The largest stimulus package in American history was signed into law last week and while it may take time to feel its effects, businesses are beginning to look at what it could mean for their employees and communities.
President Donald Trump signed the Coronavirus Aid, Relief and Economic Security (CARES) Act into law on Friday following the bill’s approval in both the House and Senate.
The $2.2 trillion federal stimulus package promises to provide $1,200 in checks to Americans making under $75,000, $350 billion in loans for small businesses with less than 500 employees, and creates a $500 billion lending fund for industries, cities and states and more.
The law is meant to help businesses keep their employees, allow individuals to continue paying their bills with the help of the stimulus check and provide a broader net for people who find themselves unemployed.
It’s passage was welcomed by business leaders across the state.
“I’m thankful that it passed,” said Tony Iannelli, president and CEO of the Greater Lehigh Valley Chamber of Commerce. “The economy went from white hot to zero. We need something and we need it fast. The next phase is to get people back to work.”
Iannelli described the stimulus bill as bold and something businesses desperately need. “They are hurting, they are not entirely sure what it entails but for right now, it’s a life raft for many businesses.”
Right now, the chamber, which relies on meetings and business events for revenue, is “out of business,” but has enough in its reserves to last for 30 days, Iannelli said.
“Cash flow has stopped. It’s just not going,” said David Black, CEO of the Harrisburg Regional Chamber and CREDC. “I don’t think anybody knows if $2 trillion is enough but it will address a lot of the need. That is an unprecedented amount of money.”
Business loans available through the stimulus could help organizations refrain from layoffs and furloughs, but businesses should be aware that the funds aren’t meant to help maintain their bottom line, said Travis Gentzler, president and CEO of Weldon Solutions in West Manchester Township, York County.
“Everyone is looking to keep their businesses open, but there is a difference between profits and poverty,” said Gentzler, adding that if Weldon Solutions was failing to pay its employees or keep the lights on, it would look into a loan.
Scott Fiore, president of TriStarr Staffing in Lancaster, has seen a number of business owners and leaders in the region struggle to maintain their employees and keep their businesses afloat; something he said could be alleviated in the short term with help from the stimulus.
Unemployment help critical
Fiore and Gentzler also praised the law’s expansion of unemployment benefits, which will increase eligibility and give unemployed workers an additional $600 per week, on top of what they already receive, for four months.
“The extra $600 in federal money for unemployment benefits is a game-changer in my opinion,” Gentzler said. “Most people cannot survive long on typical unemployment benefits, especially those who were already living paycheck to paycheck.”
Fiore, who works with employers through TriStarr, said most businesses he’s talked to are primarily concerned with trying to do what they can for employees. The additional unemployment benefits and the stimulus check will go a long way toward that goal.
The Central Pennsylvania Chapter of the Independent Electrical Contractors in Silver Spring Township, Cumberland County, expects the stimulus to have an impact on its membership, said Marissa Bankert, the chapter’s executive director.
“Not only will this package provide these small businesses with necessary lending to keep them afloat during this uncertain time, it will help employees maintain the quality of life they had prior to this crisis,” Bankert said.
HB Global, an employee-owned HVAC, plumbing and electrical installation company in Harrisburg, has focused on helping its employee owners and their families while trying to remain financially viable during this crisis, said Bob Whalen, the company’s president and CEO.
Whalen said the bill will go a long way in helping the company meet those goals.
“The U.S. coronavirus spending bill will help make this less traumatic for our employees with direct payments to our workers and improved unemployment benefits for those we have had to furlough.”
Time for patience
The Small Business Administration is also offering disaster loans to small businesses throughout the country. But Black warned that the applying for the loans online has proven difficult with so many companies trying to use the online portal at once. When applications open for the $2 trillion stimulus, there may be long waiting times there, as well, he said.
“You just have to stick with it, you might have to do it in the middle of the night,” he said. “We know the electronic portals will be slow and backed up. It’s just a matter of timing.”
Some praised the bill’s focus on small businesses.
“I think it’s a great effort and it was done quickly, and the channels of payments are in the right area,” said Don Cunningham, president and CEO of Lehigh Valley Economic Development Corp.
Cunningham said the focus should be on small businesses first and noted the bill would include $350 billion administered through the SBA.
In addition, the Pennsylvania Industrial Development Authority is administering $61 million in small business loans, he said. LVEDC is administering these loans in the Lehigh Valley.
“We are seeing a heavy demand,” Cunningham said.
The Lehigh Valley chamber is one of the nation’s largest, and has nearly 5,000 members who employ more than 220,000 people. Now, Iannelli said, “our worlds have been turned upside down.”
So far, the chamber has not had to cut any staff. But if the virus and massive business closures stretch beyond the 30-day period, phase two of the chamber’s plan could mean a variety of cuts to chamber staff. Phase three would involve taking “bold steps.”
Cunningham says the stimulus bill will help get the economy moving again.
“It shows you that at least in a time of crisis, people can work together to get something done quickly in government,” he said. “There’s no doubt we will be in a recession. I think one advantage in the Lehigh Valley is we have that balance in the economy.”
The leader of one local manufacturer said he was optimistic about the bill but noted there is much uncertainty over how companies will reap the benefits.
“I am still optimistic of the benefits of the stimulus bill but the execution of it is very disheartening,” said George Reitz, president of American Millwork & Cabinetry, a manufacturer in Emmaus. “The CARES Act is good but I listed a boatload of questions to accounting and that led to more questions.”
These questions dealt with the timeline and semantics of how the bill would be executed, he said. In addition, he questioned whether $2 trillion would be enough for all the companies in the U.S.
Much of AMC’s job sites are shut down because of COVID-19, and that affects important parts of projects such as manufacturing, engineering and ordering, he said.
His company has 83 employees and after Wolf’s state-wide business closure order on March 19, his first inclination was to preserve cash, so he laid off about half of his workforce.
However, the company has projects in the health care industry, and was able to continue building. It obtained six exemptions, and Reitz has called back about 45 people, including some office and production workers who are practicing social distancing.
Since his company operates in the construction industry, he has seen uncertainty over what’s closed and what’s open throughout the state.
“Certain jobs are opening, certain jobs are not, it’s very stressful,” Reitz said.
He recalled a recent meeting with his employees, which appeared to reflect the mood of the moment.
“It was so solemn,” he said. “It’s like someone dropped a bomb on the U.S. It was eerie.”