The COVID-19 global pandemic brought upon many changes for us all. However, our small businesses, particularly those in the hospitality industry, saw the most changes. Both faced tremendous challenges over the last year just to keep the doors open. Throughout the pandemic, in addition to Congressional action, our state leaders and a few municipal leaders have enacted programs to support businesses. However, these issues will not diminish as local governments and the state government begin their respective debates about their legislative agendas and their annual budgets.
Following the recession, our state has been fighting to recover from the collapse of the economy, which caused immense job loss, forcing many residents to grapple with the cost of living in their hometowns. According to economist Donald Klepper-Smith, Connecticut has significantly underperformed the U.S. economy in the last 10 years. Nationally, the economy grew 25 percent from 2009 to 2019, in contrast our state’ economy only grew by 1.1 percent. Since the beginning of the pandemic, about one in three small businesses throughout Connecticut have closed their doors. Our elected leaders have and must continue to take action to pass legislation and provide funding for these impacted businesses in order to make sure that our state’s economy is poised for recovery once we get past this pandemic.
On a federal level, Congress has passed a new stimulus package in December that offers assistance for small businesses and those who are self-employed. Congress passed $284 billion for another round of Paycheck Protection Program loans (PPP). Small businesses can apply for this loan whether or not they have received one before or not. Through PPP loans, small businesses can receive their monthly payroll in 2019 times 2.5. This new bill also includes “set-asides” for businesses with fewer than 10 employees and those in low to moderate income level areas. However, those businesses who have received loans through the program could face a tax hit on their state returns. As unresolved tax issues are beginning to arise, we’re seeing that some states could block PPP receipts from claiming deductions on state returns. While a second round of assistance is needed, if businesses are unable to receive tax deductions, small businesses could face an unexpected expense. An option to protect our businesses could be to provide an extension on tax filing for small businesses and ensure they are still able to claim their deductions.
In Connecticut, Governor Lamont has utilized the CARES funding to start a $50 million small-business grant program, which would be enough to award $5,000 to $10,000 to businesses throughout the end of the year. Yet, that program is no longer accepting applicants after 20,000 businesses applied. And just recently, At the end of 2020, the Governor announced that the state will provide an additional $35 million in CARES Act funding aid to small businesses. This additional funding for small businesses will help hundreds of those restaurants keep their doors open and keep more of their workers employed.
And on a local level, cities like Bridgeport are offering grant programs for small businesses such as their Bridgeport Small & Minority Business COVID Relief Grant Program , which has allocated $1 million for financing to small and minority businesses which have suffered significant loss due to the pandemic. Those who would be considered for the grant would have had less than $1 million in revenue in 2019 and employed 20 or fewer people as of March 15, 2020. Similarly in Hartford, over the summer the city has distributed over $1 million in grant funding, through the Hartford Foundation and the CARES Act. At the end of last year, Hartford announced a second round of grants which will disperse $800,000 to 100 small businesses.
These have all been important first steps, but there will undoubtedly be a push for more state resources to help local businesses be a part of Connecticut’s recovery in 2021, particularly after Congress authorized an additional $900 billion in December 2020. As local legislatures and the state legislature begin their budget process – it’ll be important to keep an eye on any new programs that will be enacted.The stimulus relief funds from the beginning of the pandemic have long since passed and businesses throughout the city are feeling its effects as they await new funding from Congress. Catalyst Board Member David Kooris (President, Stamford Downtown) wrote in December about how As a community about how its more important than ever that we come together to support local businesses, while also improving infrastructure that will support outdoor dining and easy transportation. Connecticut elected officials should not lose sight of the lessons learned in its recovery from the Great Recession, because the stakes are just as high and local businesses remain on the brink.