The 2 Trillion Dollar Package and What to Means for Small Businesses

The coronavirus has hit the nation hard, forcing several businesses to close, leaving entrepreneurs uncertain as to what their financial futures will be and putting millions of workers out of work. To counter some of the anxiety businesses and workers are experiencing, the United States has put a $2 trillion package into effect, the largest rescue package in U.S. history.  It includes generous unemployment benefits, stimulus checks, and loans, and it is expected to have a major impact on the economy.

Let’s take a closer look at what the package means for small businesses.

Paycheck Protection

The program sets aside $349 billion to support small businesses allowing them to maintain their payroll as well as some overhead expenses. Any business, nonprofit, veteran’s organization or tribal business that has under 500 employees can receive a Small Business Interruption loan of up to 2.5 times their average payroll, or a maximum of $10 million.

The loans may be used to cover payroll, benefits, salaries, interest payments, rent, and utilities. Fees are waived, and collateral is not required. Payments are deferred for anywhere from six months to a year.

Tax Changes

When it comes to taxes, the stimulus package will create a new Employee Retention Credit against employment taxes. This encourages businesses to retain their employees during periods when business is fully or partially suspended. However, the credit will not be available for businesses that received the Small Business Interruption Loan.

Furthermore, employer payroll taxes will be deferred for 2020. Fifty percent of these taxes will be due in 2021, and the other 50% will be due in 2022. Businesses that are operating at a loss may have taxes deferred for up to five years.

The Inclusion of Not-for-Profits

ICSB called in its Audacious Plan to save small businesses that all below 50 employees become tax-exempt as not-for-profits for 10 years. Small businesses are the lifeblood of their communities. Aside from selling necessary products or services, they provide social and community cohesion as well as jobs. Times of crisis like these hurt small businesses the most, which in turn harms society on a human level.

While the $2 trillion plan is historic in and of itself, what’s even more remarkable is the inclusion of nonprofits in the plan. Never before did the SBA bring nonprofits into the mix under the 7A. This levels the playing field for non-profits and small businesses.

It should be noted that here, the comparisons are not far removed. Many nonprofits do a service to humanity. Similarly, small businesses often operate at a loss, especially during times of crisis. In spite of this, they play their part in keeping their staff employed, therefore stimulating the economy.

The 2 Trillion plan is a magnanimous move on the part of the government, and it sets standards that have never before been initiated. It is hopeful that it works to get small businesses and workers through this difficult time as quickly and seamlessly as possible. 

ICSB wishes entrepreneurs, SMEs, and not-for-profits the best of luck, making it through this crisis.

Article written by:

Dr. Ayman El Tarabishy
ICSB Executive Director
Deputy Chair of Department of Management at George Washington University School of Business

In this short essay, I would like to explain why a behavioral perspective on corporate social responsibility (CSR) is useful in helping us understand and possibly also offer solutions for some of the effects of the COVID-19 pandemic and, more generally, other natural environmental disasters and stressors.

Our research over the past 15+ years has focused on behavioral CSR, which involves investigating CSR at the individual level of analysis in addition to the firm and institutional levels. In other words, it draws on the micro literature (e.g., organizational behavior, human resource management, industrial and organizational psychology) to examine the psychological foundations of CSR. This is not a typical perspective given that in our review or the CSR literature we discovered that only 4% of the articles in the 17 journals included in our content analysis focused on the individual level of analysis (Aguinis & Glavas, 2012).

Our research focuses on a behavioral perspective on CSR because it is useful in that it allows us to understand why, when, and how individuals perceive and react to CSR—and choose to lead or engage in CSR initiatives—in particular ways (Aguinis, 2011). In turn, these individual-level perceptions and reactions have effects that permeate throughout the entire organization and beyond (e.g., customers, suppliers, society at large). Let me offer an illustration.

Consider the following reactions to COVID-19 by two different firms—both engaging in CSR activities. Firm A does not integrate CSR into its strategy, routines, and operations, but Firm B does. For example, Firm A engages in some form of philanthropy to address the crisis, which is certainly a laudable and noble effort. On the other hand, Firm B integrates CSR into all activities and CSR permeates accounting, finance, human resources, marketing, operations, sales, and strategy. CSR is not something Firm B does, it is who they are. A behavioral perspective to CSR allows us to understand that these two approaches, which we label peripheral CSR and embedded CSR (Aguinis & Glavas, 2013), lead to very different outcomes. Embedded CSR enhances perceptions of organizational justice, employees’ positive selves (e.g., improved self-concept), and allows individuals to present more of their whole selves. So, it leads to improved employee engagement, job satisfaction, organizational commitment, and organizational citizenship behaviors. A behavioral CSR lens allows us to understand that not all CSR-related reactions and interventions in response to COVID-19 will necessarily lead to similarly positive outcomes. Positive outcomes are more likely to take place if CSR is embedded rather than peripheral. A behavioral perspective to CSR allows us to understand why.

Our more recent research also adopting a behavioral perspective on CSR is also useful for understanding why employees need their firms to react in certain ways as a consequence of COVID-19. For example, in our recent Journal of Management article (Aguinis & Glavas, 2019), we described the general process through which individuals give meaning to ongoing experiences , what is called sensemaking. The actions that firms and governments take in reaction to COVID-19 are what we call “sensemaking factors.” During a time of crisis, individuals scan the environment and the way in which they perceive these sensemaking factors determine not just their attitudes toward their firms, but also their behavior such as whether they will choose to leave the firm or stay (Ng, Yam, & Aguinis, 2019).

I close this essay with the following questions based on a behavioral perspective to CSR that I hope will be fruitful in moving the conversation forward:

How are leadership characteristics related to firms’ reactions to COVID-19?
What theories in human resource management and organizational behavior can be used to improve our understanding of the relation between CSR and COVID-19 (and other pandemics natural environmental disasters)?
What are the effects of programs in reaction to COVID-19 whereby employees engage in community service activities while receiving compensation from their firms?
Is there a relationship between diversity and inclusion and responses to COVID-19?
How does the behavior of individual employees promote or prevent the successful implementation of CSR interventions in relation to COVID-19?
What organizational systems and process prevent the successful implementation of CSR initiatives related to COVID-19?

I look forward to your reactions and comments!

References

[available at http://www.hermanaguinis.com/pubs.html]

Aguinis, H. 2011. Organizational responsibility: Doing good and doing well. In S. Zedeck (Ed.), APA handbook of industrial and organizational psychology: vol. 3, 855-879. Washington, DC: American Psychological Association.

Aguinis, H., & Glavas, A. 2012. What we know and don’t know about corporate social responsibility: A review and research agenda. Journal of Management, 38: 932-968.

Aguinis, H., & Glavas, A. 2013. Embedded versus peripheral corporate social responsibility: Psychological foundations. Industrial and Organizational Psychology: Perspectives on Science and Practice, 6: 314-332.

Aguinis, H., & Glavas, A. 2019. On corporate social responsibility, sensemaking, and the search for meaningfulness through work. Journal of Management, 45: 1057-1086.

Ng, T. W. H., Yam, K. C., & Aguinis, H. 2019. Employee perceptions of corporate social responsibility: Effects on pride, embeddedness, and turnover. Personnel Psychology, 72: 107-137.

That term “social distancing” is an interesting one, and perhaps even a bit ambiguous or confusing. Using the word “social” doesn’t clearly capture what we are being asked to do. 

It felt like one day we were at dinner with our friends hugging, laughing, putting our arms around each other. Then it appeared as if overnight, we were all 6 feet apart—more than at arm’s length. That distance can feel sad because we long for human connection, touch, and being in close proximity to one another. We are social creatures by nature. But one of the tiniest of all organisms has built walls between us in a way, yet that distance is one of the only ways we can defeat it.

Medical experts at WHO, the United States CDC, the White House Coronavirus Task Force, and other organizations universally agree that we need to maintain space—6 feet, the distance scientists believe a sneeze can travel—from one another. It’s the minimum amount of space we need to keep between us to slow or stop the spread of this virus. They call it “social distancing.”

That term “social distancing” is an interesting one, and perhaps even a bit ambiguous or confusing. Using the word “social” doesn’t clearly capture what we are being asked to do. When we think of that word social, we actually get the idea of gathering together as in “socializing.” How can you be “social” but yet distance yourself from others? The words seem to contradict each other. What we are really being asked to do is “physical distancing.” There can really be nothing “social” about slowing the impact of COVID-19. We must heed the collective voice of sound advice universally given by medical professionals. And no matter what term they use, the meaning is the same—keep your distance from other people to stop the spread of disease.

But does our physical distance mean that we can no longer be social? The internet has proved that the answer is a resounding NO. Virtual dance parties streamed live, neighbors in cities singing and playing music to one another on balconies, neighborhoods conducting Zumba classes with everyone safely within their own yards, having cocktails via internet conferencing—it’s the very essence of being social. Despite having to keep our physical distance, we are still connecting with one another on a social level in all sorts of ways. In fact, that distance seems to have sparked social creativity born out of necessity—finding ways to do things together that we might not have thought of before, even with people on the other side of the world. Even while the physical world is waging a battle around us, the digital world mercifully allows us to stay connected, especially at a time when people need it the most. It isn’t really social distancing that much after all.

Also, read Dr. Winslow’ s Article on MEDIUM (click here)

Article written by:

Dr. Ayman El Tarabishy
ICSB Executive Director
Deputy Chair Department of Managament
George Washington University School of Business

Dr. Winslow Sargeant
President-Elect
ICSB