With the historic passage of the Bipartisan Infrastructure Bill this past Friday, Congress now turns its attention to the sweeping social infrastructure package known as the Build Back Better (BBB) Act. Following weeks of negotiations with many Members of Congress and President Joe Biden, the House of Representatives kickstarted the process for debating and passing the bill based on the recently announced framework for the BBB budget reconciliation package. While this legislation excludes some provisions advocates have fought hard for, there is no doubt this bill still marks a transformational opportunity for American business, workers, and our country. If passed, the investments made by the BBB framework will support small businesses, enable more Americans to join and remain in the labor force, and grow our economy from the bottom and middle. A Moody’s Analytics report estimates that it will add 1.5 million jobs per year on average across the decade and boost GDP by nearly $3 trillion.
Not only will this help small businesses, many say this is what they want. A Small Business for America’s Future (SBAF) survey of more than 1,000 small business owners found that 74% believe it is important that lawmakers continue bolstering the economy by supporting policies like the infrastructure and care economy investments. Most importantly, this package directly lifts up small businesses and thus communities across the country. Here are a few key ways that it does.
1. Steps to Reduce Healthcare Cost and Expand Coverage In the same SBAF survey, lowering health insurance and prescription drug costs was the most cited policy priority for small business owners, with 73% saying it was important to their business. In addition to the first ever movement to allow the government to negotiate prescription drug costs (limited, but a very big deal), the BBB framework meets this need by reducing premiums for more than 9 million Americans who buy insurance through the Affordable Care Act Marketplace by an average of $600 per person per year. The package also closes the Medicaid coverage gap, which could help 4 million uninsured people obtain coverage. There is much more to do in this area, but these steps will provide greater stability for many small business owners and their employees.
2. Access to Capital
The BBB framework will make a $5 billion investment in U.S. Small Business Administration (SBA) programs that support recovery and provide long-term solutions. The package allocates nearly $1.5 billion for a new direct loan program at SBA to make direct loans of up to $150,000 (for contractors and manufacturers, the limit is $1 million).
“Lending reports have shown that 7(a) loans under $150,000 have decreased by almost 53 percent over the past five years. This investment in SBA’s direct lending program will fill those gaps in our lending market and ensure underrepresented entrepreneurs have the capital they need to launch and grow their businesses,” said House Small Business Committee Chairwoman Nydia M. Velázquez [D-NY] in testimony to the House Rules Committee.
It also includes $950 million to renew and continue the SBA’s 7(a) loan fee waivers and $850 million for “uplift incubators,” where nonprofits or economic development organizations can apply for grants to support underserved startup and small businesses. Finally, the BBB framework provides $224.8 million for the SBA’s Community Advantage Loan program, a pilot program for underserved businesses, $190 million for a growth accelerator grant program, and $100 million for a five-year pilot program for loans without personal or entity guarantees to cooperatives and employee-owned organizations.
3. A Start at More Fair Taxes
Three quarters of small business owners have said the tax code favors large corporations over small businesses and that small businesses are harmed when large businesses or corporations use loopholes to avoid paying taxes. Not only is the framework paid for, it is done so by helping level the playing field in the tax code. The package includes an agreement with 136 countries on a 15% global minimum tax that will prevent companies from receiving massive tax benefits from shifting profits and jobs abroad (The passage of the BBB framework will formally ratify this agreement). The legislation also ensures the highest income Americans are paying their fair share in taxes by including a new surtax on the income of multi-millionaires and billionaires with a 5% rate above income of $10 million, and an additional 3% surtax on income above $25 million. This doesn’t touch the vast majority of small businesses owners who make below $250,000 a year. This honors President Biden’s promise to not raise taxes on Any American making more than $400,000 and that’s the vast majority of small businesses.
4. Unprecedented Investment in Child Care
Too many employers are trying to help their workers ease the challenges of childcare being too expensive. A fall SBAF survey found that 66% of small business owners believe the federal government has a role in supporting universal access to affordable, high-quality child care, and more than half of small business owners believe that the lack of affordable, high-quality child care for employees has had a negative impact on their business. The BBB framework counters this impact with the largest investment in child care in the nation’s history, ensuring that the vast majority of working American families of four earning less than $300,000 per year will pay no more than 7% of their income on child care for children under the age of six. The rates will also be on a sliding scale for parents who are working, looking for work, participating in an education or training program, and/or making under 2.5 times their states’ median income. The package will help states expand access to high-quality, affordable child care to cover 90% of families across the country with young children.
5. Paid Leave that will Allow Small Business to be More Competitive
After it was cut from the initial framework, House negotiators reached an agreement to add a national paid leave program back into the bill voted on today. The amendment created a permanent, national program that will fund four weeks of paid family and medical leave for every worker in America. The program’s benefit would be determined on a sliding scale by income, with the average worker receiving two-thirds of their income back, and can be supplemented by existing employer programs. It would also fund grants to small business owners to help fill in the gaps for employees who take leave. While there is some uncertainty about whether this provision can ultimately pass through the Senate in a final bill, there is no doubt that businesses want this kind of support. A report from The Boston Consulting Group found that even before the pandemic, companies saw tremendous value in paid leave’s ability to attract and retain quality employees, and hundreds businesses have publicly called for federal policy intervention since the pandemic brought paid family and medical leave to the forefront of many of our lives. As the Senate takes up debate on the bill, negotiators should know they have Main Street’s support for keeping this provision intact.
Main Streets are still recovering from the impact of Covid-19, which compounded the day-to-day challenges small businesses were already facing. The BBB framework will give them the support they need to reemerge from this crisis stronger and ready to face the future. The House has done its job and sent the bill to the Senate, who should work with the House to find agreement and send this bill to President Biden’s desk quickly.