- Small-Business Owners Highly Engaged in 2020 Election
- In Election Year, Top Public Policy Concern Is Taxes
- Election 2020 Match-Ups Show Strength for Bloomberg
- Bottom Line
- What Each Candidate Proposes for Entrepreneurship
- What issues do entrepreneurs care about?
- The economy
- Joe Biden's small business platform
- Biden's economic restructuring
- How taxes would change in a Biden administration
- Biden's healthcare plans
- Donald Trump's small business platform
- Aspirations of a surging economy
- Trump's tax plans
- Healthcare under a Trump second term
- 5 Reasons Small Business Owners Should Vote
- 1. Regulation
- 2. Taxes
- 3. Access to credit
- 4. Health insurance
- 5. The economy
- 5 Ways the Outcome of the 2020 Election Could Impact Your Small Business – Exemplar Companies, Exemplar Capital, Exemplar Tax, Exemplar Consulting
- Corporate Tax
- Stimulation of the Economy
- Capital Gains Taxes
- Estate Tax
- Exemplar’s Professional Team Can Help Your Business Navigate Change
- Small business confidence drops to all-time low after Biden election
- Politics and small business
- Divided government can be good for Main Street
- Covid lockdowns and small business
Small-Business Owners Highly Engaged in 2020 Election
- 90% of small-business owners are paying attention to the 2020 campaign
- 69% say their business benefited from the 2017 tax law
- Bloomberg is only Democrat to edge out Trump among small-business owners
— Small-business owners are highly engaged in the 2020 presidential election campaign, as 60% say they are paying “a lot” and 30% “some” attention to it. With near unanimity, they say they are ly to vote in the general election.
Sixty percent approve of the job that Donald Trump is doing as president, and 52% think their business would be better off if he is reelected. They are somewhat less ly to say they would be better off if the Democratic nominee wins the election (41%).
These findings are from a Jan. 15-24 nationwide Square/Gallup online survey of small-business owners with annual revenues between $50,000 and $25 million.
Most small-business owners rate the financial condition of their business positively — 56% say it is “excellent” and 38% “good” — and 69% report that their business benefited from the 2017 tax reform law. More than seven in 10 say they reinvested over one-quarter of the savings that resulted from the tax law in their business.
Yet, other policies have had a less positive effect. Seventy percent of small-business owners say the cost of healthcare has had “a lot of” or “some” impact on their ability to hire and retain employees, and half say the same of changes to U.S. immigration policies since 2017.
In Election Year, Top Public Policy Concern Is Taxes
Among a list of six public policy issues, taxes receive the most mentions: 32% of small-business owners say taxes are the greatest impediments to their business operations in this election year. Government regulations (21%), healthcare (20%) and U.S. trade tariffs (15%) are second-tier obstacles, and climate change (7%) and immigration (5%) are at the bottom of the list.
Taxes Top List of Small-Business Owners' Public Policy Obstacles
|Square/Gallup, Jan. 15-24, 2020|
Asked which party would do a better job of handling these six issues, small-business owners are more ly to favor the Republican Party for taxes, immigration and tariffs, and the Democratic Party for healthcare and climate change. Owners are closely divided between the two parties on government regulations.
Small-Business Owners' Views of Party Better Able to Handle Top Issues
|Square/Gallup, Jan. 15-24, 2020|
Election 2020 Match-Ups Show Strength for Bloomberg
Among those who say they plan to vote in a Democratic primary or caucus, 22% of small-business owners say they will support Joe Biden, while 17% say Michael Bloomberg, 14% Bernie Sanders and 13% Elizabeth Warren. Thirteen percent are undecided, and fewer than 10% plan to support Andrew Yang, Pete Buttigieg or Amy Klobuchar.
Small-Business Owners' Preferences for Democratic Nomination
|Asked of those who said they plan to vote in a Democratic primary or caucus|
|Square/Gallup Jan. 15-24, 2020|
Though trailing Biden overall, Bloomberg does especially well among independent and Republican small-business owners who plan to vote in a Democratic nominating contest in their state.
Turning to November, even though they are more ly to identify as Republicans (40%) than Democrats (33%) or independents (26%), small-business owners are closely divided as to whom they say they would support in the general election.
In seven hypothetical head-to-head matchups, no more than four percentage points separate Trump from each potential Democratic nominee. Bloomberg is the only Democratic candidate who edges out Trump.
Small-Business Owners' General-Election Preferences
|Square/Gallup, Jan. 15-24, 2020|
There are more than 30 million small businesses in the U.S., and this constituency is an important one for any presidential candidate to win over. Most small-business owners indicate they have benefited from Trump's 2017 tax law and report that their businesses are in good financial condition today, which would seem to be a positive sign for Trump.
They are paying a lot of attention to the 2020 presidential election, and most plan to vote. But while their approval of the president is high, smaller percentages support him in general-election matchups with seven potential Democratic nominees.
The Democratic presidential candidate with the most crossover appeal to Republican and independent small-business owners is Bloomberg, who, Trump, has a business background. Bloomberg also gives Trump the toughest test in the head-to-head matchups.
View complete question responses and trends (PDF download).
What Each Candidate Proposes for Entrepreneurship
- Both Biden supporters and Trump supporters believe this will be a transformative election for the United States.
- The two candidates have vastly different views on everything from healthcare to taxes.
- Regardless of your final determination, you should vote in this election.
- This article is for small business owners who are seeking to understand which presidential candidate has the right platform for new businesses.
As we inch closer to the Nov. 3 general election, hopeful entrepreneurs looking to join the other 32 million small businesses in the U.S.
know by now how important this election will be. With a decision looming between Republican incumbent President Donald Trump and Democratic nominee and former Vice President Joe Biden, each vote could have major implications for your new venture.
So, before you step into the voting booth or mail in your ballot, it's important to be clear on both candidates' positions on issues that affect small businesses and entrepreneurs.
What issues do entrepreneurs care about?
Starting a new business can be a daunting task under normal circumstances, but 2020 has been anything but “normal” due to a mixture of catastrophic events, racial unrest and a global pandemic that has killed more than 215,000 Americans. With additional stimulus measures proving unly and continued (albeit gradually lifting) restrictions on how businesses operate, small businesses have had a rough go of it.
Looking ahead to the next four years, fledgling small businesses and established ventures a are paying attention to some key issues that could mean the difference between keeping the lights on and shutting down for good.
After months of social distancing restrictions (and, in some cases, mandated closures), it may be hard to remember how 2020 began. Before the coronavirus reached U.S. shores, the economy was on a resurgence of sorts, bolstered in part by the Tax Cuts and Jobs Act of 2017.
That legislation, along with continued Obama-era economic trends, boosted the confidence of consumers and investors.
However, once COVID-19 started affecting thousands (and, later, millions) of Americans, some state governments ordered many businesses to shut down, resulting in unprecedented unemployment numbers and the sudden cratering of any economic gains earned since 2008.
As entrepreneurs and small business owners consider their vote, many look back to past stimulus efforts by the federal government, including the Payment Protection Program and stimulus checks that resulted from the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Though negotiations for another stimulus package have been sidelined by political jockeying, millions throughout the country support the idea of buoying individuals and businesses with federal money.
Regardless of what lawmakers end up supporting, small business owners of all stripes know some assistance is desperately needed.
History typically shows that the Republican Party wants to cut taxes in every form, while Democrats often have plans to increase taxes to cover government spending in other places and programs.
While the Trump administration can claim victory in this area with the passage of the Tax Cuts and Jobs Act, many have seen this key piece of legislation as a giveaway for the wealthy that left the working class and small businesses with little to show for it.
As an entrepreneur, your taxes will have a major effect on your take-home pay.
Federal policy directly affects the healthcare benefits you offer your employees. For a decade, the U.S. healthcare system has operated under reforms enacted in the Affordable Care Act (ACA).
While it has provided millions with the chance to obtain reasonably priced healthcare, the ACA has created its own set of problems, leaving many lawmakers wondering what changes need to be made, with potential solutions typically falling along party lines.
As a new or potential small business owner, you should pay close attention to the coming election, since offering good benefits is a great way to attract and keep good employees.
Key takeaway: There are many issues that affect entrepreneurs and small businesses, but the economy, taxes and healthcare are often top of mind.
Joe Biden's small business platform
After having worked beside President Barack Obama, Biden has campaigned partially on his experience as the second in command during a period when the federal government worked to dig itself the Great Recession and forge the ACA.
Despite weeks of attempts, we were unsuccessful in getting a response from the Biden campaign about the vice president's platform. Nonetheless, we broke down his various proposals the information on the campaign's official website.
Biden's economic restructuring
With the nation's economy still hurting from the pandemic, Biden is confident that he and his running mate, California Sen. Kamala Harris, can right the ship. Biden proposes he'll do that for small business owners by helping that segment of the economy gain access to funding to start new ventures and keep existing ones afloat.
One of his proposals includes the creation of a “True Small Business Fund” that would provide $60 billion to small lenders and community banks to quickly get money into the hands of local businesses.
His platform also calls for a ban on well-to-do businesses gaining access to programs the previously run Paycheck Protection Program.
When plans that get put into place, Biden wants the terms to benefit the small business community.
Another key point of Biden's economic plan for small businesses is a push to help businesses owned by Black, Indigenous and people of color (BIPOC) get started.
It's well documented that BIPOC-owned businesses have a difficult time securing funding from traditional lenders, and when they open, they have been closing at a rapid pace due to COVID-19, according to a working paper from the National Bureau of Economic Research. As such, Biden said he will “remove barriers to participation in our economy, expand access to opportunity, and fully enforce the policies and laws that we already have on the books.” The chief part of this proposal is the creation of a Small Business Opportunity Plan, which would provide more than $150 billion in loans and venture capital for BIPOC entrepreneurs.
How taxes would change in a Biden administration
Biden contends that Trump “rewards wealth over work,” citing the Tax Cuts and Jobs Act as a de facto tax jubilee for the rich.
By contrast, Biden says his tax plan would keep taxes level for anyone making less than $400,000 a year, enact “more than one-dozen middle-class tax cuts” and raise the corporate tax rate from 21% to 28%, among other proposals.
In addition, Biden's plan would tax foreign earnings of U.S. companies and impose additional taxes on companies that outsource jobs to other countries.
Tax savings would come in the form of various tax credits for major life milestones, such as buying their first home, and ensuring no family spends more than 8.5% of their income on healthcare.
Biden is also proposing up to $8,000 in tax credits for low- and middle-class families to pay for child care and an equalization of tax benefits for retirement savings between the wealthy and low- and middle-class households.
Biden's healthcare plans
Having helped ensure the ACA's passage in 2010, Biden is running on a promise to keep it intact.
Biden's campaign website says he plans to “build on the Affordable Care Act by giving Americans more choice, reducing health care costs, and making our health care system less complex to navigate” by creating a Medicare-esque public option. If this option is enacted, he believes all small businesses will be able to “afford coverage for their employees.”
Key takeaway:Biden's multifaceted plan proposes more taxes for the rich and the continuation of the ACA.
Donald Trump's small business platform
Trump is running on the message that he wants to bring the U.S. economy back to its pre-COVID levels. Trump has claimed many times that he was able to steward the country to an unprecedented level of prosperity.
“This president has helped small businesses thrive by removing burdensome regulations from the Obama-Biden administration, allowing additional tax deductions, and helping small businesses keep their employees on the payroll throughout the pandemic with the Paycheck Protection Program,” said Courtney Parella, a spokeswoman for Trump's re-election campaign.
Whereas Biden has proposed a plan for the next four years, Trump has campaigned on the accomplishments of his first term. Though we pushed the Trump campaign for information on the president's plans for the next four years, we did not receive any response. our research, however, here are some of the points Trump is running on as they pertain to new small businesses:
Aspirations of a surging economy
For most of his time in office, Trump has had a strong economic reality as part of his message to the American people.
A poll taken by CNBC and Survey Monkey back in February showed that nearly two-thirds of small business owners “approved of the way President Trump [was] handling the U.S. economy.
” The campaign also highlights that, in 2019, new business applications rose to nearly 3.5 million, marking about a 20% increase from three years earlier.
By the spring, the economy had taken a massive backslide, with millions of people making initial jobless claims each week for several weeks.
Though times have been tough, Trump emphasizes that he and Senate Republicans pushed the CARES Act, which created the Paycheck Protection Program, provided $350 billion in forgivable SBA loans and issued $10 billion in emergency grants, among other things.
Though there hasn't been a comprehensive explanation of Trump's platform moving forward, the campaign has released a list of his economic agenda on the campaign's website.
Trump's tax plans
Trump may have run as an outsider in 2016, but his tax policies are very similar to long-established Republican efforts.
With the largest tax reform legislation already on his résumé as president, Trump has begun floating some ideas that he may act on if reelected.
Though specifics aren't easy to nail down, the president has shared his interest in a potential payroll tax cut, as well as a cut to the individual tax rate to 15% and a reduction to the capital gains tax.
As for small businesses in general, Parella noted that the Tax Cuts and Jobs Act established a 20% tax deduction that pass-through entities and other small businesses can take advantage of on up to $326,000 of income. More than 90% of U.S. small businesses can claim that deduction, according to the campaign.
Healthcare under a Trump second term
Republicans in Congress have long held that they want to repeal and replace the ACA, and Trump echoes those sentiments. Though neither side has offered a concrete plan beyond the “repeal” part, the campaign is touting the president's previous efforts that can affect small businesses.
One issue that many small businesses may be familiar with is the expansion of health reimbursement arrangements and association health plans that give smaller companies the ability to group their coverage. By doing so, they can increase their buying power and earn lower-cost health insurance benefits for their employees.
Other potential pro-small business healthcare moves that the president may consider in a second term are the reduction of prescription drug prices and health insurance premiums, and the elimination of surprise billing.
Key takeaway:Trump has largely been able to draw on the state of the U.S. economy before the pandemic. If reelected, he would ly push for the end of the ACA, add more business tax cuts and try to find a way back to an economic normal.
5 Reasons Small Business Owners Should Vote
October 23, 2020 5 min read Opinions expressed by Entrepreneur contributors are their own.
Covid-19 has thrown many of America’s small businesses into survival mode. Although some are starting to rebound, others are still focusing on reclaiming lost revenues — many with fewer employees and resources than they had before the pandemic.
There's no denying that economic outlooks remain uncertain, and workloads are high. With everything you're dealing with, the general election may be the last thing on your mind.
But as small business owners strive to make a difference, it's more important than ever to vote.
Not only for president, but also for the Congressional and Senate lawmakers on the ballot who will lead policies impacting your business and community. Let's take a deeper look.
Government regulations directly impact businesses.
For small businesses, in particular, it’s difficult to stay compliant when laws suddenly and quickly change — especially now, when you have limited resources.
At BlueVine, we hear from business owners you all the time, and if there’s one thing you want and need this year, it’s stability. Many of you need predictability when it comes to things regulation.
Common business regulations such as licenses and permits, employment law, environmental legislation and consumer advertising, dictate how you do business and where you spend your time. When laws constantly change, it’s not only hard to keep up; it’s also difficult to focus on vital revenue-generating activities.
Regulation is here to stay, but you can influence how it changes and affects your small business by voting on November 3.
Related: Motivating Trends: Building Small-Business Resiliency in a Pandemic
Federal taxes are a significant burden for small business owners, both financially and administratively. Depending on your business, you could be on the hook for federal and state income tax, self-employment tax, payroll tax, capital gains tax, property tax and dividend tax.
The cost can add up quickly. According to the SBA, small businesses in the U.S. have an average effective tax rate of 19.8 percent. This means that, on average, nearly 20 percent of your revenue goes to taxes.
Fortunately, tax legislation exists to benefit small businesses — deductions and exemptions for businesses of a certain size. The thing is, these benefits often have expiration dates, meaning you need to continue making your voice heard at the polls.
3. Access to credit
As a business owner, you need to continually invest in new inventory, product launches, marketing campaigns and new hires. But investments these can be difficult to make when cash flow is tight and credit access is low.
Under normal circumstances, cash flow is a major pain point for small businesses. In 2020, it is even more so. For example:
- Studies show that cash and credit constraints are top concerns for business owners.
- In August of this year, big banks approved only 13.6 percent of business loan applications.
- According to SCORE’s latest Megaphone of Main Street, a report on small business trends, cash reserves are shrinking for small business owners due to the Covid-19 pandemic.
All this to say, access to credit is critical for small businesses. Local, state and federal programs offering low-interest loans to new small businesses need widespread support. And because minority owners face greater barriers to capital, there’s a lot of room to improve inclusive financial legislation.
Related: New Survey Finds Nearly Half of Small-Business Owners Don't See a Need for Physical Stores (Infographic)
4. Health insurance
The cost of health insurance remains the number one problem for small businesses. According to the NFIB, it has held this top spot for 29 years.
Many small businesses have found ways to decrease healthcare costs (for example, by increasing employee deductibles, copayments and premiums, eliminating dependent care, or negotiating with carriers), but doing so opens up another issue: finding and keeping top employees.
If you can offer an attractive, affordable healthcare option to employees, you gain a competitive edge in the job market. More than that, many of you need affordable and flexible healthcare to stay financially solvent.
5. The economy
Small businesses make up 99.9 percent of all U.S. businesses and drive economic growth. At the same time, you’re often the first to feel the impact of economic changes (especially when there’s a decline). The economy can’t exist without small businesses and vice versa.
The Wells Fargo/Gallup Small Business Index from August 2020 looks at the small business owners’ views on the economy and their ability to recover from this pandemic. A few interesting points:
- The majority of owners do not expect to see a full recovery for a year or more.
- Owners are more optimistic now than they were back in April.
- Top issues in this year’s election include the economic impact of COVID-19, the overall handling of COVID-19, and economic policies.
So, even though optimism is rising, there’s a long road to recovery. What that looks depends on election outcomes.
On November 3, small business owners you can shape policies that will impact your business for years to come. So can your employees, so remind them to hit the polls, too. This election day, make small business count.
Related: Report Gives Before and After View of How the Crisis Changed Small Business Priorities
5 Ways the Outcome of the 2020 Election Could Impact Your Small Business – Exemplar Companies, Exemplar Capital, Exemplar Tax, Exemplar Consulting
The global pandemic has had sweeping ramifications for small businesses around the United States, and the 2020 Election is certain to have a significant impact on small businesses.
A majority of America’s small businesses rank the economy as one of the top two issues influencing who they will vote for this fall according to data from the Q3 2020 MetLife & U.S.
Chamber of Commerce Small Business Index.
As Tuesday, November 3 inches closer, questions arising about what a change in administration, or incumbent politicians’ evolving priorities might mean for the small business landscape. Small business owners should continue to pay close attention to campaign promises, issues particularly focusing on tax reform, minimum wage and health care.
No matter what November 3rd brings in terms of outcomes, its almost a certainty that nearly half of the country will be disappointed, if not horrified. The possibilities of civil unrest, COVID resurgence, and economic distress will all impact consumer behavior and business stability.
Below are a few things to take into account when outlining a game plan for your small business after the 2020 election and in the years to follow.
If former Vice President Joe Biden is elected president in November, his inauguration into office would take place approximately three years after one of the most significant revisions to the federal tax laws in generations went into effect.
The Tax Cut Jobs Act reduced the federal corporate income tax from 35% to 21%. That rate reduction, and the Tax Cut Jobs Act elimination of the corporate alternative minimum tax, results in a broad reduction of corporate taxes.
The bill also contained provisions intended to spur investment in the U.S and deter investment offshore.
If Vice President Joe Biden is elected, his corporate tax proposals would reduce the impact of some of the TCJA’s changes. His administration would pursue an increase in the federal corporate income tax rate from the current 21% to 28%, which was the same rate proposed by the Obama administration in both 2012 and 2016.
Any corporate income tax change has the potential to influence corporate actions in numerous ways. Raising the corporate tax rate increases the cost of making investments in the United States. Under a higher tax rate, some investments wouldn’t be made, which leads to less capital formation, and fewer jobs with lower wages.
For Trump, making the tax cuts passed in 2017 permanent in a second term is ly the most significant issue for business owners, as some key provisions will expire in 2025 current law.
For small business owners that are focused on tax issues, if they are happy with the current tax situation, it is ly they would support President Trump’s tax and economic vision.
Stimulation of the Economy
As numerous small businesses were forced to shut down during the COVID-19 pandemic, small business loans and lines of credit were, and still may be, the only source of revenue available right now.
Although the Paycheck Protection Program offered relief to many businesses around the United States, the program closed in August and the SBA is no longer accepting applications from participating lenders.
The two presidential candidates certainly have differing views on the next steps to helping small businesses, and which industries the government should strengthen.
The Trump administration has proposed the Main Street Lending Program, which supports lending to small and medium-sized for-profit businesses and nonprofit organizations that were in sound financial condition before the onset of the pandemic. Loans originated under the program have several features that will help borrowers facing challenges.
The program offers 5-year loans, with floating rates, and principal and interest payments deferred as indicated in the charts below to assist those experiencing temporary cash flow interruptions. To support a broad set of employers, loan size starts at $250,000 and ranges up to $300 million for some loan types.
Additionally, President Trump has expressed interest in possible future bailout packages for the cruise and airline industries.
Former Vice President Joe Biden has singled out industries including clean energy, construction and infrastructure, and 5G telecommunications as key sectors to his economic recovery plan.
Additionally, Biden supports increasing the minimum wage in America to $15/hour, which would generate $120 billion in higher wages for workers by 2024, but at a time where businesses are struggling to remain above water, such a move could widely impact unemployment rates as business would need to rebound more robustly to achieve a similar level of employment. He believes the injection of wages will help stimulate the economy and spur greater business activity and job growth.
Although the idea of raising the minimum wage is noble and commendable, some argue that raising it could have serious and negative unintended consequences, disproportionately harming those it was intended to help.
Capital Gains Taxes
Both presidential candidates have suggested changes to the way capital gains get taxed.
Biden’s tax plan would take away the preferential 20% maximum capital gains rate for those with income levels about $1 million. Instead, investors would have to pay their ordinary income tax rate even on long-term capital gains. With the plan reinstating a 39.6% top tax bracket, the net impact would be to nearly double long-term capital gains liability.
On the other hand, President Trump has talked about lowering the top capital gains tax rate to 15%, which for business owners looking to exit in the next few years, could be significant.
These differences are important for small business owners holding valuable assets that they may be potentially selling in the future. Many entrepreneurs are worried about how fast the tax change could become law, and whether they should be selling their business sooner rather than later.
As older owners plan their exit strategies, they do want to know that they have the option to pass on the wealth they have created to heirs on favorable tax terms in the event of death. Many small business owners could be effected in the event of former Vice President Joe Biden taking office.
Trump’s Tax Cuts and Jobs Act nearly doubled the amount of money that families can pass on free of taxes either in a bequeath or in lifetime gifts. This is known as the gift and estate tax exclusion.
In 2020, an individual can pass on up to $11.58 million to an heir without facing federal estate or gift taxes of 40%.
Biden’s plan would bump the top tax rate on these transfers to 45%, limit the amount people can pass on at death free of taxes to $3.5 million and limit the exclusion to $1 million for gift taxes, according to the Tax Policy Center.
He is also proposing to eliminate the step-up in basis, a provision in the tax code that allows heirs to receive assets valued as of the date of death. This means, an heir who sells the holding right away would pay little to no capital gains taxes on it. Instead, Biden’s proposal would tax unrealized capital gains at death.
Healthcare coverage costs have been skyrocketing for small businesses, and were a major concern for business owners well before COVID-19 arrived. Although both President Trump and former Vice President Biden want to lower health care costs, their approaches differ significantly.
In a second term, much of President Donald Trump’s healthcare platform plans to build upon the administration’s first term efforts, which included an ongoing effort to repeal the Affordable Care Act.
According to the Trump 2020 campaign website, the administration has worked to expand access to healthcare in rural communities, which is an issue that impacts 1 in 5 Americans.
Another key market for small businesses is the expanded access to Association Health Plans (AHPs) allowing small business to pool risk across states.
In contrast to the president’s platform, former Vice President Joe Biden has committed to protecting the ACA, which was shepherded by President Obama and signed into law in 2010.
According to the Biden campaign website, the candidate plans to build on the foundation laid by Obamacare and expand access to healthcare for millions of Americans so that approximately 97% of Americans are insured.
Only time will tell what employers should expect with health care moving forward, which makes it important for small business owners and Human Resources departments to pay critical attention for the foreseeable future.
Exemplar’s Professional Team Can Help Your Business Navigate Change
Exemplar’s team of over 50 professionals nationwide is equipped to help your small business with potential tax and legal changes that may result from the 2020 election. Chat will us here to discuss how this might impact you today!
Small business confidence drops to all-time low after Biden election
Small business confidence has fallen to an all-time low after the election of former Vice President Joseph Biden, according to the Q4 CNBC|SurveyMonkey Small Business Survey.
With a confidence index reading of 48, Main Street's outlook is now below where it was during the second quarter of this year (49), when lockdowns across the nation were increasing amid the first wave of Covid-19. That Q2 number had been the all-time low previous to the just-completed survey, conducted Nov. 10 to Nov. 17 among more than 2,200 small business owners nationally, using the SurveyMonkey platform.
Since CNBC began conducting the survey in 2017, the confidence index reached as high as 62, and had never dipped below the mark of 50 until 2020. While another surge in coronavirus cases continues to hit Main Streets across the nation, and a lack of progress on stimulus talks in Washington, D.C.
exacerbates the issues faced by small business owners, key questions in the confidence index relate to the Main Street outlook on taxes and regulation, and the responses from small business owners are skewed heavily by their political leanings — the small business demographic overall has a conservative skew.
According to SurveyMonkey, approximately 60% of small business owners identify as Republicans.
The Q4 CNBC|SurveyMonkey Small Business Survey reveals the weight of political partisanship after the presidential election on the small business outlook.
CNBC|SurveyMonkey Small Business Survey, Q4 2020
Fifty-three percent of small business owners said they expect tax policy to have a negative impact on their business in the next 12 months, while 49% said government regulation will have a negative impact. By party affiliation, the divide is stark.
Among Republicans, 75% said tax policy will be a negative and 72% said regulations will be a negative. Those numbers drop to 15% (taxes) and 11% (regulations) among Democrats.
These are the highest percentages recorded for the “negative impact” response in the four years of the survey.
Politics and small business
“The immediate shift in forward-looking sentiment that small business owners reported following the election reveals how deeply politics has become embedded in the public's assessment of the economy, and in particular how divided the country is,” said Laura Wronski, research science manager at SurveyMonkey.
“We've seen evidence of that every quarter, with Republican small business owners consistently reporting a higher degree of confidence than Democrats, but the election of Joe Biden is the first opportunity we've had to see whether that would flip if presidential power changed parties — and it did dramatically.
Among Republican respondents, the small business confidence index score fell from 57 in the third quarter to 42; among Democrats, confidence jumped from 46 to 58. The lowest previous confidence reading from Republican business owners was in Q2 2020, at 54.
We've seen evidence of that every quarter, with Republican small business owners consistently reporting a higher degree of confidence than Democrats, but the election of Joe Biden is the first opportunity we've had to see whether that would flip if presidential power changed parties — and it did dramatically.
Laura Wronski, SurveyMonkey research science manager
Overall, the survey finds 34% of small business owners saying Joe Biden will be good for small business, while 55% say he will be bad for small business. By party, 89% of Republican small business owners say Biden will be bad for business, while 86% of Democrats say he will be good for Main Street.
Wronski noted that part of the small business confidence being measured every quarter is owners' assessments of what things will look a year from now policy changes made at the federal level, and those questions are subject to a lot of uncertainty in any immediate post-election period, before the new administration takes power and before their policy agenda is fully fleshed out.
“We don't yet know how Biden will work with Republican leaders to carry out his agenda, and we don't even know what his specific policy proposals will be yet, so we're really in wait-and-see mode, and that lack of certainty is always a tricky situation for small business owners to operate in,” she said.
Divided government can be good for Main Street
With the Senate races in Georgia still to be decided in January — and control of the Senate up for grabs — it remains to be seen how much political capital the Democratic Party will have even with the White House won.
The stock market has continued to rally a belief that divided government is good for corporations, and will limit a President Biden's ability to repeal Trump tax cuts.
Small business experts and owners say there is reason to believe Main Street also will perform well under a divided federal government.
“If we do indeed end up with a Republican-controlled Senate, many feel that this is a win-win scenario,” said Tony Nitti, a federal tax partner at RubinBrown, who works with many entrepreneurs.
“Clients viewed the election as a bit of a 'Sophie's Choice': they preferred the stability and potential pandemic response of a Biden presidency, but wanted the tax regime of a Trump second term.
With these results, there's a bit of a 'best of both worlds' feel,” Nitti said, explaining that a Biden administration may address the pandemic in a more thoughtful and resolute manner, and that the Republican controlled Senate will keep any significant tax increases in check.
“In a divided government scenario, and the way things are shaping up in the House, it will be very difficult to raise taxes, and especially so on small businesses,” said Karen Kerrigan, president and CEO of trade group Small Business & Entrepreneurship Council. “The House margins will be so tight with respect to majority control.”
Kerrigan noted that during much of the Obama presidency, the environment was one of divided government and it was one in which capital access increased for small businesses.
“The Great Recession created opportunities for bipartisan collaboration, and one of those areas impacted was access to capital and the need to boost new business creation given the fact that more firms were closing than starting.
The Obama Administration took an early interest and lead in making investment crowdfunding legal, along with other key elements of the Jumpstart our Businesses Act (JOBS Act), which has had a positive impact on capital markets to this day,” she said.
Kerrigan said small business owners are busy people, and un Wall Street, they do not necessarily follow the nuances of divided government.
“During the campaign, they read or heard about Biden policies that could impact their business, from taxes to workplace regulation and more, and remain concerned about possible new costs on top of their current challenges.
It is not surprising that their confidence in the immediate aftermath of the election has dropped,” she added.
But she expects the confidence gap to narrow, though it will take time, as more conservative business owners are able to absorb and process information about the new political reality and see that the actions taken by a divided government which do not reflect some of the more “intrusive policies” outlined in the Biden agenda.
Ravin Gandhi, founder and CEO of Chicago-based housewares manufacturing company GMM Nonstick Coatings said he is encouraged by the outlook.
Infrastructure and a Covid-relief stimulus bill are both bipartisan needs, while taxes will ly remain lower on business, which will be helpful as the economy struggles to recover from the pandemic.
He said the fact that Biden “barely beat” Trump, should also limit the left's ability to over-regulate. And for any business that imports or exports — his uses overseas manufacturing — an end to Trump's trade wars is a positive.
Covid lockdowns and small business
Small business owners widely support (83%) a new stimulus package from the federal government, according to the survey — including 76% of Republican respondents and 96% of Democratic respondents. Fifty percent of small business owners said direct payments to individuals should be included in any new stimulus; 42% said mortgage/rent relief; 41% said an extension of the PPP loan program.
But small business confidence decreased from last quarter solely because of the forward-looking factors including taxes and regulation, Wronski noted, not because of a crash in current business conditions, the confidence index saw earlier this year when coronavirus restrictions were introduced.
“There is not going to be a national shutdown policy,” Kerrigan said. “President-elect Biden has a mix of advisors on the Covid-19 issue, with several communicating that our economy can continue to 'stay open' and it can be done safely with the right precautions. In addition, the majority of Democrat governors would also oppose this top-down approach.”
Small business owners' assessment of current business conditions was at least stable from Q3 to Q4, and even ticked up slightly on some measures, including more business owners describing conditions as “good” and less describing it as bad. Those expecting greater revenue in the next year — and citing recent revenue and demand increases — were also more numerous in Q4, while the hiring outlook was more or less stable quarter over quarter.
“That's pretty remarkable given how long so many businesses have had to operate while working from home, dealing with decreased demand, implementing new policies and safety procedures, and everything else they've had to handle thanks to the pandemic,” Wronski said.
The CNBC|SurveyMonkey Small Business Survey for Q4 2020 was conducted across more than 2,200 small business owners Nov. 10-Nov. 17. The survey is conducted quarterly using SurveyMonkey's online platform and its survey methodology.
The Small Business Confidence Index is a 100-point score responses to eight key questions. A reading of zero indicates no confidence, and a score of 100 indicates perfect confidence. The modeled error estimate for this survey is plus or minus 2.
5 percentage points.
“,”author”:”Eric Rosenbaum”,”date_published”:”2020-11-30T11:00:01.000Z”,”lead_image_url”:”https://image.cnbcfm.com/api/v1/image/106801065-1606155104318-gettyimages-1229090791-ryanclosedstores5biz.jpeg?v=1606155570″,”dek”:null,”next_page_url”:null,”url”:”https://www.cnbc.com/2020/11/30/small-business-confidence-hits-all-time-low-after-biden-election.html”,”domain”:”www.cnbc.com”,”excerpt”:”Main Street business confidence hits an all-time low in the CNBC|Survey Monkey Small Business Survey for Q4 2020. The reason? Politics.”,”word_count”:1611,”direction”:”ltr”,”total_pages”:1,”rendered_pages”:1}