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      ‘Bidenomics’ is a business opportunity. But who can cash in?

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      This past week Joe Biden gave a speech in which he touted his economic policies and, rather than deflecting, he leaned into what many of his opponents called “Bidenomics”.Bidenomics is the opposite of “trickle-down” theory, which holds that tax cuts to wealthy individuals and corporations ultimately find their way to the rest of the population through more spending and investment. For the president and his supporters, Bidenomics means government spending and investment in infrastructure and services that create jobs and growth.“I didn’t come up with the name, I really didn’t,” he said in his remarks. “I now claim it.”If you’re a small business owner or an entrepreneur a president’s economic policies – assuming they can get congressional support – really do matter. This is not to claim that Biden’s economic agenda will be any more or less successful than his predecessors’: for many the trickle-down v spending debate will never be resolved. But when a president sets an agenda it reveals where money will be spent. And my smartest, most experienced clients are watching closely. Why? Because regardless of where they stand politically, what’s best for their business is always, always, always to follow the money.They know that when you own a business your job is to create value and build an organization that provides a livelihood for all the people that rely on you. This includes your customers, your suppliers, your partners and of course your employee and their families, as well as your family. Which means that you put politics aside (until it’s time to cast your vote) and instead you follow the money. Get it?So where is the Bidenomics money going?For starters, there’s almost $300bn going towards building chip manufacturing plants under the 2022 Chips Act. There’s also another $391bn that’s being spent on companies that are improving their energy efficiency and making greener products under the Inflation Reduction Act. A trillion dollars is being expended on roads, buildings and other infrastructure projects thanks to the 2021 Infrastructure Act. That’s about $1.7tn, which is a lot of money. The president is also telling us that more will be spent on affordable healthcare, social services and education.That’s where the money’s going over the next few years and even more will be spent if he wins re-election in 2024. When it comes to your business, it doesn’t matter whether you agree with these policies. What matters is that you take advantage of them for the benefit of your business. So how are my clients doing this?If you want to sell products and services to the chip manufacturers and other players in the industry (and the most active ones – like Intel, Samsung, GlobalFoundries and Skywater Technologies – are already in line for the funding) then target these companies and their projects and consider what products and services of yours can be sold to them. Or you can do your research, identify opportunities and start filling out applications at places like the Department of Commerce’s Chips.gov, or at Chips Act which is a private organization that provides support for businesses looking for help writing grants and submitting proposals. Or you can go directly to the Semiconductor Industry Association or read the excellent guidance provided by Semi, an organization that supports companies in the electronic manufacturing and supply chain industries.If you want to get funding for energy-efficient projects or to help develop energy efficient products you should start with the White House Inflation Reduction Act Guidebook which lists dozens of government agencies that are doling out money to organizations of all sizes for just that purpose. The Department of Energy’s Office of Manufacturing and Energy Supply Chains has $6bn available for projects and, wow, you can’t get any more government-sounding than that, right? Or if you merely want to maximize your use of the expanded tax credits under the legislation visit the IRS’s Inflation Reduction Act web area.Maybe you want to get in on the $1tn infrastructure spending? The White House, Federal Highway Administration, Department of Energy and Department of Commerce all have funding opportunities related to the 2021 legislation.Follow the money. Start at any of the places I’ve mentioned above and get ready to go down the Federal Rabbit Hole.Finding this money, let alone applying, isn’t easy. Which is why many of my clients don’t do this. They’re lazy. My best clients – and I have a handful – have already hired summer interns whose jobs are to peruse the maze of government bureaucracy, identify opportunities and start filling out forms. Doing this takes time, effort, tenacity. If it was easy, everyone would be doing it.Even if you’re not in the construction industry you can still leverage Bidenomics. That’s because all of the companies that are getting funding will need your products or services. Chip manufacturing plants will have employees that eat pizza. Highways have buildings that need to be cleaned. “Green” products need to be transported. People in these industries getting all that money will need accountants, lawyers, architects, marketing professionals and workplace consultants.Bidenomics. Obamacare. Supply side. Trickle down. These are just words. Political phrases to create headlines and catch the attention of voters. Smart business owners know this. They don’t get distracted by these terms. And they don’t let their politics muddle their strategies. What they do is follow the money. And my best clients have taught me that whether you’re a fan of Biden’s – or any president’s economic policies – there’s always plenty of money and opportunities to pursue if you just follow the money. More

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      A US debt default could crush small businesses. So what can we do? | Gene Marks

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      The US is careening towards a debt crisis the likes of which we haven’t seen since 2011 when Barack Obama faced off against the Tea Party. No one knows for sure if the federal government is going to default on its debt by the end of this month. But if Democrats and Republicans can’t agree on a compromise, it will have an enormous impact on small businesses around the country.Some 65% of small businesses believe they would be negatively affected by a default, according to a recent report from Goldman Sachs. This is very bad news. Small businesses accounted for 45% of all private-sector jobs in the first quarter of 2022.The first small businesses that will be affected will be those that contract directly with the federal government. Tens of thousands of small businesses received more than $154bn in federal contracts in the fiscal year 2021 – about 27% of all government contract spending that year. And this doesn’t include the small businesses that indirectly received funding from larger construction and other firms that get government money and sub-contract out work to them. If Janet Yellen is forced to prioritize interest and debt payments above all else, then these federal contracts would be suspended and the negative cash flow impact on these small firms would be substantial. Let’s remember: almost half of small businesses have less than three months of cash on hand.Then there are the small businesses that service government properties. A report from the Cato Institute estimates that the federal government owns or leases more than 350,000 buildings and properties around the country. These facilities are a critical revenue source for countless small firms that perform construction, maintenance, security, cleaning, electrical, landscaping and other kinds of services, all which would be potentially interrupted. The employees that go to these buildings every day rely on neighboring businesses for their lunches, dry cleaning, yoga, happy hours and other products and services. If ordered to stay home, these businesses – already reeling from the number of employees now working remotely – would suffer a significant blow.Then there are government functions. Individuals and small business owners rely on many areas of the government for services. They’re applying for passports, questioning the IRS, waiting on regulatory approval and loan guarantees from the Small Business Administration. These and many other critical government services could be suspended if funding is re-directed.These are all immediate effects of what would happen if the government must avoid a loan default. The longer-term effects are even more devastating. If the situation persists credit and financial markets will be volatile and banks will be forced to limit financing to only the most secure (and usually) largest of their customers, which means many small businesses seeking loans will either have to wait or be denied. The Goldman Sachs study found that 77% of small business owners they surveyed were already concerned about their ability to get loans.According to the White House, a default lasting more than three months would cause a significant recession with as many as 8 million people losing their jobs. The stock market – where small business owners park a significant amount of their retirement savings and collateral – could collapse.All of this could not come at a worse time for small businesses. Optimism among business owners – as determined monthly by the National Federation of Independent Businesses – is already at a 10-year low. Bankruptcies are ominously on the rise too, with one research firm reporting a 20% increase in filings from a year ago. An extended shutdown would make these numbers much worse.If you’re a small business owner, what can you do?It sounds obvious but it’s a fact that my very best clients are always thinking ahead. So the first thing you should be doing is preparing. A federal default or shutdown may not happen at all, but that doesn’t mean you shouldn’t be ready for such an event by the end of this month.That means hoarding cash, confirming your credit availability (including credit cards) and communicating with your customers, suppliers, employees and partners. No one should be surprised by your actions – like delaying payments – if a shutdown occurs. They should know that this is something you may be forced to do and they should know this well in advance. The more you tell them of your plans the better they can also plan and the more appreciative they will be.Also, and this is probably no consolation for businesses right now, is to take away an important lesson: diversity is important. If your business relies too much on any one customer (ie the federal government) then once this problem is behind us you should be making it a priority to diversify your customer base. Too much dependence on one source of revenue is too big a risk and even the federal government can’t be relied on to pay its bills on time – or at all.The silver lining in this dangerous, avoidable situation is that it would take time for things to get really, really bad. Although Yellen warns of a default by the end of May, she does have options for at least funding major parts of the government. And quarterly tax payments – expected by mid-June – could help stave off disaster for a while longer. But none of this should stop a business owner from thinking about the consequences now and preparing for this event. Even if we escape this time, given the acrimonious environment in Washington, we shouldn’t be surprised if something like this doesn’t occur again – and soon. More

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      How the Small Business Administration’s new chief plans to make the agency known

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      Isabella Guzman is the new administrator of the Small Business Administration (SBA). And she’s got a long-term problem.No, it’s not about pandemic loans or the bottleneck in disbursing grants under other stimulus initiatives. It’s not even about catching fraudsters or approving applications. She has these problems of course. But that’s not the long-term problem.Guzman’s long-term problem has to do with awareness.“The SBA has always been the best kept secret in government, and we don’t want to be that,” she told me in a recent podcast interview. “We want to be known.”Right now most small business owners I know are only aware of the SBA because of the media attention received – both positive and negative – by being the middleman for various stimulus programs. But those programs are going to end this year. So what happens after that? What’s next for the SBA?For years, the department has struggled to get the word out about its services. And there’s no question that the SBA has many services to offer small businesses well and beyond dolling out loans and grants.“We know that government can be hard to navigate, and we’re trying to simplify our processes,” Guzman says. “Our customers are small businesses owners who have to wear so many hats and have so many responsibilities and need a team behind them.”What kind of team? There are the Small Business Development Centers, a network of free consulting agencies generally tied to colleges and universities which use professors and grad students as resources to help small businesses create business plans, do market research and evaluate technology. Or there’s Score, a long time, SBA-linked association of “retired” small business experts and owners who provide wisdom and advice at no charge. The SBA also has a myriad of educational programs and customer assistance resources that can help small businesses get government contracts or just better manage cash flow.Then there are the many guaranteed loan programs the agency offers through its lender network that can provide millions of dollars of working capital and other financing opportunities to buy property and equipment for small businesses who otherwise would not be able to fulfill normal banking requirements.And yet, when I ask my clients – who are mostly established firms – about the SBA I usually get blank stares. These clients aren’t aware of these options. They don’t realize they can get free consulting from university professors and retired CEOs or bank loans from lenders that wouldn’t ordinarily lend to them. Even the business owners I know operating in low- to moderate-income areas aren’t aware of the special services and funding available specifically for them. Or the more than a hundred women’s business centers throughout the country specifically devoted to the needs of female entrepreneurs.Why not? It’s awareness. The SBA has an opportunity to leverage the enormous PR it received during the pandemic and use it to make more businesses aware of all that it does. So how does administrator Guzman plan to do this?“We’re going to be looking at all of our programs completely and trying to apply a customer-first and technology forward approach as well as an equitable approach,” she says. “We intend to make sure that we’re meeting businesses where they’re at in their current situations and providing products and services that can best help them grow.”Specifically, that means hiring better and brighter people for her organization (“like Nasa” she says), increasing their partnering outreach to government departments, local organizations and chambers of commerce, and focusing on issues that are top of mind for many business owners, such as exit strategies.“Our small business development centers in particular are training up on ESOPs (Employee Stock Ownership Plans) and other types of alternatives for exit strategies,” Guzman says. “We know that it’s a big challenge to sell or hand down a business and we don’t want those businesses to disappear.”Finally, Guzman plans a greater reach out to communities of color and other areas where discrimination and lack of education is holding back on their opportunities. Her goal is to prevent “barriers from limiting entrepreneurship” and “to make sure that every type of entrepreneur from all backgrounds have the opportunity to pursue their dream of small business ownership”.Will the SBA be able to leverage its notoriety from the pandemic into a message that enables more small business owners to take advantage of all the resources it provides? Other administrators have tried this in the past, with mediocre outcomes. But Guzman has a chance right now to increase capitalize on what her agency has done in the past and make more business owners aware of the services it can provide in the future. Let’s hope she succeeds. More

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      Three bills show Congress can deliver for small business despite divisions | Gene Marks

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      Three bills are working their way through Congress that can provide significant help for small businesses. Do you know what they all have in common? Welcome signs of bipartisan support for small business.The first is the 504 Modernization and Small Manufacturer Enhancement Act of 2021. This bill, which passed the House in mid-April and is awaiting a Senate vote, is designed to make the Small Business Administration’s (SBA) 504 Loan Program more accessible to manufacturers through certified development company (CDC) intermediaries. The manufacturers would be able to apply for the funding – which can be as much as $6.5m – if they can show that funds will be used for energy efficiency or aid in the revitalization of a disaster area. The bill increases the loan amount available for small manufacturers and relaxes some collateral requirements, as well requiring the SBA to provide training.Why is this bill important? Because it directs capital to manufacturers and leverages the underused CDCs. “Too many people are not as familiar with institutions like certified development companies,” says the Democratic representative Sharice Davids, a co-sponsor of the bill. “But they have a really great track record of servicing and helping small businesses who are either unbanked or underbanked.”Next is the Opportunity Zone Extension Act. Sponsored by the Republican representative Tim Burchett, this bill was introduced in the House in February and awaits a vote. It extends for two years the election and capital gain deferral periods for qualified opportunity zones (defined as an economically distressed community where private investments, under certain conditions, may be eligible for capital gain tax incentives).The bill incentivizes investments in small companies located in areas that need it the most. “If people don’t invest, the property falls into disrepair,” says Burchett. “But if there’s investment then jobs can be created, there’ll be more encouragement for further investments. I just think it’s a winning opportunity for our rural America and our inner-city America.”Finally, there’s the Microloan Transparency and Accountability Act of 2021. Passed in the House in September 2020 and re-introduced this year, the bill establishes a 5% technical assistance grant for certain financing intermediaries, including intermediaries who make 25% of their loans to rural small businesses.“It just really helps ensure that the Small Business Administration (SBA) gives rural small businesses access to micro loans,” Burchett, who also sponsors the bill, says. “I just don’t feel like people should be overlooked because of their location or maybe the color of their skin or the region that they grew up.”The bill also requires the SBA to report certain metrics related to the disbursement of microloans to small businesses.Yes, these bills all help small businesses – particularly small manufacturers, businesses in low to moderate income areas and rural companies – get more funding from the federal government. But there’s a bigger thing that these bills have in common: they’re very, very bipartisan.For example, the 504 Modernization and Small Manufacturer Enhancement Act of 2021 is co-sponsored by five Republicans (including Burchett) and three Democrats. The Opportunity Zone Extension Act has nine Republicans and two Democrats signed on. The Microloan Transparency and Accountability Act of 2021 has three Republicans and two Democrats on board.Unfortunately, these bills don’t get much media attention because they’re not headline-worthy. But for many small business owners, their passage could mean the difference between growth and stagnation, survival or demise.So, yes, political infighting makes a juicy story. But behind the scenes, there are some issues that both parties can agree on and one of those issues is supporting small businesses. More

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      Biden swings by Pennsylvania in Covid relief tour and promises ‘more help’

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      Sign up for the Guardian’s First Thing newsletterJoe Biden stopped by a unionized, Black-owned flooring company in the battleground state of Pennsylvania on Tuesday to highlight how the provisions of his $1.9tn coronavirus relief package will help lift small businesses hurt by the pandemic, part of a cross-country campaign to promote the first major legislative achievement of his presidency.During his visit to Smith Flooring Inc, located in the Philadelphia suburb of Chester, Biden said the sweeping new law was a “big deal” and promised the owners: “More help is on the way – for real.”“We’re gonna be paying our employees,” James Smith, who co-owns the business with his wife, Kristin Smith, said of their plan for the relief checks. “We’ve been paying them. Since the first run of PPP, we decided we wanted to take that money and not lay anyone off. We put everybody in a group and said, ‘Look, we’re gonna do this for you as a team, we’re gonna get through this together.’”Biden’s visit to Smith Flooring, in a state he clawed back from Donald Trump in 2020, was his first stop on the White House’s “Help is Here” tour and comes a day after Biden announced that his administration was on track to mark two key milestones in the coming days: delivering 100m Covid vaccinations since his inauguration – far outpacing his initial promise to administer those doses in his first 100 days – and distributing 100m stimulus checks to Americans.The tour includes Biden, Kamala Harris and their spouses, Jill Biden and Doug Emhoff. Later this week, Biden and the vice-president will visit Georgia, another swing state that he narrowly won in 2020.During the visit, Biden explained how his plan would help small businesses like Smith Flooring, which saw its revenue fall by roughly 20% during the pandemic, according to the White House. The flooring company recently qualified for a federal Payment Protection Program (PPP) loan under an action taken by the president targeting businesses with 20 or fewer employees.Biden’s plan, one of the largest emergency aid packages ever enacted, will provide $1,400 direct payments to most Americans, send $350bn in aid to state, local and tribal governments, dramatically expand the child tax credit and spend tens of billions of dollars to accelerate Covid-19 vaccine distribution and testing.“Shots in arms and money in pockets,” Biden said in brief remarks on Tuesday. “That’s important. The American Rescue Plan is already doing what it was designed to do: make a difference in people’s everyday lives.“We’re just getting started.”Alawi Mohamed, the owner of a commercial strip in Chester, said the first loan given in last year’s coronavirus relief package had helped him stay afloat, but he was hoping Biden’s plan would give him a much-needed boost.“Everybody got affected by Covid-19. When they shut down everything, we got affected big time. Nobody was around and people were actually staying home,” he said. Now he said, he is “back to business, gradually, but everything came out good”.Also on Tuesday, Biden introduced Gene Sperling, a longtime Democratic policy aide, to oversee the implementation of the $1.9tn package.Democrats are increasingly confident that the stimulus package will boost their prospects in 2022, when they will attempt to keep their slim majorities in both chambers of Congress despite a long history of the president’s party losing seats during the congressional midterm elections.Every Democrat except one House member voted for the bill while Republicans unified against it.Republicans have attacked the plan as bloated, filled with liberal priorities that run far afield of the coronavirus response. But Democrats argue that the package will lift the nation from the dual crisis by rushing immediate aid to those hit hardest by the economic downturn and help ensure a more even recovery. They also say it will go further to tackle deep-seated economic inequalities, halving child poverty and expanding financial aid for families squeezed by job loss and school closures.Polling has consistently found that Americans favor Biden’s stimulus plan. According to a new CNN/SSRS poll released this week, 61% of Americans approve of the coronavirus relief package, while 37% oppose it.Haunted by their lashing in the 2010 midterms, Democrats now believe that they didn’t do enough to promote their sweeping stimulus package, shepherded by the new Obama administration and passed by Democratic majorities in response to the financial collapse.The House speaker, Nancy Pelosi, has touted the package as among the most consequential bills of her decades-long career, putting it on par with the Affordable Care Act. In a letter to colleagues after the bill was signed, she urged members to hold tele-town halls and send informational literature to constituents to explain how the bill could benefit them and their families.“We want to avoid a situation where people are unaware of what they’re entitled to,” Harris said during her visit to a culinary academy in Las Vegas on Monday. “It’s not selling it – it literally is letting people know their rights. Think of it more as a public education campaign.” More

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      Biden's Covid relief means small businesses can save big on taxes in 2021 | Gene Marks

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      Thanks to the stimulus programs, there are now five ways small can save big on their taxes in 2021 … and even get money back.The signing of the American Rescue Act this week means that more than $5tn has been spent on stimulus programs in the US to fight the economic impact of the Covid pandemic. A significant amount of this money has been earmarked towards funding small businesses, such as the paycheck protection program and the economic injury disaster loan program. However, all of the stimulus programs contained generous tax incentives that can not only save business owners a significant amount on their taxes in 2021, but also provide additional funding. Here are five that every small business owner should be considering.Employee retention tax creditThe employee retention tax credit is one such tax incentive. The credit was initially part of the March 2020 Cares Act and has been extended through 31 December 2021. To be eligible for the credit for any quarter in 2021 a business must show that it has been partially or fully shut down or experienced a revenue decline of more than 20% that quarter compared with the same quarter in 2019. If eligible, then the business can take a credit of up to $7,000 per employee per quarter based on their wages against their employer payroll taxes owed.The big deal is that if the credit is larger than what’s owed, the business can get the difference back in cash. The credit is also available to businesses that participate in the paycheck protection program, although wages used for forgiveness cannot be used to calculate the credit. The criteria for claiming the credit in 2020 are different but businesses owners can still apply to do that. All of these calculations are done on a company’s quarter federal tax returns.Families First Coronavirus Response Act tax creditAnother tax benefit has to do with the Families First Coronavirus Response Act (FFCRA). This legislation predated the Cares Act in 2020 and required employers to compensate their employees if they had to take time off because they, or their family members, were affected by Covid. This includes having to stay home to supervise their children while they attended virtual classes. The act provided for a tax credit where the business owner could claim money back on their federal payroll tax returns for the wages they were required to pay.The FFCRA is now voluntary in 2021. But for those employers that do continue to offer these benefits – which now includes time off to get vaccinated or to recover from any effects of vaccinations – the credit is still available and has been extended through September.Cobra tax creditCobra – or Continuation of Health Coverage – is a federal law that requires employers to make health insurance available under their corporate health plans to employees for a certain period of time who lose their benefits because of layoffs or reduced hours of employment. The idea is that people don’t lose their health insurance if they lose their jobs, but they do have to pay.In a new provision, the American Rescue Plan now fully subsidizes for the continuation of Cobra benefits for employees from April through September and offers a tax credit for employers who continue to pay for the health insurance premiums on behalf of their laid-off employee.Carryback of lossesThere is another big benefit for companies that lost money in either 2020, 2019 or 2018.Thanks to the Cares Act – and subsequent stimulus bills which kept this rule in place – companies that lost money those years can, for one time only, carry back those losses for up to five years. Which means that if a business paid taxes in the past, those losses would reduce what was owed and therefore a company would be due the money back. Normally tax rules don’t allow this kind of carryback but this year is an exception. We’re telling our clients to amend and file their corporate returns as quickly as possible in order to start the refund process, which takes an average of six weeks.Work opportunity tax creditThe National Federation of Independent Businesses reported this past week that 40% of their surveyed members had open jobs to fill and another 56% of owners reported hiring or trying to hire in February, up five points from January. These numbers are likely to increase significantly over the next few months as the economy recovers. The good news is that a big tax credit related to hiring has been extended through 2025.It’s called the work opportunity tax credit and it provides a credit on income taxes due for any employer that hires a veteran, someone off of welfare or – more timely – a worker who has been unemployed more than six months. It could be an enormous tax benefit for those employers who take advantage. Some of my clients are calculating this credit in advance before a hire and then using it as a signing bonus to help them better compete against others seeking talent.Clearly there are significant tax benefits – many which include cash refunds – for small business owners who choose to take advantage of them. My smartest clients are already talking to their tax advisers and getting help. They know that these benefits are short-term. They also know that leveraging them could provide much needed funds to help them navigate to, and through, the post-pandemic recovery. More