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Small businesses push back on plan to redirect COVID relief funds

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The U.S. Capitol building.

Congress could reroute about $5 billion in COVID relief set aside for small business to pandemic-related health care needs.   Stefani Reynolds/Getty Images

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Around this time in 2020, there was a lot of talk about how to help small businesses. Many were crushed during the pandemic — but some were saved when federal aid started flowing.

As conditions ease, not all of that small business aid has been used, with about $5 billion remaining. Now, small businesses are pushing back on a proposal to reroute that COVID relief money away from them and toward pandemic-related health care needs. 

The first few months of the pandemic almost spelled financial disaster for AltusCampus, an online education company in Madison, Wisconsin, run by Daniel Guerra Jr. 

“We had, like, no cash that came in for, like, 90 days,” he said. “I mean, it was tough.”

Guerra pivoted his company from online videos to live webinars, which helped. But the big boost came once Guerra got pandemic aid three times from two federal programs.

“That was an instrumental lifeline for us. We’d be out of business if we had not had help,” he said.

That kind of help might be cut back as the Joe Biden administration looks to pay for its health care response to the pandemic. With Republicans exerting pressure to cut spending, around $5 billion set aside for small businesses could get rerouted. 

That might not be so bad, said Eric Zwick, an associate professor of finance at the University of Chicago.

“Say, if a restaurant is having trouble keeping customers in because, like, it used to serve a lot of office workers and those office workers aren’t coming back, at some point that restaurant needs to change its business model,” he said.

And keeping support in place for too long might hinder that, per Zwick.

But these companies still face a lot of uncertainty, according to John Arensmeyer, CEO of the advocacy group Small Business Majority.

Uncertainty “about prices — they’re being impacted by inflation,” he said. “Uncertainty about rebuilding their workforce.”

He’s hoping lawmakers keep small business aid intact when they return from recess next week. 

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