a stimulus package before the end of the week, it is important for policymakers to ensure that any legislation provides the necessary long-term support that startups and other small businesses need at this difficult time. Startups are critical drivers of our nation’s economy, and lawmakers must work to provide these companies with the assistance they need to grow, create jobs, and innovate on a global scale.
On the Horizon.
The Hill is holding a virtual discussion at 1 p.m. tomorrow to discuss the role of technology in revitalizing the U.S. economy following the COVID-19 pandemic.
Invent Together is holding a virtual fireside chat at 4 p.m. tomorrow to discuss ways of promoting diversity in patent filings.
