PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Technology Tools and Platforms Become More Essential for Small Businesses in the COVID-19 Economy

By at 19 May, 2020, 8:59 am

A key element of “payroll protection” in the COVID-19 economy is the technological infrastructure and and tools that enable small businesses to process payroll seamlessly through the click of a mouse or using a mobile device.

By Karen Kerrigan-

Even before COVID-19 hit, small businesses were digitizing business operations and broadly adopting technology and internet tools for sales, marketing, e-commerce, payroll, inventory tracking and more. Technology has become as essential as any traditional utility, which small business owners have come to depend on to start the day and run their operations. Therefore, costs associated with technology platforms and software licensing must be recognized as such, and be treated as an allowable expense for loan forgiveness under the Paycheck Protection Program (PPP).

Under the PPP, no more than 25% of a total loan (and consequently, forgiveness) can be for non-payroll costs such as rent, utilities, and mortgage interest. While SBE Council is working to change the 75-25 rule (see my latest Morning Consult op-ed on PPP fixes here), it is important that Congress and the SBA recognize that expenses related to technology software and platforms, which enable off-site, mobile and virtual operations, be allowable as forgivable PPP expenses.

The mass movement of small business operations and communications to technology platforms and the cloud throughout the COVID-19 crisis is the only way many small firms can operate, compete, drive revenues and just plain survive during this period of restricted mobility and business activity. Yes, the “re-opening” of the American economy has begun, but challenging times remain ahead for many small businesses. That is why government needs to provide as much relief and help as possible given the uncertainties and daunting recovery efforts ahead.

A new “State of Small Business Report” published by Facebook and the Small Business Roundtable (where I serve as Chair) finds that 31% of small businesses are currently not operating, and one-third of respondents said they do not plan to re-open. That means the COVID-19 toll on small businesses will be quite severe, along with the permanent loss of jobs attached to these enterprises. It is imperative that government at all levels works to sustain and help rebuild what is left of our small business economy.

For small businesses that found strategies to operate during this period, many turned to technology for help, according to the Facebook-Small Business Roundtable report.  Over half (51%) of small businesses say they have increased online interactions with customers, and 36% report they are now conducting all sales online.

A U.S. Chamber of Commerce-Met Life monthly small business poll (released on May 5, 2020) also reports on the big shift to technology, including a significant jump in teleworking among small firms, and a larger share of small retailers that have transitioned their presence to be more virtual or digital (17% of small business owners say they have made this transition, up from 10% last month.)

A key element of “payroll protection” in the COVID-19 economy is the technological infrastructure and tools that enable small businesses to process payroll seamlessly through the click of a mouse or using mobile devices. Software and platforms that have allowed small business owners to strengthen e-commerce capacity and drive revenue during the COVID-19 downturn have become essential to survival. Again, Congress and the SBA need to acknowledge the critical role that technology is playing in keeping small businesses open and workers employed by clarifying the rules to add these essential costs to the list of forgivable expenses under the PPP program.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council.    

 

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