WASHINGTON – Today, U.S. Senators Chris Coons (D-Del.) and Ben Cardin (D-Md.), Ranking Member of the Small Business Committee, introduced legislation that would ensure that every small business with a loan from the Small Business Administration, or SBA, would be relieved of their loan payments—including principal, interest, and fees—for the next six months. Senators Coons and Cardin are actively working to include this bill in the third legislative package currently being drafted to respond to the coronavirus. The Small Business Debt Relief Act of 2020 would be a lifeline for a wide range of American small businesses fighting for their survival over the coming months.
In addition to Senators Coons and Cardin, original cosponsors of the legislation include U.S. Senators Amy Klobuchar (D-Minn.), Tammy Duckworth (D-Ill.), Ron Wyden (D-Ore.), Maria Cantwell (D-Wash.), Ed Markey (D-Mass.), Jeanne Shaheen (D-N.H.), Jon Tester (D-Mont.), Kirsten Gillibrand (D-N.Y.), Angus King (I-Maine), Mazie Hirono (D-Hawaii), and Maggie Hassan (D-N.H.).
“Small businesses in Delaware and across the country are already facing devastating impacts from the economic fallout of COVID-19,” said Senator Coons, a member of the Senate Small Business Committee and ranking member of the Financial Services and General Government Appropriations Subcommittee, which funds the SBA. “We have no time to waste to help small businesses and the millions of employees whose livelihoods are at stake right now. The scale and speed of the federal government response will determine the future of independent restaurants, hotels, retailers, childcare centers, and so many other small businesses across the country.”
Senator Coons called for the Small Business Debt Relief Act to serve as part of a comprehensive relief package for small businesses. “While we must ensure that businesses that already hold government-backed loans get immediate relief, we also must reach the broader small business community. This bill would encourage new SBA loans by offering payment relief to borrowers that take out loans in the next six months. I’m also working with Senate Small Business Committee Chair Marco Rubio (R-Fla.) and Ranking Member Ben Cardin (D-Md.) on fee waivers and increased guarantees to accelerate the availability of credit to a broad range of small businesses.”
"Our first priority during this unprecedented time is to make sure that existing SBA borrowers are supported to ensure that our country's small businesses are not crippled by the time Main Street begins opening their doors again," said National Association of Government Guaranteed Lenders President & CEO, Tony Wilkinson. "With Senator Coons' legislation, SBA borrowers will have one less- but very significant- expense that they will need to worry about during this stressful time. Right now, small business borrowers all over the country are worried about how to make their monthly payment on their SBA loan, and Senator Coons' thoughtful leadership will take some of that fear off the table."
“The SBA Microloan Program provides the technical assistance and capital, including loans up to $50,000, that many minority, women, veteran and low-income entrepreneurs have difficulty accessing from traditional financial institutions, even during the best of economic times,” said Bob Rapoza, spokesperson for the Friends of the SBA Microloan Program. “We applaud the lifeline this legislation will provide to some of our nation’s smallest and hardest hit businesses that are experiencing the brunt of the COVID-19 crisis, including significant revenue shortages, supply chain issues, and inability to meet payroll, mortgages, rent and other building expenses.”
The Small Business Debt Relief Act would assist borrowers in three major SBA lending programs:
· The 7(a) Loan Guarantee Program consists of $95 billion of outstanding loans. The two industries with the largest share of that volume are restaurants and hotels, which are among the hardest-hit by COVID-19. Child care centers, dental practices, and medical practices also rely heavily on the program.
· The 504 Certified Development Company loan guarantee program provides long-term fixed rate financing for major fixed assets, such as land, buildings, equipment, and machinery and microloan programs. The total of outstanding 504 loans is $26 billion.
· The Microloan program provides loans of up to $50,000 to small businesses and nonprofit child care centers, via nonprofit intermediary lenders. The total of outstanding microloans is more than $560 million.
The bill would immediately support the approximately 320,000 small businesses across America that participate in SBA’s 7(a), 504, or microloan programs. The Small Business Debt Relief Act is also endorsed by the Friends of the SBA Microloan Program.
A copy of the full bill text can be found here.
A one-pager of the bill can be found here.