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Main Street Stimulus

April 19, 2020

The money is rolling in. Even though congress squabbled as the CARES Act took shape, it took less than a month from the time the bill was introduced to when money hit bank accounts. I’ve previously discussed what can be done with this money if it is not needed to pay bills. That previous discussion revolved around strengthening your own financial health. Now let’s discuss how you could spend this money for greatest impact if your financial house is in order.

You heard that right. A financial advisor saying it is alright to spend money. Don’t get carried away, but, yes, you can in fact spend money. Americans are notoriously poor savers so it can get a little monotonous encouraging people to save. Getting people to spend, well, Joe Exotic’s album I Saw a Tiger is in the top 10 in CD sales on Amazon, so….

Now that you went and bought that CD, let’s get back to what this money can mean to Main Street. Most of us have seen the signs or social media posts about why you should support local businesses. Something along the lines of paying for t-ball or cheer for the owners’ children instead of another vacation home for a CEO. The sentiment here is correct even if the logic is a bit flawed. There are many reasons people venture out on their own, but building your own business has inherent risk that promises more than what are essentially discretionary expenses.

I don’t want to discount that supporting a small business helps send the owner’s kid to camp but rather point out the stakes are much higher for these business owners. People pour their lives into their businesses. If you have ever known someone that owned their own business this is not news to you. This is an incredibly stressful time for our local small business owners, so your support affects more than just their wallets but also their mental health. It is a dangerous thing to take away someone’s purpose, and, even if you cannot financially support a small business right now, it’s a good time to check in with your business owner friends.

These businesses also happen to make up a large portion of our economy. According to the U.S Small Business Administration, 99.9% of American businesses are considered small businesses and 60 million working Americans are employed by a small business. Most of our country’s job growth is also due to small businesses as they account for 65% of net new jobs. What this means is while many have their eyes glued to the stock market the real engine of our economy is running on fumes.

Many of the owners and employees also do not have company sponsored retirement plans. It’s a bit old, but in 2009, the Small Business Administration commissioned a study that found nearly three quarters of workers in the small private sector did not have access to a company sponsored retirement plan. For the business owner, the business itself is often the largest retirement savings vehicle, and they may be watching their business and their retirement wither away right now.

This highlights the importance of the Paycheck Protection Program to get small businesses the support they need to weather this storm. As I write this, financial news talking heads are commenting on how difficult it has been to get these loans, how much more money may be needed, and if the loans will even work for certain industries like restaurants. These businesses are in real trouble and the safety net that was set out may have holes or, in some cases, is set 10 feet too low. These are the businesses we need to help.

Because of our current environment and social distancing, some companies' stocks are trading around their all-time highs as we lean on them during this shelter in place. I’m not saying to quit ordering from Amazon. Unless you bought Joe Exotic’s greatest hits because you should probably address your spending habits. If there is something that you can get locally though, try to do so. Think about more than just restaurants. It’s hard to do because we are stuck at home, food is yummy, and they certainly need the help right now, but other businesses are in even worse shape. Some of these businesses have come up with creative ways to deliver their goods and services to a populace on lockdown. Seek them out and give Main Street a chance of coming out of this.