WASHINGTON – U.S. Senator Chris Coons (D-Del.) and his Democratic colleagues on the U.S. Senate Committee on Small Business & Entrepreneurship today released a new relief proposal to help small businesses address public health-related challenges from the novel coronavirus (COVID-19) outbreak.
In addition to Coons, the Democrats on the committee are Senators Ben Cardin (D-Md.), Maria Cantwell (Wash.), Jeanne Shaheen (N.H.), Ed Markey (Mass.), Cory Booker (N.J.), Mazie Hirono (HI), Tammy Duckworth (Ill.), and Jacky Rosen (Nev.). The Democrats’ measure will be introduced when the Senate gavels into session this afternoon.
Click here to download a copy of the proposal; the full text follows:
COVID-19 RELIEF for Small Businesses Act of 2020
SENATE SMALL BUSINESS COMMITTEE DEMOCRATS
American small businesses are facing an unprecedented economic disruption due to the novel coronavirus (COVID-19) outbreak, with reports of small businesses experiencing major difficulties. Due to the nature of this economic disruption, the existing disaster recovery programs for small businesses are insufficient. Congress must find new, innovative ways to help our nation’s small businesses survive the coronavirus outbreak, and build resiliency for the future.
Senate Small Business Committee Democrats propose the COVID-19 RELIEF for Small Businesses Act of 2020 to improve and leverage the tools available at the Small Business Administration (SBA) to support small businesses, and create new tools to address the unprecedented pressure that small businesses face, including waiving the disaster declaration requirements so that businesses in all states have immediate access to Economic Injury Disaster Loans.
Further, Senate Democrats support true small business relief through the tax code. These proposals are outside the scope of the Small Business Committee, but we look forward to working with the Finance Committee to ensure tax relief provides the most support possible to the small businesses that need it the most. Details on the proposals for the SBA are below.
The federal government has a duty to prevent any small business from falling through the cracks during this public health emergency. For small businesses that are denied an Economic Injury Disaster Loan (EIDL), the bill would create a new grant program to award up to $50,000 to small businesses that meet the following criteria:
The grants may be used to address any purpose that would have been allowable under the EIDL program, including:
Small Business Debt Relief
Small businesses in industries heavily impacted by coronavirus—such as travel, tourism, and hospitality—are experiencing dramatic cash flow problems. SBA borrowers in the 7(a), 504, and microloan programs are disproportionately in industries likely to be hurt by this crisis. By volume, hotels and restaurants are by far the two largest industries represented. The government is ultimately responsible for guarantees on all of these loans, and has a vested interest in averting mass defaults.
To provide immediate relief to small businesses with SBA-backed loans, the bill would:
SBA Major Loan Programs
Unlike large companies, small businesses operate on narrow margins, which makes them more vulnerable to long economic disruptions. Every day, small businesses experiencing disrupted supply chains and mandatory closures for social distancing are losing money—inching toward going out of business.
To get capital to small businesses, the bill temporarily tailors SBA programs to:
Direct Lending Program
In addition to leveraging existing SBA programs and the thousands of lending partners that deploy capital to small businesses, small businesses will need a flexible resource for accessing affordable capital to sustain operations, pay workers forced to stay home from work due to the illness, address supply chain interruptions, and other outbreak-related expenses.
This bill establishes a temporary direct loan program at SBA for small businesses located in a State or Territory with a confirmed or presumed positive case of COVID-19. The Business Stabilization Direct Loan Program would:
The federal government must grant flexibility to small business federal contractors and expedite the contract award process so affected contractors can begin generating revenue. The bill would:
SBA resource partners, including Small Business Development Centers (SBDCs), Women’s Business Centers (WBCs), and the SCORE program, provide vital mentorship, guidance and expertise to small businesses. These organizations will need to hire more staff to deal with the increasing number of small businesses that need their help to respond to COVID-19. The bill would:
Community Advantage Program
We know that, in times of economic downturn or uncertainty, underserved markets often experience an even larger credit crunch.
To increase lending to underserved markets, the bill would:
This legislation builds on lessons learned over the past nine years, creating guardrails for responsible growth and increasing oversight to mitigate risk.
Intermediary Lending Program
Responding to the economic impact of this public health crisis requires fast, flexible and targeted deployment of capital to the communities most affected. The bill would reinstate and make permanent the Intermediary Lending Program (ILP), which would give direct loans of up to $1.5 million to nonprofit lenders, who then lend to small businesses in their communities with loans of up to $200,000.
The program would:
Small Business Resiliency
After small businesses make it through this difficult period, the federal government must do all it can to ensure that they are more resilient and better prepared for the next economic disruption, whether it’s a natural disaster or a cyberattack on their business. The bill would:
The provision is similar to rules in SBA’s physical disaster loan program that allow businesses to take out an additional 20 percent to pay for hazard mitigation to better withstand the next natural disaster.
Office of Emerging Markets
After the Great Recession, SBA created an office to bring “greater unity, focus and effectiveness to SBA’s efforts” to reignite economic opportunity for underserved, or emerging, markets. The office was unique, did great work, and was considered vital by stakeholders, however it is now vacant.
It is vital that the additional resources and tools provided to SBA be deployed in a strategic manner to ensure that SBA-backed capital is directed to the communities that struggle the most to access capital in the private markets.
The bill would create the Office of Emerging Markets within SBA to:
Innovation Centers Program
Underserved communities have been left out of many of the economic gains that have occurred since the Great Recession. Many of these communities are now expected to be among the hardest hit by COVID-19. As our economy recovers from this pandemic, we must ensure that these communities are not left even further behind.
The bill would create the Innovation Centers Program within SBA to:
Small Business Innovation Research & Small Technology Transfer Research Programs
The Small Business Innovation Research Program and the Small Technology Transfer Research Program allow government agencies to partner with high-tech small businesses to conduct vital government research in areas, such as renewable energy, cybersecurity and biosciences.
The bill would make the programs permanent, providing certainty that roughly $3.5 billion in seed capital continues to flow into local our communities annually, require civilian agencies to accelerate the timelines for awards to as close to 90 days as possible so small businesses are able to act quickly.
The State Trade Expansion Program (STEP) awards funds to be used to increase small business exporters and their sales in their state. Entities who have been awarded funds under the program in fiscal years 2018 or 2019 will struggle to use all of those funds before the deadline due to the impacts of COVID-19 on international trade and exports. Currently, unobligated funds cannot be carried over into the next fiscal year.
This bill would support small business trade and exporting by allowing states to carry over STEP funds from FY18 and FY19 into FY21 to ensure that they still have access to that money once normal business resumes.