Investment

New Texas law, and proposed federal law, could offer help to struggling small businesses.

When Hurricane Harvey hit Texas, four years ago, it left $ 125 billion dollars in damage. With this, and more disasters to follow, struggling small businesses are left with few options to survive.

Now, a new law in Texas, and proposed federal law, could offer help. SB 678 gained bipartisan support, when it passed the Texas legislature, in the last session.

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Modeled under a Florida law, it sets the framework for emergency small business debt bridges, up to $ 50,000 dollars, to help them cope. Federally, the proposed LIFT UP Act could make emergency assistance, taken by small businesses, more help than a hindrance.

Janice Jucker, of Three Brothers Bakery, jokes with her and her husband Bobby, the king and queen of disaster.

“We went through four floods, fires, storms, pandemics, and one freezing,” he half joked.

Those disasters left the business with hundreds of thousands of dollars worth of emergency loans, used to rebuild and reopen. It will take a lot of pastry, however, to pay for that money because government assistance comes with a catch.

The simplified explanation is that, in good times, healthy businesses can get loans designed to help them grow. That debt can be forgiven up to nine months before repayment begins.

In contrast, ‘Economic Impact Disaster Loans’ designed for businesses in trouble, any deferred payment includes interest that starts to add up immediately.

“Many small businesses that have these loans are no longer aware that deferrals accrue interest, creating a deeper hole,” Jucker said, “It makes it worse.”

LIFTUP, or “Loan Interest Forgiveness for Taxpayers under the Pandemic Act ‘, was introduced to Congress by Texas lawmakers Lizzie Fletcher and Michael McCaul. It will provide disaster loans with both, and better, terms that get businesses healthier.

Essentially, it will require repayment, without adding heavy interest bills when businesses can’t handle it, and potentially lighten the debt load that goes into the way of growing and surviving.

“It’s a tsunami of a problem, preparing to happen,” Jucker warned, “I think America’s economic recovery will slow.”

Texas SB 678 creates a framework, for emergency loans, but state legislators still need to decide the source of funding.

Meanwhile, LIFTUP was introduced in February and is still in the hands of the House Committee on Small Business.

In a statement, Rep. Fletcher, who is leading the effort, said, “This is a common and meaningful way to help alleviate the financial burdens of our small businesses in this challenging time.”

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