Experts: Even with latest stimulus, more is needed to keep local businesses afloat

A new fiscal stimulus bill signed into law Dec. 27 will provide much-needed relief to Kern County businesses, which have been struggling to survive over the last few months.

Still, the economic toll caused by the coronavirus pandemic has left many employers in difficult positions, and economic experts say more funding will be needed before widespread vaccinations become available.

“There’s a huge spectrum of individual situations that is really, really, difficult to try to lump into one category, but it’s a broad spectrum across the board,” said Kelly Bearden, director of the Cal State Bakersfield Small Business Development Center. “As far as a devastating impact on businesses in general, I would say it’s the worst that’s happened, at least in my lifetime.”

The $2.3 trillion Consolidated Appropriations Act of 2021 is meant to ease some of the financial burden caused by economic hardships of COVID-19. The bill includes $900 billion in stimulus funding and $1.4 trillion to fund the government for the remainder of the fiscal year.

While everyday citizens may recognize the act as the means by which they receive $600 stimulus checks, business owners are eyeing the $284 billion set aside for forgivable loans in a “second draw” of the Paycheck Protection Program.

Crucially, the PPP sent $900 million in forgivable loans to Kern County businesses in the first round of funding, according to an analysis by The Californian. In the second draw, only businesses with 300 or fewer employees that experienced a 25 percent drop in revenue in one quarter of 2020 will be eligible.

The California Small Business COVID-19 Relief Grant Program will also provide $475 million in aid to local businesses. Now employers will need to figure out if they are eligible for certain funds, and how they can apply those funds to their firms.

“We know the framework, we know how it’s going to work, we just don’t know if it’s going to work for everybody or each individual

business,” Bearden said.

Despite the high figures, some businesses may struggle to survive even with the additional aid.

“I think the demand is going to significantly outstrip the funding available for both programs,” Greater Bakersfield Chamber of Commerce President and CEO Nick Ortiz wrote in an email to The Californian.

He added that another federal stimulus would likely be needed to provide emergency liquidity to employers, especially if economic restrictions remain in place for a significant part of 2021.

“Small businesses are the backbone of our economy, and many will be shuttered for good due to the pandemic,” he continued. “We need to find ways of supporting businesses as they reopen, incentivizing the next generation of entrepreneurs and reducing regulatory barriers to power economic growth.”

For the county of Kern, which has seen sales tax revenue decline and could experience a significant dip in property tax revenue in 2021, the federal stimulus package eased some of its financial burden, but fell short elsewhere.

While the bill extended a deadline that would have forced the county to spend all $157 million it received from the original economic stimulus, known as the CARES Act, by Dec. 30, it did not provide financial support for local governments that have experienced shortfalls in tax revenue.

“We would have hoped to at least have a mechanism to recognize and backfill some of that lost revenue,” said Chief Operations Officer James Zervis. “As being one of the larger, if not the largest employer in the county, we have a lot of employees that we provide for. And obviously all of the local governments are dealing with economic impacts in lost revenue because of the pandemic.”

Like many others in Kern County, local officials and business leaders will be keenly watching the federal government for a potential third stimulus package, and any indication that the pandemic has begun to recede.

“The economics aren’t going to change until everything else changes,” Zervis said. “As long as we’re on shutdown, and restaurants are closed and economic activity is curtailed, we’re going to feel those impacts.”