Small Business in America: Where do we go from here?

(DESCRIPTION) 
Joan Woodward in a video window in the upper right corner. Text, Wednesdays with Woodward (registered trademark) A Webinar Series. Small Business in America. Where do we go from here? Logos under the text, SBE Council Small Business & Entrepreneurship Council, Travelers Institute, Travelers, ACCION. 

(SPEECH) 
Good afternoon, everyone, and thank you for joining us today. I'm Joan Woodward, and I'm honored to lead the Travelers Institute, the public policy division and educational arm of Travelers. Today's program is part of our Wednesdays with Woodward series, a series we started this past summer to explore issues impacting our personal and professional lives in these really difficult and uncertain times. 

(DESCRIPTION) 
Join our mailing list: institute@travelers.com. LinkedIn Connect: Joan Kois Woodward. Watch Replays: travelers@institute.org. hashtag WednesdayswithWoodard 

(SPEECH) 
We're pleased you're here today, and we hope you'll stay engaged with us. You can join our mailing list and get invitations by emailing institute@travelers.com or connect with me directly on LinkedIn. You can watch replays of our past webinars on the travelersinstitute.org. 

Before 

(DESCRIPTION) 
Wednesdays with Woodard is an educational webinar series, presented by the Travelers Institute, the public policy division of Travelers. This program is offered for your informational and educational purposes only. You should consult with your financial, legal, insurance or other advisers about any practices suggested by this program. Please note that this session is being recorded and may be used as Travelers deems appropriate. 

(SPEECH) 
Before we get started, I'd like to share our disclaimer about today's program. 

(DESCRIPTION) 
Photo and text, Speaker, Karen Kerrigan, President & CEO Small Business & Entrepreneurship Council 

(SPEECH) 
We're thrilled to be joined by the Small Business and Entrepreneurship Council and Accion, our partners for this program. These are two fantastic organizations working on behalf of small businesses, and we extend a very special welcome to all their members today. 

Today's topic is a timely one--the state of small business in America. As we all know small businesses, like all businesses and communities, have been impacted by COVID 19 and the changing economic conditions would seem to change every day. Business owners were boosted in part by economic aid packages during the onset of the pandemic. But in a tense election year, Congress has yet to pass another stimulus package in the second half of this year. 

As we sit here today, the United States is experiencing a record surge in coronavirus cases, providing further complexity for business operations, all of which is to say this is a serious situation with many moving parts. With that, I'm thrilled to introduce our phenomenal guest speaker today who's often referred to as America's Small Business Ambassador. Karen Kerrigan is President and CEO of the Small Business and Entrepreneurship Council, an advocacy and research and educational organization dedicated to protecting small businesses and promoting entrepreneurship in America. The SBE council educates elected officials, policymakers, business leaders, and the public about key policies that enable business and start up startups to grow. 

Karen regularly engages with the president's cabinet and key advisors and has led roundtables at the White House economic summits and scores of other events hosted by the US Small Business Administration, the US Treasury Department, the SEC, and other governmental agencies. She regularly testifies before Congress and has written hundreds of op eds and white papers on small business. 

I could go on and on. But, Karen, we're very, very happy to have you joining us today. So just a quick note on housekeeping-- we're going to have a number of questions come in I'm sure from the audience. If you want to submit your question, please use the Q&A function at the bottom-middle of your Zoom screens there. And just type in your question. We'll get to as many as we can in the time we have allotted. And check anonymously if you don't want me to read your names. 

So let's not have any further ado. Karen, please take it away. We're going to have a little bit of a conversation after Karen's remarks. Then we'll get to your questions. Thank you again, Karen. 

(DESCRIPTION) 
Karen Kerrigan in a video window in the upper right corner. 

(SPEECH) 
Oh, Joan, thank you. It's an honor to be here today with you and with the Travelers and Travelers Institute. Thank you for your leadership. And I do value so much our partnership over the years on so many issues and so many programs that we've worked on together from cybersecurity to business readiness and, of course, all the tools and information that you're providing small businesses and their employees during this COVID 19 era. It really has been invaluable, and we do appreciate your partnership so much. 

Again, thank you for having me. And welcome, everyone. It's great to be here. And thank you for tuning in. Small businesses in America-- where do we go from here? 

(DESCRIPTION) 
Goldman Sachs 10,000 small businesses VOICES. Sinking Lifeboats: Small Businesses Struggle To Stay Afloat While Awaiting Additional Federal Help. Small business owners make tough choices while Congress fails to pass relief legislation. 42% have been forced to lay off employees or cut employee compensation. 52 % have foregone paying themselves. 28% say the legislative uncertainty has caused them to consider closing their business. 33% have dipped into personal savings to stay operational. Source: Survey of 893 Goldman Sachs 10,000 Small Businesses participants conducted by Babson College and David Binder Research from November 4-5, 2020 

(SPEECH) 
Gosh, I tell you--small businesses have been on a real journey--let's just say that. Since March, since the pandemic hit, obviously, owning and running a small business is very, very challenging in its own right. And certainly, many entrepreneurs and small businesses were put to the test during this period. 

So where do we go from here? You know we think eventually in a more positive direction. We are optimists that as SBE council given the news on the outlook for a vaccine and a more certain path forward on policy. But there is definitely going to be some challenging months ahead for many small businesses given the increase in COVID cases and infections, and what we are now seeing in a return to state and local restrictions on mobility and on economic activity in various areas of the country. 

And unfortunately, this next wave of shutdowns are modified shutdowns in many instances combined with the colder weather could be the final straw for many small businesses and particularly so given the fact that there has been no additional relief or stimulus from Capitol Hill. We've been talking daily with our members about the state of their finances and their local small business economies and, of course, closely following many of the regular surveys on the collective outlook, confidence, and overall financial health of small businesses. 

And we began to see some positive traction in late June and July for small businesses following the early shock of the pandemic in March. And we were very focused as an organization, working with many of our allies here in Washington on getting another relief package through before Congress departed for their break in August. From our perspective, this was critical to fueling what we saw was momentum in the economy, leveraging some of the positive data, and things that were occurring in the economy. 

So we all know August came and went. So did the 2020 elections. And the failure to act has been very disappointing and very hard on many small businesses across America. And you're looking at this first slide--sinking lifeboats--I think this is very appropriate in terms of the findings of this survey. Babson College and Goldman Sachs--10,000 small businesses fielded a survey in early November. And these results really should be lighting a fire under Congress and pushing members to act. 

And let me add that this survey was conducted really during the early days of the pandemic surge. This happens very rapidly as we saw what happened in March and how governments react. And so those early days really sort of preceded some of the government actions that we're now seeing happening in terms of shutdowns, mini shutdowns, and restrictions on mobility and economic activity. 

And if you look at that, business owners do continue to suffer due to Congress' failure to act. They have to make choices. They've been making tough choices because they have not gotten the relief that they need from Washington. 52% have been forced to lay off employees or cut compensation for their employees. 52% have forgone paying themselves. That will not last long, let me tell you. 33% had dipped into personal savings to stay operational. And 28% say the legislative uncertainty in general has caused them to consider closing their businesses. So they're operating under this huge cloud of uncertainty. 

And let me also mention that the impact on Black owned businesses according to the survey had been even more severe. 61% have forgone paying themselves. 49% have had to lay off employees or cut compensation. And 57% have had to dip into personal savings. And revenues have not come back. 57% of Black owned businesses report that less than 50% of their pre-COVID revenue has returned. From the general small business population, that's 34%. But still, it shows you that for many small businesses that operate on thin profit margins, they're not that revenue is not there to cover their expenses or even to make up for the deep hole of revenue loss over the first couple of months. 

(DESCRIPTION) 
Text, Their Survival Hangs In The Balance. The survey question, Based on the situation today, do you think your business will survive? The choices are Yes, Don't Know, or No. A graphic depicts responses from April, May, July, September and November. 68% said Yes in April, 74% in May, 73% in July, 65% in September, and 60% in November. 28% said Don't Know in April, 22% in May, 23% in July, 28% in September, and 34% in November. 4% said No in April and May, 3% in July, 7% in September, and 6% in November. Source: Survey of 893 Goldman Sachs 10,000 Small Businesses participants conducted by Babson College and David Binder Research from November 4-5, 2020 

(SPEECH) 
So we're on to the next slide here. It goes without saying, I mean, this small business survival does hang in the balance for many, many businesses. Back in April, 28% said they did not know if their business would survive versus 34% in November. The numbers of owners saying no, that their business would not survive has also steadily increased. 

And let me just say something about those who have already closed. There's not a definitive official number. But we know it is well over a million, if not in the millions, unfortunately. A Main Street America report that was done back in April estimated that 3.5 million businesses would close by June and possibly 7.5 million by September if conditions at that point in time continued. And as we know, for some small businesses, those conditions did continue in terms of shutdowns and just not having customers come through their doors. And for others, it did not. It got a little better. 

Near the end of September, 5% of businesses surveyed by the Census Bureau said they would not survive the next six months, which is approximately 1.2 to 1.5 million businesses. The restaurant industry predicts that up to 85% of independent restaurants may close. So look it, I mean, suffice it to say the current situation with regards to the pandemic and shutdown activity does not bode well for a range of small businesses.  

(DESCRIPTION) 
The Impact Of Rising COVID-19 Infection Rates This Fall. Small businesses are experiencing drops in revenue this fall. 59% say their businesses Revenue has been negatively impacted by Rising COVID-19 infection rates this fall. 86% of those whose Revenue has been negatively impacted say their decline is due to changing customer behavior while 44% say their decline in revenue is due to more restrictive state and local regulations. Now is the time to put politics aside. 96% say it is important for Democrats and Republicans to turn the page on partisan politics and pass bipartisan legislation to provide financial relief for America's small businesses. Source: Survey of 893 Goldman Sachs 10,000 Small Businesses participants conducted by Babson College and David Binder Research from November 4-5, 2020 

(SPEECH) 
And unfortunately, the final number is going to be pretty staggering. 

As I noted previously, we felt it was important for Congress to pass a package before they left in August. And this side really speaks to why we were pressing upon them to do so. We knew, in the fall, conditions would change. There would be an increase in the number of COVID 19 cases and that would affect business revenues. And as you see, 59% of small businesses say their business revenue has been negatively impacted by rising COVID 19 infection rates. And 86% of those revenues have been negatively impacted due to changing customer behavior which has been changing continuously throughout the course of the pandemic. 

And thankfully, many small businesses have been able to adopt because of technology. But it's been pretty massive changes that a lot of small businesses have not been able to keep up with maybe because of where they're located, maybe because of the products and services that they offered. But there is a significant decline due to changing customer behavior. And 44% say their decline in revenue is due to more restrictions on state and local regulations. 

So obviously, we agree with 96% of the small businesses who say now is the time to put politics aside, that it's important that Democrats and Republicans come together and agree on a package. We think there's a lot of space for agreement and consensus, particularly on the small business side of things. And although we've been pushing, in August, pre-election, we're now post-election. And we continue to push in this regard. 

(DESCRIPTION) 
Small Business In America: Hoping For A Lame Duck Miracle. Post-Election Realignment and a COVID-19 “Stimulus” Package: Both sides (re-) dig back in. “Skinny” Stimulus or No Stimulus? Outlook for PPP re-up and other financial support programs. The I-ideal Small Business Package: PPP restoration and key program reforms (and simple forgiveness / payback process), E I D L re-up, long-term COVID-19 recovery loan program, federal co-investment fund. Other Critical Stimulus Areas: Funding for broadband infrastructure, liability safe-harbor, no additional mandates on small businesses. 

(SPEECH) 
So let's see--OK, so where do we go from here in the Lame Duck? "Hoping for a Lame Duck Miracle", as I titled this slide. We think that we have a little better chances than a miracle. But we know there are several things moving forward in terms of operating in the Lame Duck. There are only 15 legislative days left this year. And there's a lot of work to do. For example, a big government spending package, defense authorization, and hopefully a COVID-19 relief package. 

In recent media reports, both sides are dug in regarding their publicly stated starting points for a stimulus package. The Democrats on the House leader as well as the Senate leader said $2.2 trillion is our starting point. Republicans in the Senate said $500 billion--between $500 and $650 billion. But there is a new twist to negotiations. And that is that Senate Majority Leader Mitch McConnell is now the point person for Republicans. The White House is out, which we believe brings a fresh approach to the process and perhaps renewed hope. 

In the end, we think what will matter is how pressured Democrats feel or feeling to get something done. And based on the outcome of the elections, you would think they would be highly motivated to do so. But publicly, that does not appear to be the case. But we do know there is some soul searching going on in the Democratic party, which we think is a positive factor that increases the chances of getting some type of stimulus before the end of this Congress or perhaps even some types of relief for small businesses in the spending packages, in the big spending package that they'll be addressing. 

So what do we want? We're hedging on the--if a package gets through, it won't be this multi-trillion-dollar package. A skinnier one as has been described on Capitol Hill and in the media. Our ideal package would include the reopening of the PPP program. There's $138 billion in funds that still sit idle with several key reforms to the program including the opportunity for a second draw for small businesses who took out a first loan. Keep PPP-- Keep PPP reform--say that three times-- Keep PPP reforms that allow for forgiveness on expenses related to PPE, cloud services technology, greater flexibility in selecting the window for forgiveness, and a simplified application and forgiveness process for loans under $150,000. 

Ideally, they would also re-up put more money into the Ideal Program. We have been pushing for a long-term recovery program for small businesses where you could pay it out over a longer period of time at low interest rates where we already have the framework in EIDL. And if more money was put into this program, this could serve this purpose for small businesses in terms of accessing loans. 

We're pushing a lot of innovative things--a co-investment fund. $600 billion the Fed had available to provide to Main Street--they've only lent $4.8 billion out of that $600 billion. They have not reached Main Street. And so the co-investment fund idea essentially would take hopefully $20 billion of that money and use regulated crowdfunding to leverage local dollars where if a business on a platform raised money locally, that the federal government would come in and match that and that would be repaid. But debt and equity-based crowdfunding is beginning to boom. And given the fact that many local people want to save local businesses, we believe a co-investment fund, which has been tried and done in the UK with great success, can be a great model for the US as well. 

Again, ideally, we need money for broadband, infrastructure, rural America. If you look at how everything has moved online technology platforms, the importance of technology to businesses, to individuals, to household, rural broadband, broadband for underserved areas is more important than ever. We think there is consensus on this, and we'd like to see this in some type of spending package up on the Hill. And ideally, a liability safe harbor for small businesses although, this could be difficult given where the Democrats are on the issue. 

(DESCRIPTION) 
Small Business in America: the 2021 Legislative Wish List. TAX CERTAINTY: no tax increases, and address to T C J A expiring provisions. Potential for a tax deal? ACCESS TO CAPITAL: Action on capital deployment, including relief measures not addressed in the Lame Duck session. REGULATION AND EXECUTIVE ORDERS: First Do No Harm to Small Businesses. AFFORDABLE HEALTH COVERAGE: Maintain improvements to HRAs, small business purchasing pools and the movement toward competitive markets and more Innovation. TRADE AND GLOBAL MARKETS: Tariff relief, IP protections, true open markets. 

(SPEECH) 
So we can go to the next slide, but I'll just conclude on this one by saying that the chances are slim for a big stimulus deal in the Lame Duck, but they are better for a small business package that starts and passes in the Senate and then possibly gets pushed over in the House. Right before the election, five Democrats joined all Republicans. This is in the Senate to advance the Continuing Paycheck Protection Act, which includes most of the PPP provisions that I mentioned. 

But we need 60 votes. And so that's what we're going to be going for. And hopefully, again, sort of the outcome of the elections has incentivized more Democrats to join at least some type of small business package that's going to save Main Street and save local economies. 

I guess, the last slide, Joan, really is the legislative wish list and what we think may be happening. Obviously, President-elect Biden is coming in with his own agenda--a tax and regulatory agenda, investments for Main Street, a health care agenda. And some of those, whether there are tax increases or perhaps more regulation on the business community, will be tempered by what we have seen in terms of the outcome of the elections. 

The Republicans picked up a fair amount of seats over on the House side. The majority in the Senate still hangs in the balance. But it will still be very, very close. And so a lot of observers are saying, and I agree, that some of the more aggressive elements, the big elements, like a Green New Deal or big tax increases, maybe parts of the regulatory agenda concerning the environment and labor--those things are not going to be able to get through this Congress. 

So and President-elect Biden has said that for people under $400,000, he won't increase taxes. A lot of them are small businesses. So from our perspective, no big tax increases to speak of. There are going to be tax cut and Jobs Act expiring provisions. And we think this pathway sets up the possibility of some type of tax deal in the Congress because you do have all these expiring provisions that relate to small businesses and there could be some type of deal. So we think there's some positive things that can happen on the tax side. There's always winners and losers, Joan, as you know with tax reform. But we're not expecting the worst when it comes to taxes. 

In terms of access to capital, there is going to be a lot of action on capital deployment. There is no doubt about that. In terms of SBA programs and the variety of different types of government programs that are really going to be providing more capital and more relief to Main Street. Again, we'd like to see our co-investment fund is part of this mix, a long-term type of loan program for small businesses. These are the types of things that we do think have a possibility in 2021. 

In terms of regulation and executive orders, our message is first do no harm particularly in a very, very tough economy and a recovering economy that many small businesses aren't going to be able to afford the cost of more taxes or more regulation. That uncertainty, operating in that type of uncertain environment makes it even more difficult for them. So again, I think on the regulatory piece, there will be tempered. But the Biden administration, a Biden administration, will certainly be pushing out some executive orders. And particularly, perhaps on the labor side, that could impact labor costs and labor regulation. 

Affordable health coverage--small business is all about that as there have been some good improvements that have been made over the last couple of years in terms of small business purchasing pools, health reimbursement accounts. We'd like for those things to be maintained and to be improved. We'd like to see the current administration encourage more Telehealth, which is happening now. And that will be a tremendous cost saver and provide access to a lot of small businesses and self-employed people at lower costs and in rural America. 

And again, the big type of socialized health care, Medicare for all stuff--we don't believe will be happening, certainly not in 2021. On trade and global markets, we're going to be pushing for tariff relief, more IP protections. We think there's going to be more of an opportunity to do trade deals in the administration. And this is all good news for small business because most of the businesses in America who are involved and engaged in global markets are actually small to midsize businesses. And given technology more are moving to global markets in order to grow their revenues, to grow their businesses, and small businesses definitely will be looking for that to recover in the COVID 19 economy. 

So is that enough of an introduction for you, Joan, in terms of--I try to provide the--I know there's a lot of details in there. And a little bit of everything. And hopefully, we could do some--I'm sure there's some great questions out there. 

(DESCRIPTION) 
Joan and Karen share the screen. 

(SPEECH) 
Yes, Karen. That was fantastic. Thank you so much for that kind of broad overview. And I like all the statistics you ran through. Clearly, there's a lot to talk about. Getting a lot of questions in the Q&A function. So please do submit your questions. And I'll get to as many as we can today. So first, let me start with this, Karen-- all eyes are on Georgia, right? The two runoff elections that will absolutely determine the control of the Senate. But right now, it does look, given some of the Democratic losses, some of the Republican losses, that those two Senate seats will determine the outcome. 

I believe that if the Republicans win one of those seats that they will control the Senate. So with that in mind, do you think those stalled conversations that we see right now over the Lame Duck Stimulus Bill will continue or do you think the Republicans would want to try it again with their current majority, want to try to get something done? Or do you think the Democrats, at this point--Nancy Pelosi and Biden are saying, well, let's wait till we come into power. 

And in January, of course, then a Stimulus Bill won't happen until February by the time Biden is inaugurated at the end of January. Or do you really think that we'll see a small Stimulus Bill now and then maybe another Stimulus Bill after Biden kind of takes over the White House? What is your current--if you had a place to bet? 

Joan, I mean, what you said should happen. There should be a Stimulus Bill now. And then once the new administration takes over, go at it again, right? I mean, there's no reason why Washington shouldn't be deploying only some type of capital and relief to Main Street, to small businesses, to health care providers, the whole vaccine deployment--all of that, right? 

You know what? The next couple of days, Joan, I think are really going to--we're going to see what happens because I do believe now--although they've publicly stated, again, the Democrat leaders, that $2.2 trillion or nothing and President-elect Biden has said the same thing--we want a big package. I think there's a lot of pressure coming from the Democrat caucus. There's a fair amount of angst and soul searching of look it, that approach really didn't serve us well in the elections. And our constituents need this help. You're talking about Main Streets; you're talking about businesses. So that pressure is beginning to build. And again, I always take the optimistic approach, Joan. And I think something will get done. 

And again, if it's not a stimulus package, perhaps it's going to be stuffed tucked into the Spending Bill, right, that's going to be passed. And hopefully, and I believe there'll be some small business support in there. You've got $138 billion sitting idle in PPP. And if it just gets--again, reopen it, reform it. Do what you need to do just to unleash some of that capital. Again, something will get done, whether it's a standalone or as part of a bigger spending package because the pressure I think is too great right now. 

And there are some--again, Democrats who are thinking ahead two years saying, look it--we've got to start rebuilding the party, rebuilding the image. Folks are up for reelection, Joan. The election just ended. But they're starting again, right? It just began again. And you have members thinking long term. And again, I do think something will happen. How big--I don't know. 

And, Karen, on that note--so the Democrats were supposed to pick up seats, right, in the House and in the Senate. And so given that Biden has clearly won the White House now, the Democrats did lose about 11 or 12 seats in the House. And they look to lose the ability to take over-- we'll say they lose the ability to take over the Senate. So if Mitch McConnell stands firmly in charge of the Senate, you're saying there will be not a big tax increase because he will not allow that to go through. Probably not a big corporate tax increase. We won't see packing of the court, I assume. Do you agree with that? 

Yes. I agree. 

So Biden could not pass any other bill to expand the number of Supreme Court justices if McConnell is still in charge. You also said some of the other regulations that were rolled back under the Trump administration could not be passed again in a Republican or reversed in a Republican led Senate. But Biden could also have a number of executive orders, right? Now how does an executive order right work in the Department of Labor and the Department of Environmental Protection? The president comes down with an executive order and absent legislation--those can be impacting small businesses on day one, right? 

Yes, they could. And they have to be carefully worded executive orders because they could overstep their statutory or sort of the bounds of what they're allowed to do. And of course, as we've seen with President Trump's executive orders, I mean there have been legal challenges to those, right, that had been overturned. But we do clearly see somewhere, there could be sort of a rollback in terms of some of the things that we've seen under the Trump administration. For example, several things that the Department of Labor regarding independent contractors, right, and clarifying things and making things a little bit more clear that do make certain, I think, this approach, the independent contractor, the model, if you will. 

So the Biden administration could play with those executive orders and sort of move back and do something a little bit differently. It'd be interesting to see, I think, on the labor side and also on the workplace protection side--there's been this argument in terms of COVID-19. Well, how far does the federal government need to go in terms of workplace safety and providing rules and regulations versus what's been done at the state and the local level. And it may be guidance, it may be hard fast rules. 

But again, that's another area that I know that the labor movement has been agitating on and wanting to see labor and OSHA pushing more stringent requirements on employers. And again, emergency authority can be used in so many instances, Joan. And we'll have to see what happens in that regard. But those are just a few areas where on executive environmental rules and regulations maybe tailoring back or moving back some of the executive orders in that area. But I would say it won't really go too far. I can't really see it going too far. 

But we're still keeping an eye out on sort of what his folks are saying and his advisors are saying and how he will govern. They've got to realize they've got a very, very tenuous recovery. And putting more costs, more pressures on the private sector, on small businesses, is just going to be—you won't get the recovery. You won't get the bounce back. You won't get the job growth. 

And you think they're tuned in to that. They do realize. I mean, because Biden has said that he wants to Institute a mandatory mask federal mandate on nationwide mask wearing. The states and the localities have been changing different rules in different states. And so you do believe that they are very cognizant of the fact that locking down more or changing how states have been handling this could impair the economic recovery. You're getting that makes sense? 

I think so. I think the signals that he has sent just recently as well as the advisors that he's surrounding himself with have said, that we've learned a lot during this pandemic, that the state and local officials are sort of better equipped at doing this. But moreover, Joan, there are Democrat governors too who don't believe in a federal lockdown. I mean, they're accountable to their small businesses and their workers. 

And they've got to keep the economy--they've got to they've got to have this balance, right, of providing safety. We can do it safe or we can do it smart. They want to keep the economy rolling. They have to bring in revenues into their government. They want to have a healthy economy. So you do got Democrat governors out there too, Joan, who are sending these messages to the Biden administration that a national lockdown or big mandates are not going to be helpful to their economies. 

OK. Great. So let's pivot a little bit and talk about the really good news we've been hearing over the past week or so which is a vaccine--the Pfizer and Moderna vaccines are 90% to 95% effective, and they're getting emergency use authorizations hopefully in the next weeks and months to roll out hundreds of millions of doses to our country. And so how is that going to look in terms of who gets them first? We know the vulnerable, the nursing home, the health care workers, the essential personnel will be getting those first in line. 

What about small businesses? I mean, they're not really considered essential personnel--the restaurateurs. How will it look in terms of will you have to have a certification? Do you have the COVID vaccine in order to eat at a restaurant or go to a local small business? How do you think that's going to look in terms of going from where we are today to the nirvana of getting back to whatever normal is going to look like after most of us have had a vaccine? 

Well, there's certainly going to be a transition period, right, Joan? And I think the big issue right now in barrier that the government will face is when you look at the numbers of people who are saying they're not going to take this vaccine, right? I mean, the trust level right now is not there. It's increasing though. I think it's getting better in the public above--I don't know what the number is right now. But it was very low at the beginning. But it is increasing. 

And so I think that's sort of the first barrier and challenge is basically building this trust. And the people who need to get vaccines actually sort of sell them into the importance of being vaccinated. And of course, the distribution of the vaccine itself with the supply chains and sort of what they need to deliver the vaccines in terms of--there's going to be a certain degree of coldness, right? I mean they got to be a temperature that they had to be delivered under. These are all sorts of things that need to be worked out. 

So I don't know. I just believe in the ingenuity of the private sector collaborating with the government. The states are going to play a big role in this as well, Joan, right, which is good. I think this top down approach--I mean, this sort of approach of allowing the states to come up with their own distribution model and how they do things and working with the federal government, I think, is very, very important because the states know their terrain the best. 

So this is all just sort of beginning to sort of come into focus, Joan. I wish I had more information. And I had like a little flowchart behind me. I'm waiting for that as well. How the military is going to be involved-- there's going to be an all hands on deck approach to this. And I don't know what's going to happen later in terms of the mandates. That's going to be very interesting, right, to see what employers require, what governments require, what businesses require in order to have people come into their business, work in their businesses. That is going to be very interesting. And I think that's all still yet to play out. 

OK, great. And schools too, right? Are schools-- 

And schools! I mean, yes. I was just talking about the business sector. You're right. And you're talking about University systems. And these were issues, Joan. I sit on the board of my Alma mater, the Cortland College Foundation that we were talking about. And there's still so many unknowns in terms of this and how you get all these students vaccinated and who gets allowed back into campus. And anyway-- 

Yeah. 

OK, so again, submit your questions through Q&A, and we're going to get to them in one second. I have one last question for you. So Karen, the holidays are really right around the corner. I know a lot of us like to shop small. So how can we support small businesses? It seems that we're all getting these Amazon packages delivered and wallmart.com packages. But how could small businesses increase holiday sales this year? And how can you get the word out to do that, to really support our local businesses? 

It's really great. All the surveys that I've seen, Joan, are off the charts in terms of the consumers and the holiday buyers. 70% to 80% said they do plan to shop at small businesses more--to shop local, to support their small businesses, whether it's local or even a small business in general. But the important thing is that small businesses--they need to reach out. They need to be prepared for this, OK? 

So the holiday shopping period has already begun. It started at the end of September. We're into November right now. But if you're a small business and if you're not on social media, if you're not on Facebook, if you're not using Twitter, you do have to use all the tools that are available. 60% of consumers say that they're using social media more, and they're actually using social media--Instagram-- to find new products and services, to find small businesses, to find new brands. 

So from the small business perspective, you need to be communicating, emailing, doing social media, collaborating, working with other small businesses, working with your town and your local governments to come up with innovative ways to drive consumers, I would say, into your business. And that means shopping online, picking up curbside. But you have to meet customers where they are. And right now, Joan, they're online. They're online. 

And here's the good news, Joan--if you're a small business that plans to deliver locally to your customers, I think you have a leg up because there's going to be so many packages, so many things that are going to be delivered. There's going to be massive amount of delays in the system. If you can get something that day to a customer in your local area, you have a competitive advantage. And so you do have to really think about doing that type of delivery. Maybe do your own delivery system, a local delivery system, to get customers their packages immediately. Or again, in an efficient way, that sort of beats sort of what's happening right now. But I think this is an opportunity for small businesses, given the massive amount of packages that could clog up the system. 

And I actually want to give a shout out to my good friend JoAnne Murray, president of Allan Block Insurance. She actually just asked that same question coming through the chat saying, how can we help small town retailers transition to online and help them hold on. And I think you just answered that beautifully, right? The Facebook, the Twitter, offer that same day delivery service that maybe some of the other big box retailers can't do. So-- 

And, Joan, there's so much technology out there that makes it so easy. I mean, all the technology platforms--that's why so many small businesses have been able to pivot overnight and to do this. And the tools are there to do it. And a small business owner has to fully embrace this and get on board and do it. 

OK. Another question coming in--what happened to the $138 billion that you just mentioned in the PPP loan? Why is that not been disbursed? 

Well, the program ended August 8th, right? And as we moved closer to that deadline, even a month or two away from it, we saw that there wasn't the same uptake on that program that we saw in the early days. And Joan, I think this has a lot to do with some of the uncertainty of the program. How the program was designed really didn't align with the needs of many small businesses. There was the rule--the 70-30 rule, then the 60-40 rule that in order to have it forgiven, 60% had to go to payroll, 40% had to go to other costs. 

There's so many businesses out there where the building that they're in is their biggest cost. I mean, I'm in Northern Virginia, and I look at these rents that small business owners are paying--25, 30, $40,000 a month. I mean, this is a huge expense for them. And also a lot of other restrictions that really didn't align with the needs of small businesses. So hopefully, if once we reopen the program, some changes get made that we'll be able to have a program that works for more small businesses, and there's more flexibility where more small businesses will be able to take advantage of the PPP program. 

OK, excellent. Another question for you--what is the success ratio between franchisees and other small businesses? So is it good to have the mother ship kind of watching over you if you're a franchisee or is it better to be your own independent small business in this market? 

It really depends on the individual. I really think there are those innovators, entrepreneurial people, who see a need in the marketplace. They start a new type of business. I mean, that's how we get new franchises, right? [LAUGHS] But there is something to be said for the franchise model, Joan. There is no doubt about it. They have a high rate of success given that they know what works, it's turnkey, you have to come up with the capital. You still have to be a good business owner, good manager, in order to make it work. 

But in the COVID economy, Joan, there are so many variables at this point. I mean, my friends at the International Franchise Association--they say, look at it. There's no relief coming from Washington. 34,000 or some odd additional franchises could go under. So you know what's happened in the COVID economy has totally changed the dynamics of independents versus franchises. 

But I will say this, Joan. The good news about small business in general is that we're seeing off the chart numbers in terms of people who want to start businesses. It's just extraordinary the number of business applications. It is surging. And I think that's because of several things--because of necessity and because of opportunity and technology. And so this is a really, really good thing. 

But we're using this as—look we're going to leaders in Congress and government, members of the new administration and say, look, you have all these people who want to start businesses. There's going to be a huge hole, millions and millions of businesses who have gone over. We're going to need to replenish them. And that's why you need access to capital programs, you need innovative programs like the Main Street Recovery Co-investment Fund that we're talking about that really leverages the power of crowdfunding in order to reach these businesses. 

And Karen, let me interrupt you on this. So spend another minute on that. How does that get--is that set up? Does it need governmental blessing or legislation or executive order to have that set up? Talk about that crowdfunding mechanism and how it would work. 

It's just amazing to me that our organization--we led the effort to make equity and debt based crowdfunding legal. It took four long years for the SEC to put the rules in place. Now we're seeing a surge in equity and debt-based crowdfunding, which is really great news because these businesses--they cannot find capital elsewhere. They're going to their local customers, their local community. My colleague said, they're calling them their in investomers, the combination of investors and customers. 

And the SEC just passed in very favorable rules that will grow crowdfunding more. They increase the minimum amount that can be raised from $1 million to $5 million. They allow small businesses to go on regulated platforms and socialize their idea and talk to investors first before they file with the SEC, which is very important. So they get to test the waters. 

So how this would work, Joan, is very, very simple. I remember watching Fed Chairman, Jerome Powell sitting in front of Congress and members were imploring him to think creatively and outside of the box of how we can use this $577 billion that hasn't gone to Main Street. And how this would work is this--with a co-investment fund, you already have regulated platforms by the FCC. They have all these stringent rules in place that protect investors. Essentially, you have a fund, a business goes on a platform, they have to raise their goal. And once they raise their goal from their investors, from their crowd, the government would come in and they would match that, OK? 

But that gets paid back, Joan. This is not like free money. And we think this is a lower risk endeavor for the government, even then the PPP program, because the investors are actually betting this business. You have to disclose a lot of information. You have to basically provide--well, a lot of information like financials, traction of the business, future of the business, how the money is going to be spent. So it's not easy to raise money, Joan. The crowd has to believe in you. Investors have to see what you see. And then once that happens, Joan, the government will come in and match. And again, the UK has done this with great success. The UK stole crowdfunding from us, equity crowdfunding. And now we're going to steal this idea from them and hopefully implement it here. 

OK, great. Another question coming in from William McKnight from Prince Insurance Group. Do you have stats on the hospitality industry and their prospects moving into 2021? Do you think there'll be any additional money for cruise lines, hotels, airlines in the Stimulus Bill? 

Gosh, that's hard to say. There was general money where those industries we're going to be covered. I don't have stats in terms of what the future looks like. All I know with the vaccine--it looks a lot better. But, Joan, really--hospitality, hotels--again, decimated by COVID, particularly in areas like Las Vegas, New York, Chicago, where they are dependent on conferences, on tourism, and those other things. So there is going to be a shake up in the industry. 

Airbnb has gone public. They're benefiting a lot from what's happening during COVID-19. There's going to be a lot of losses, Joan, I fear. And it's going to take a while for the cruise industry to come back just like the airline industry. And there may be the opportunity for some type of funds for them in the future because--well, I know with the airline industry--we can't afford to lose that industry in the United States. 

Sure. OK. Another question coming in from Karen Griffin. Amazon commercials recently stayed they're investing in small businesses. Can you comment on this? What is this? Are they really trying to help small businesses? And have you seen what they're doing in communities? 

I haven't specifically seen their programs in communities. I mean, I do know what they are trying to do is through their Amazon small business stores and through certain programs is to highlight and to promote the small businesses that sell on Amazon. So they are making an effort to do that. I haven't really talked-- I mean I do know businesses that sell--small businesses that sell on Amazon. I mean, they're very grateful for having that outlet. Some do very well. Some can't compete. I guess it just really depends on what you're selling and sort of the demand for that in the marketplace. But specifically, I haven't really seen the programs in the local community, Joan. So I can't comment on that. 

OK. Let's shift to access to capital. And so we talked about the PPP. What are some of the other avenues to access capital? And how, in your view, is the SBA doing with I'm sure the overwhelming applications for SBA loans? 

Yeah. Well, the SBA in the future is going to continue to play a big role in capital deployment. Look it-- first, in terms of getting out these COVID related EIDL and PPP loans. We did have glitches. There's no doubt about that. And that's why from the beginning, we were very vocal about getting Fintech involved and some of the nontraditional lending institutions because the rapidity--I mean, how rapid we were deploying that capital was very important to small businesses. 

So over the years, the SBA has had its ups and downs in terms of the loan programs, when hurricanes hit, how quickly they were able to do it. I don't think the program goes away. I think they're going to continue to play a big role. The SBA loans, I think, will continue to play a big role in terms of deploying capital, moving forward. 

And again, what we'd like to see is--and many in the small business community--is a COVID related loan, very long term over 20 years, not five or 10 years, with very favorable interest rates, very low interest rates to pay back this loan. I mean, this is going to be the only way that many small businesses are going to be able going to be able to recover. So that program does not exist. We'd like to see it. We'd like to see Congress established one. And we think the SBA--they do very well in the SBA loan space in general-- 7A loans. And this could be something that fits into their wheelhouse. 

The other is the EIDL loans, Joan. Now in the original legislation, the loans were supposed to be for $2 million. SBA, for some reason, cap them at $150,000. So many small businesses who needed more did not get that. And there's bipartisan legislation in the Senate side that would put $100 billion more into this program. And again, bring it back to what it was originally intended--$2 million, long term payback, low interest rates. And we think-- 

Karen, what happened there? What happened? The original intent you said versus what the law was passed or what the SBA implemented of the law. 

What they implemented, Joan, it was just--I mean, that was not even in the legislation. And many members of Congress were quite angry about that. They're like, well, the legislation we passed was $2 million. It was a higher amount. But then all of a sudden, small businesses started hearing that they were just getting $150,000. So the unofficial policy at the SBA was this $150,000 cap. And for many small businesses--I mean, look, they were grateful to get that, but they needed much more than that. And they are very capable of paying back more than that. But I guess they just felt that they had a limited pool, and that they would cap the amount at $150,000 in order to impact as many small businesses as they could. But that just ends up hurting many small businesses, Joan. 

They should have stuck with the rules. And if they needed more money, went back to Congress and said, look it--re-up. We've gone to this money quickly because we are loaning at these higher amounts. But, Joan, it was just something that the SBA instituted on their own with the blessing of the Treasury Department. The other piece was that $10,000 grant that small businesses were supposed to get once they apply for the loan. And the SBA developed a rule internally--it wasn't public--that basically limited that to $1,000 per employee. So there was a lot of surprises for small businesses with this program. 

OK. OK. So overall, with a new Biden administration coming in and the vaccine coming in shortly thereafter, do you believe we will see a robust V-shaped recovery in the macroeconomic outlook, or do you think it will be a 2022, 2023, when we'll see robust economic growth? 

I think it's going to be longer to get robust growth, OK? I think we're in a deep hole. So we're going to continue to see large growth numbers. But compared to--remember--we're digging out of a $6 trillion hole or something like that, Joan. And so we're going to continue to dig out. I think it's going to be positive. There is going to be some certainty. But sometimes, stability and certainty in terms of policy is not necessarily great for small businesses because they need additional things like more tax relief, regulatory relief, or things that may not get done in divided government. 

But the good news about divided government is that there is sort of a little bit more of this stability and certainty with respect to policy. There's not going to be a lot of really bad things happening that will hurt the economy and hurt small businesses. So I anticipate a not robust, good growth, healthy growth digging out. But because we're not going--again because we're not going to be having, I think, more movement in terms of competitive tax policy, regulatory policy, things like that, that it could be slower. And, Joan, who knows what else is around the corner. My gosh, I hope 2020--we don't want 2021 to be like 2020, right? 

No, we don't. No, we don't. We layered on top a number of wildfires and hurricanes that clearly our industry--we see it every day. So the impact of those, I think, it was a record amount of hurricanes so far this year our small businesses had to deal with on top of the COVID. So--Karen, last question for you, and then we really want to thank you for your incredible thoughts today. And I want to encourage everyone to go on your website, the SBE Council, to get more information, and watch the Stimulus Bill activities. 

But let's talk about the Infrastructure Bill. Do you expect a large-scale infrastructure bill with lots of new spending? And do you think that would help small businesses if that happened kind of early next year? 

Well, one, Joan--yes, visit our website SBE council, and you can sign up for our small business E-news for free. And we provide lots of tips and trends--things happening in the marketplace, in addition to all the legislative and policy work that we do. I do anticipate an Infrastructure Bill. I think there is going to be one that happens--broadband infrastructure and just sort of the broad category of infrastructure. 

And yes, I mean, this is going to benefit many small businesses that sort of operate in this space, in the contracting space. It'll certainly help in terms of job creation and job growth. And those are customers, right, of small businesses. But I think, more importantly for our country, we do need modern infrastructure, Joan, if we're going to continue to compete. And so this will be good for many small businesses who, again, will benefit directly definitely more broadly. 

The only caveat will be, Joan, on those Infrastructure Bills--we're going to be watching it very closely because we don't want a lot of conditions placed on them in terms of--the labor movement will play a big role in terms of how some of those contracts happen. And sometimes, in terms of some of those type of mandates and restrictions, small businesses get cut out of procurement opportunities because they can't afford that. So we're going to be advocating for just sort of an open procurement process. And again, there's so many small businesses that can play a role in modern innovative infrastructure. And so we'll be watching that very closely, Joan. And I do think it's going to happen. 

Great. Well, optimistic note we'll end on then, Karen. Thank you so much for your time and all for you do for a small businesses these past many decades. I know you work Capitol Hill very hard and the agencies and the White House. So we're just truly appreciative of your service to the country, honestly. 

Joan, thank you. 

(DESCRIPTION) 
Wednesdays with Woodward, A Webinar Series. Register Now: December 2, 1-2PM ET. Weathering the Storm: An Inside Look at the Insurance Institute for Business & Home Safety. Replays Now Available: Leading Through Crisis, Resilience in Times of Uncertainty. Cybersecurity During the Pandemic. Employee Safety During COVID-19, And many more. travelersinstitute.org 

(SPEECH) 
OK. And folks, we want to tell you about our last webinar coming up after Thanksgiving. On December the 2nd, we're going to have a webinar hosting the CEO of the Insurance Institute for Business and Home Safety. Roy Wright will be with us talking about--they're celebrating the 10th year anniversary and it's called weathering the storm. This is a research facility that the insurance industry is very heavily involved in testing different products. Testing wind and hail and wildfire and hurricane and force winds. They have an amazing facility in South Carolina that I was lucky enough to visit a few years ago. So stay with us in December the second, two weeks from today. 

And then we have an amazing program lined up for the new year. We're going to kick off with a former FDA commissioner, talking about the distribution for vaccines and other interesting programs for you all of 2021 on Wednesdays. So join us, the travelersinstitute.org to register for these events or watch our replays. The replay of this event will be up in a few days. So again, Karen, thank you for your time and your service. And thank you all for joining us. Wear your masks, be safe. Have a wonderful Thanksgiving. And we'll see you in December.