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US Government Efforts for Small and Medium Businesses Affected by the Coronavirus

As the United States and the world have been thrown into uncertainty by the spread of the coronavirus, small and medium-sized businesses, including startups, have been particularly affected as consumer habits have drastically shifted.  The US government has already taken some large actions to address the effects of coronavirus, including some measures to try to help small and medium-sized businesses, and even larger stimulus measures are under development.  

Coronavirus Stimulus Bill #1 (HR 6024)

On March 6, President Trump signed the Coronavirus Preparedness and Response Supplemental Appropriations Act (HR 6024), the first Congressional effort to address the growing health crisis.  Among other provisions, the new law allows businesses impacted by coronavirus to receive Small Business Disaster Loans from the Small Business Administration (SBA).  This provision is expected to result in $7 billion for eligible small businesses. 

Small Business Administration Actions

On March 11, President Trump gave an address to the nation in which he directed the SBA to use its authority to give low-interest loans to small businesses in states affected by the coronavirus.  The SBA released updated criteria for states to request access to loans for small businesses affected by coronavirus.  The new criteria makes it easier for states to qualify for small business loans by specifying that a state only needs to show that five small businesses in its state have suffered substantial economic injury to qualify.  The revised criteria also makes loans available statewide in affected states, rather than the previous county-by-county assessment.   

Paid Leave in Coronavirus Stimulus Bill #2 (HR 6201)

On March 18, Congress passed and President Trump signed the Families First Coronavirus Response Act (HR 6201).  Among the new law’s provisions to address the spread of the coronavirus, there are a few provisions that will impact small and medium-sized businesses.  Section 1302 of the new law expands the Emergency Family and Medical Leave Expansion Act (FMLA) to require that employers of fewer than 500 employees provide 12 weeks of job-protected leave for employees who have a child whose school or caregiver is unavailable because of coronavirus precautions. The first ten days of leave may be unpaid, but the following days of leave will include a benefit of at least two-thirds the normal pay-rate, capped at $200 per day or $10,000 in total. Employers with fewer than 50 employees can request an exemption from the Department of Labor if this requirement would put their business at risk. Section 7002 of the new law provides a refundable tax credit for 100% of the wages paid under these requirements.  

The new law also expands employer requirements for paid sick leave.  Section 5102 of the law requires that employers with fewer than 500 employees must provide two weeks of paid sick leave (80 hours for full-time workers, and adjusted hours for part-time workers).  During this time, employees will receive their full pay, capped at $511 per day, if they are subject to a mandatory quarantine, have been advised to self-quarantine, or are experiencing symptoms of coronavirus.  Section 7001 of the law provides a refundable tax credit for 100% of the wages paid for this required sick leave. 

Qualified self-employed individuals are also eligible for a tax credit if they are affected by the coronavirus under Section 7002 of the law. 

Ongoing Efforts for Further Stimulus Measures

Despite these efforts to address the impacts of coronavirus on small and medium-sized businesses, there is a bipartisan recognition across the U.S. government that more needs to be done in response to this unprecedented health and economic situation. In his March 11 speech, President Trump requested a $50 billion increase in SBA’s small business loan program. The Treasury Department has sent a proposal to the Senate for large economic stimulus measures, which reportedly includes $300 billion for the creation of a small business interruption loan program.

On March 19, the Senate released the CARES Act to provide further stimulus, which includes a number of large measures to aid small and medium-sized businesses impacted by the coronavirus.  The bill expands the availability of SBA small business interruption loans to businesses that employ under 500 people. Businesses could use these federally guaranteed loans for payroll, sick leave, mortgage payments, rent, utilities, and other debt obligations incurred before the period of the loan.  Portions of these loans would be eligible for forgiveness if they are used for payroll for employees, and the employees are retained through the end of the crisis. The bill also includes $240 million for SBA Small Business Development Centers and Women’s Business Centers for counseling and training of small businesses impacted by the coronavirus. The House of Representatives is also reportedly working on its own large stimulus package, which will include relief for small businesses. 

State and local governments are also acting to aid small and medium-sized businesses affected by the coronavirus.  New York City is providing zero-interest loans of up to $75,000 to businesses of fewer than 100 people that have lost at least 25% of their sales due to coronavirus, and offering businesses of fewer than five employees grants to cover 40% of their payroll costs for two months.  Many other cities and states are implementing similar programs. Governor Gavin Newsom (D-CA) has requested over $1 billion in federal funding for California’s ongoing response to the coronavirus. For small and medium-sized businesses, Gov. Newsom’s request includes guaranteed loans made by U.S. banks to small and medium-sized businesses, direct cash assistance and zero-interest loans to maintain small businesses, and rental assistance for businesses that are impacted by the shutdown.  


Some, if not all of society’s most useful innovations are the byproduct of competition. In fact, although it may sound counterintuitive, innovation often flourishes when an incumbent is threatened by a new entrant because the threat of losing users to the competition drives product improvement. The Internet and the products and companies it has enabled are no exception; companies need to constantly stay on their toes, as the next startup is ready to knock them down with a better product.