COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options

Changes from January 15, 2021 to February 17, 2021

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COVID-19 Relief Assistance to Small
~~January 15~~February 17, 2021 , 2021
Businesses: Issues and Policy Options
Robert Jay Dilger
The U.S. Small Business Administration (SBA) administers several types of programs to support The U.S. Small Business Administration (SBA) administers several types of programs to support
Senior Specialist in Senior Specialist in
small businesses, including direct disaster loan programs for businesses, homeowners, and small businesses, including direct disaster loan programs for businesses, homeowners, and
American National American National
renters; loan guaranty and venture capital programs; management and technical assistance renters; loan guaranty and venture capital programs; management and technical assistance
Government Government
training programs; and contracting programs. Congressional interest in these programs has training programs; and contracting programs. Congressional interest in these programs has

always been high, primarily because small businesses are viewed as a means to stimulate always been high, primarily because small businesses are viewed as a means to stimulate
Bruce R. Lindsay
economic activity and create jobs, but it has become especially acute in the wake of the economic activity and create jobs, but it has become especially acute in the wake of the
Specialist in American Specialist in American
Coronavirus Disease 2019 (COVID-19) pandemic’s widespread adverse economic impact on the Coronavirus Disease 2019 (COVID-19) pandemic’s widespread adverse economic impact on the
National Government National Government
national economy. national economy.

This report provides a brief description of the SBA’s programs and examines congressional This report provides a brief description of the SBA’s programs and examines congressional
Sean Lowry
action to assist small businesses during and immediately following the Great Recession (2007- action to assist small businesses during and immediately following the Great Recession (2007-
Analyst in Public Finance Analyst in Public Finance

2009) and during the COVID-19 pandemic, including the following: 2009) and during the COVID-19 pandemic, including the following:
 

P.L. 116-123, the Coronavirus Preparedness and Response Supplemental Appropriations P.L. 116-123, the Coronavirus Preparedness and Response Supplemental Appropriations
Act, 2020, provided the SBA an additional $20 million for SBA disaster assistance administrative expenses Act, 2020, provided the SBA an additional $20 million for SBA disaster assistance administrative expenses
and made economic injury from the coronavirus an eligible expense for SBA’s Economic Injury Disaster and made economic injury from the coronavirus an eligible expense for SBA’s Economic Injury Disaster
Loans (EIDL). Loans (EIDL).
 P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), among other  P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), among other
provisions, provided $349 billion to support SBA’s Section 7(a) lending programs and create a new provisions, provided $349 billion to support SBA’s Section 7(a) lending programs and create a new
Paycheck Protection Program (PPP). PPP loans have a 100% SBA loan guarantee, a 10-year maximum Paycheck Protection Program (PPP). PPP loans have a 100% SBA loan guarantee, a 10-year maximum
term, and a not-to-exceed 4% interest rate to assist small businesses, small 501(c)(3) nonprofit term, and a not-to-exceed 4% interest rate to assist small businesses, small 501(c)(3) nonprofit
organizations, and small 501(c)(19) veterans organizations that have been adversely affected by COVID-organizations, and small 501(c)(19) veterans organizations that have been adversely affected by COVID-
19. Loan deferment and forgiveness are provided under specified conditions. The loans were originally 19. Loan deferment and forgiveness are provided under specified conditions. The loans were originally
available through June 30, 2020, and had a two-year term at 1% interest. available through June 30, 2020, and had a two-year term at 1% interest.
 P.L. 116-139, the Paycheck Protection Program and Health Care Enhancement Act (Enhancement Act),  P.L. 116-139, the Paycheck Protection Program and Health Care Enhancement Act (Enhancement Act),
among other provisions, provided $321.335 billion to support up to $659 billion in Section 7(a) lending. among other provisions, provided $321.335 billion to support up to $659 billion in Section 7(a) lending.
 P.L. 116-142, the Paycheck Protection Program Flexibility Act, among other provisions, extended the PPP  P.L. 116-142, the Paycheck Protection Program Flexibility Act, among other provisions, extended the PPP
loan forgiveness covered period from 8 weeks after the loan’s origination date to the earlier of 24 weeks or loan forgiveness covered period from 8 weeks after the loan’s origination date to the earlier of 24 weeks or
December 31, 2020. PPP borrowers could use the 8-week-covered period if they received their loan prior to December 31, 2020. PPP borrowers could use the 8-week-covered period if they received their loan prior to
enactment (June 5, 2020). enactment (June 5, 2020).
 P.L. 116-147, to extend the authority for commitments for the paycheck protection program, extended the  P.L. 116-147, to extend the authority for commitments for the paycheck protection program, extended the
PPP covered loan period from June 30, 2020, to August 8, 2020, and authorized $659 billion for PPP loan PPP covered loan period from June 30, 2020, to August 8, 2020, and authorized $659 billion for PPP loan
commitments and $30 billion for 7(a) loan commitments. commitments and $30 billion for 7(a) loan commitments.
 P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N,  P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N,
Title III of the Consolidated Appropriations Act of 2021), signed into law on December 27, 2020, among Title III of the Consolidated Appropriations Act of 2021), signed into law on December 27, 2020, among
other provisions, extends the PPP through March 31, 2021, increases the program’s authorization amount other provisions, extends the PPP through March 31, 2021, increases the program’s authorization amount
from $659 billion to $806.45 billion, and allows second-draw PPP loans of up to $2 million. from $659 billion to $806.45 billion, and allows second-draw PPP loans of up to $2 million.
Some of the provisions enacted during the 116th Congress to assist small businesses adversely affected by the COVID-19 Some of the provisions enacted during the 116th Congress to assist small businesses adversely affected by the COVID-19
pandemic (e.g., SBA fee waivers and increased loan limits) were enacted during the 111th Congress to assist small businesses pandemic (e.g., SBA fee waivers and increased loan limits) were enacted during the 111th Congress to assist small businesses
during and immediately following the Great Recession. The main difference between the legislation enacted during the 111th during and immediately following the Great Recession. The main difference between the legislation enacted during the 111th
and 116th Congresses is that the legislation enacted during the 116th Congress has a much broader scope and cost than the and 116th Congresses is that the legislation enacted during the 116th Congress has a much broader scope and cost than the
legislation enacted during the 111th Congress and includes loan deferrals, loan forgiveness, and greatly expanded eligibility, legislation enacted during the 111th Congress and includes loan deferrals, loan forgiveness, and greatly expanded eligibility,
including, for the first time, specified types of nonprofit organizations. including, for the first time, specified types of nonprofit organizations.
One lesson learned from the actions taken to assist small businesses during and immediately following the Great Recession is One lesson learned from the actions taken to assist small businesses during and immediately following the Great Recession is
the potential benefits that can be derived from providing additional funding for the SBA’s Office of Inspector General (OIG) the potential benefits that can be derived from providing additional funding for the SBA’s Office of Inspector General (OIG)
and the Government Accountability Office (GAO). GAO and the SBA’s OIG can provide Congress information that could and the Government Accountability Office (GAO). GAO and the SBA’s OIG can provide Congress information that could
prove useful as Congress engages in congressional oversight of the SBA’s administration of legislation to address COVID-prove useful as Congress engages in congressional oversight of the SBA’s administration of legislation to address COVID-
19’s adverse economic impact on small businesses, provide an early warning if unforeseen administrative problems should 19’s adverse economic impact on small businesses, provide an early warning if unforeseen administrative problems should
Congressional Research Service Congressional Research Service

COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options

arise, and, through investigations and audits, serve as a deterrent to fraud. Requiring the SBA to report regularly on its arise, and, through investigations and audits, serve as a deterrent to fraud. Requiring the SBA to report regularly on its
implementation of the CARES Act could promote transparency and assist Congress in performing its oversight implementation of the CARES Act could promote transparency and assist Congress in performing its oversight
responsibilities. In addition, requiring both output and outcome performance measures and requiring the SBA to report this responsibilities. In addition, requiring both output and outcome performance measures and requiring the SBA to report this
information to Congress and the public by posting that information on the SBA’s website could enhance congressional information to Congress and the public by posting that information on the SBA’s website could enhance congressional
oversight and public confidence in the SBA’s efforts to assist small businesses. oversight and public confidence in the SBA’s efforts to assist small businesses.
Congressional Research Service Congressional Research Service

COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options

Introduction
The Small Business Administration (SBA) administers several types of programs to support small The Small Business Administration (SBA) administers several types of programs to support small
businesses, including businesses, including
 direct disaster loan programs for businesses, homeowners, and renters to assist  direct disaster loan programs for businesses, homeowners, and renters to assist
their recovery from natural disasters; their recovery from natural disasters;
 loan guaranty and venture capital programs to enhance small business access to  loan guaranty and venture capital programs to enhance small business access to
capital; capital;
 small business management and technical assistance training programs to assist  small business management and technical assistance training programs to assist
business formation and expansion; and business formation and expansion; and
 contracting programs to increase small business opportunities in federal  contracting programs to increase small business opportunities in federal
contracting. contracting.
Congressional interest in the SBA’s programs has increased in recent years, primarily because Congressional interest in the SBA’s programs has increased in recent years, primarily because
small businesses are viewed as a means to stimulate economic activity and create jobs. small businesses are viewed as a means to stimulate economic activity and create jobs.
Congressional interest, however, has become especially acute in the wake of the Coronavirus Congressional interest, however, has become especially acute in the wake of the Coronavirus
Disease 2019 (COVID-19) pandemic’s widespread adverse economic impact on the national Disease 2019 (COVID-19) pandemic’s widespread adverse economic impact on the national
economy, including productivity losses, supply chain disruptions, major labor dislocation, and economy, including productivity losses, supply chain disruptions, major labor dislocation, and
significant financial pressure on both businesses and households. significant financial pressure on both businesses and households.
This report begins with an overview of legislation considered during the 116th Congress to assist This report begins with an overview of legislation considered during the 116th Congress to assist
small businesses adversely affected by the COVID-19 pandemic. It then provides an overview of small businesses adversely affected by the COVID-19 pandemic. It then provides an overview of
SBA disaster loans and discusses various issues related to providing disaster assistance to small SBA disaster loans and discusses various issues related to providing disaster assistance to small
businesses adversely affected by COVID-19. It then presents an overview of SBA access to businesses adversely affected by COVID-19. It then presents an overview of SBA access to
capital programs (including the 7(a) loan guarantee, 504/CDC loan guarantee, and Microloan capital programs (including the 7(a) loan guarantee, 504/CDC loan guarantee, and Microloan
programs), SBA management and technical training programs (Small Business Development programs), SBA management and technical training programs (Small Business Development
Centers [SBDCs], Women Business Centers [WBCs], SCORE, and Microloan technical Centers [SBDCs], Women Business Centers [WBCs], SCORE, and Microloan technical
assistance), and SBA contracting programs. This is followed by a discussion of legislation assistance), and SBA contracting programs. This is followed by a discussion of legislation
enacted during the 111th Congress to assist small businesses during and immediately following enacted during the 111th Congress to assist small businesses during and immediately following
the Great Recession (2007-2009). the Great Recession (2007-2009).
As discussed below, some of the provisions included in legislation enacted during the 116th As discussed below, some of the provisions included in legislation enacted during the 116th
Congress to assist small businesses adversely affected by the COVID-19 pandemic were included Congress to assist small businesses adversely affected by the COVID-19 pandemic were included
in legislation enacted during the 111th Congress to assist small businesses during and immediately in legislation enacted during the 111th Congress to assist small businesses during and immediately
following the Great Recession, including SBA fee waivers and increased loan limits. The main following the Great Recession, including SBA fee waivers and increased loan limits. The main
difference between the legislation enacted during the 111th and 116th Congresses is that the difference between the legislation enacted during the 111th and 116th Congresses is that the
legislation enacted during the 116th Congress is much larger in scope and cost than the legislation legislation enacted during the 116th Congress is much larger in scope and cost than the legislation
enacted during the 111th Congress and includes loan deferrals, loan forgiveness, and greatly enacted during the 111th Congress and includes loan deferrals, loan forgiveness, and greatly
expanded eligibility, including, for the first time, specified types of nonprofit organizations. expanded eligibility, including, for the first time, specified types of nonprofit organizations.
Legislative Efforts to Assist Small Businesses
During the 116th Congress
P.L. 116-123, the Coronavirus Preparedness and Response Supplemental Appropriations Act, P.L. 116-123, the Coronavirus Preparedness and Response Supplemental Appropriations Act,
2020, was the first act to include provisions targeting SBA assistance to small businesses 2020, was the first act to include provisions targeting SBA assistance to small businesses
adversely affected by COVID-19. The act provided the SBA an additional $20 million for SBA adversely affected by COVID-19. The act provided the SBA an additional $20 million for SBA
disaster assistance administrative expenses and deemed the coronavirus to be a disaster under the disaster assistance administrative expenses and deemed the coronavirus to be a disaster under the
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SBA’s Economic Injury Disaster Loan (EIDL) program. This change made economic injury from SBA’s Economic Injury Disaster Loan (EIDL) program. This change made economic injury from
the coronavirus an eligible EIDL expense. the coronavirus an eligible EIDL expense.
~~Congress followed with~~ At that time, the SBA had $1.1 billion in disaster loan credit subsidies available, enough to support between $7 billion and $8 billion in disaster loans. Anticipating high demand, the SBA initially reduced the maximum COVID-19 EIDL loan amount from the statutory imposed $2 million lending cap to $500,000. Due to unprecedented demand, on May 3, 2020, the SBA lowered the maximum COVID-19 EIDL loan amount to $150,000.1 P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act
(CARES Act)(CARES Act)~~. The CARES Act~~, enacted on March 27, 2020, made numerous changes to SBA programs, including the creation made numerous changes to SBA programs, including the creation
of the Paycheck Protection Program (PPP), which are loans 100% guaranteed by the SBA with a of the Paycheck Protection Program (PPP), which are loans 100% guaranteed by the SBA with a
maximum term of 10 years and a maximum interest rate of no more than 4%. These loans are maximum term of 10 years and a maximum interest rate of no more than 4%. These loans are
available to small businesses, small 501(c)(3) nonprofit organizations, and small 501(c)(19) available to small businesses, small 501(c)(3) nonprofit organizations, and small 501(c)(19)
veterans organizations—and are eligible for loan forgiveness. The SBA announced that the loans veterans organizations—and are eligible for loan forgiveness. The SBA announced that the loans
would have a two-year term at a 1% interest rate. would have a two-year term at a 1% interest rate.
The CARES Act provided deferment relief for PPP loans and existing loans made under the 7(a), The CARES Act provided deferment relief for PPP loans and existing loans made under the 7(a),
504/CDC, and Microloan programs. The act also appropriated $349 billion for PPP loan 504/CDC, and Microloan programs. The act also appropriated $349 billion for PPP loan
guarantees and subsidies (to remain available through FY2021), $10 billion for Emergency EIDL guarantees and subsidies (to remain available through FY2021), $10 billion for Emergency EIDL
Advance Payment grants, $675 million for the SBA’s salaries and expenses account, $562 million Advance Payment grants, $675 million for the SBA’s salaries and expenses account, $562 million
for disaster loans, $25 million for the SBA’s Office of Inspector General (OIG), $265 million for for disaster loans, $25 million for the SBA’s Office of Inspector General (OIG), $265 million for
entrepreneurial development programs ($192 million for small business development centers entrepreneurial development programs ($192 million for small business development centers
(SBDCs), $48 million for women’s business centers (WBCs), and $25 million for SBA resource (SBDCs), $48 million for women’s business centers (WBCs), and $25 million for SBA resource
partners to provide online information and training), and $17 billion for six months of debt relief partners to provide online information and training), and $17 billion for six months of debt relief
for the SBA’s 7(a), 504/CDC, and Microloan programs. for the SBA’s 7(a), 504/CDC, and Microloan programs.
A summary of the CARES Act’s major small business-related provisions is presented in the A summary of the CARES Act’s major small business-related provisions is presented in the
Appendix.
~~The CARES Act was enacted on March 27, 2020.~~ On March 30, 2020, the SBA updated its On March 30, 2020, the SBA updated its
website to allow COVID-19-related EIDL applicants an option to request an Emergency EIDL website to allow COVID-19-related EIDL applicants an option to request an Emergency EIDL
Advance Payment grant.Advance Payment grant.12
The SBA started accepting PPP loan applications on April 3, 2020. The SBA started accepting PPP loan applications on April 3, 2020.23 Because the SBA neared its Because the SBA neared its
$349 billion authorization limit for Section 7(a) lending, which at that time included the PPP, the $349 billion authorization limit for Section 7(a) lending, which at that time included the PPP, the
SBA stopped accepting new PPP loan applications on April 15, 2020.SBA stopped accepting new PPP loan applications on April 15, 2020.34 A total of 1,661,367 PPP 1 Additionally, on April 3, 2020, the Small Business Administration (SBA) lowered the COVID-19 Economic Injury Disaster Loan (EIDL) lending cap from $500,000 to $15,000. On April 11, 2020, the SBA restored the cap to $500,000. See SBA, Office of Inspector General (OIG), Inspection of Small Business Administration’s Initial Disaster Assistance Response to the Coronavirus Pandemic, Report Number 21-02, October 28, 2020, pp. 9, 10, at https://www.sba.gov/document/report-21-02-inspection-small-business-administrations-initial-disaster-assistance-response-coronavirus-pandemic. 2 ~~A total of 1,661,367 PPP~~
~~loans were approved by 4,975 lenders, totaling $342,277,999,103. Most of the loans (74%) were~~
~~for less than $150,000. The average loan amount was $206,022.4~~
~~The SBA also stopped accepting COVID-19-related EIDL and Emergency EIDL Advance~~
~~Payment grant applications on April 15, because the SBA was approaching its disaster loan~~
~~assistance credit subsidy limit.5 COVID-19-related EIDL and Emergency EIDL Advance~~
~~Payment grant applications already received continued to be processed on a first-in first-out basis.~~

1 EIDL applicants that applied for a COVID-19-related EIDL prior to March 30, 2020, were required to reapply for an EIDL applicants that applied for a COVID-19-related EIDL prior to March 30, 2020, were required to reapply for an
Emergency EIDL Advance Payment grant. Emergency EIDL Advance Payment grant.
23 The SBA accepted The SBA accepted ~~PPP~~Paycheck Protection Program (PPP) loan applications from independent contractors and self-employed starting on April 10, 2020. loan applications from independent contractors and self-employed starting on April 10, 2020.
~~3 U.S. Small Business Administration (SBA)~~ 4 SBA, “Statement by Secretary Mnuchin and Administrator Carranza on the , “Statement by Secretary Mnuchin and Administrator Carranza on the
Paycheck Protection Program and Economic Injury Disaster Loan Program,” April 15, 2020, at https://www.sba.gov/Paycheck Protection Program and Economic Injury Disaster Loan Program,” April 15, 2020, at https://www.sba.gov/
about-sba/sba-newsroom/press-releases-media-advisories/statement-secretary-mnuchin-and-administrator-carranza-about-sba/sba-newsroom/press-releases-media-advisories/statement-secretary-mnuchin-and-administrator-carranza-
paycheck-protection-program-and-economic (hereinafter SBA, “Statement by Secretary Mnuchin and Administrator paycheck-protection-program-and-economic (hereinafter SBA, “Statement by Secretary Mnuchin and Administrator
Carranza on the Paycheck Protection Program and Economic Injury Disaster Loan Program”). Carranza on the Paycheck Protection Program and Economic Injury Disaster Loan Program”).
P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) authorized $349 billion for P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) authorized $349 billion for
general business loans authorized under Section 7(a) of the Small Business Act. This authorization limit applied to the general business loans authorized under Section 7(a) of the Small Business Act. This authorization limit applied to the
~~7(a) lending programs as well as to the Paycheck Protection Program (PPP).~~
~~4 SBA, “Paycheck Protection Program (PPP) Report through April 16, 2020, at 12 PM EST,” at https://content.sba.gov/~~
~~sites/default/files/2020-05/PPP%20Deck%20copy.pdf.~~
~~5 SBA, “Statement by Secretary Mnuchin and Administrator Carranza on the Paycheck Protection Program and~~
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Congressional Research Service 2 link to page 43 link to page 43 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options loans were approved by 4,975 lenders, totaling $342,277,999,103. Most of the loans (74%) were for less than $150,000. The average loan amount was $206,022.5 The SBA also stopped accepting COVID-19-related EIDL and Emergency EIDL Advance Payment grant applications on April 15, because the SBA was approaching its disaster loan assistance credit subsidy limit.6 COVID-19-related EIDL and Emergency EIDL Advance Payment grant applications already received continued to be processed on a first-in first-out basis.
The SBA resumed the acceptance of new PPP loan applications on April 27, 2020, following The SBA resumed the acceptance of new PPP loan applications on April 27, 2020, following
enactment of the Paycheck Protection Program and Healthcare Enhancement Act (Enhancement enactment of the Paycheck Protection Program and Healthcare Enhancement Act (Enhancement
Act; P.L. 116-139) on April 24, 2020. The Enhancement Act increased the SBA’s Section 7(a) Act; P.L. 116-139) on April 24, 2020. The Enhancement Act increased the SBA’s Section 7(a)
loan authorization limit from $349 billion to $659 billion and appropriated $321.335 billion to loan authorization limit from $349 billion to $659 billion and appropriated $321.335 billion to
support that level of lending. The act also appropriated $50 billion for EIDL, $10 billion for support that level of lending. The act also appropriated $50 billion for EIDL, $10 billion for
Emergency EIDL advance payments (grants), and $2.1 billion for SBA salaries and expenses. Emergency EIDL advance payments (grants), and $2.1 billion for SBA salaries and expenses.
The SBA began accepting new EIDL and Emergency EIDL Advance Payment grant applications The SBA began accepting new EIDL and Emergency EIDL Advance Payment grant applications
on a limited basis on May 4 to accommodate agricultural businesses that were provided EIDL on a limited basis on May 4 to accommodate agricultural businesses that were provided EIDL
eligibility by the Enhancement Act. The SBA also processed applications from agricultural eligibility by the Enhancement Act. The SBA also processed applications from agricultural
businesses that had submitted an EIDL application prior to the legislative change. Those businesses that had submitted an EIDL application prior to the legislative change. Those
agricultural businesses did not need to reapply. All other EIDL loan applications that were agricultural businesses did not need to reapply. All other EIDL loan applications that were
submitted before the SBA stopped accepting new applications on April 15 continued to be submitted before the SBA stopped accepting new applications on April 15 continued to be
processed on a first-in, first-out basis.processed on a first-in, first-out basis.67 The SBA resumed the acceptance of new EIDL and The SBA resumed the acceptance of new EIDL and
Emergency EIDL Advance Payment applications from all borrowers on June 15, 2020.Emergency EIDL Advance Payment applications from all borrowers on June 15, 2020.78
A summary of the Enhancement Act’s major small business-related provisions is presented in the A summary of the Enhancement Act’s major small business-related provisions is presented in the
Appendix.
Numerous proposals to amend the PPP were introduced throughout the spring, summer, and fall Numerous proposals to amend the PPP were introduced throughout the spring, summer, and fall
of 2020, including of 2020, including
 H.R. 6800, the Health and Economic Recovery Omnibus Emergency Solutions  H.R. 6800, the Health and Economic Recovery Omnibus Emergency Solutions
Act (Heroes Act), which was passed by the House on May 15, 2020; Act (Heroes Act), which was passed by the House on May 15, 2020;
 S. 4321, the Continuing Small Business Recovery and Paycheck Protection  S. 4321, the Continuing Small Business Recovery and Paycheck Protection
Program Act, which was introduced in the Senate on July 27, 2020; and Program Act, which was introduced in the Senate on July 27, 2020; and
 H.R. 925, the (updated) Heroes Act, which was passed by the House on October  H.R. 925, the (updated) Heroes Act, which was passed by the House on October
1, 2020. 1, 2020.
A summary of these bills’ major small business-related provisions is presented in t A summary of these bills’ major small business-related provisions is presented in the Appendix.
7(a) lending programs as well as to the PPP. 5 SBA, “Paycheck Protection Program (PPP) Report through April 16, 2020, at 12 PM EST,” at https://content.sba.gov/sites/default/files/2020-05/PPP%20Deck%20copy.pdf. 6 SBA, “Statement by Secretary Mnuchin and Administrator Carranza on the Paycheck Protection Program and Economic Injury Disaster Loan Program.” 7 SBA, “Economic Injury Disaster Loan Emergency Advance,” May 4, 2020, at https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/economic-injury-disaster-loan-emergency-advance. 8 SBA, “SBA’s Economic Injury Disaster Loans and Advance Program Reopened to All Eligible Small Businesses and Non-Profits Impacted by COVID-19 Pandemic,” June 15, 2020, at https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/sbas-economic-injury-disaster-loans-and-advance-program-reopened-all-eligible-small-businesses-and?utm_medium=email&utm_source=govdelivery. Congressional Research Service 3 link to page 43 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options As negotiations among House and Senate leaders continued over these and other legislative As negotiations among House and Senate leaders continued over these and other legislative
proposals, several changes to the PPP were agreed to. For example, P.L. 116-142, the Paycheck proposals, several changes to the PPP were agreed to. For example, P.L. 116-142, the Paycheck
Protection Program Flexibility Act, enacted on June 5, 2020, among other provisions, Protection Program Flexibility Act, enacted on June 5, 2020, among other provisions,
 extended the PPP loan forgiveness covered period from 8 weeks after the loan’s  extended the PPP loan forgiveness covered period from 8 weeks after the loan’s
origination date to the earlier of 24 weeks after the loan’s origination date or origination date to the earlier of 24 weeks after the loan’s origination date or
December 31, 2020; December 31, 2020;
 provided borrowers that received a PPP loan prior to the date of enactment (June  provided borrowers that received a PPP loan prior to the date of enactment (June
5, 2020) the option to use the CARES Act’s loan forgiveness covered period of 5, 2020) the option to use the CARES Act’s loan forgiveness covered period of
eight weeks after the loan’s origination date; eight weeks after the loan’s origination date;
 replaced the 75%/25% rule on the use of PPP loan proceeds for loan forgiveness  replaced the 75%/25% rule on the use of PPP loan proceeds for loan forgiveness
purposes with the requirement that at least 60% of the loan proceeds be used for purposes with the requirement that at least 60% of the loan proceeds be used for

~~Economic Injury Disaster Loan Program.”~~
~~6 SBA, “Economic Injury Disaster Loan Emergency Advance,” May 4, 2020, at https://www.sba.gov/funding-~~
~~programs/loans/coronavirus-relief-options/economic-injury-disaster-loan-emergency-advance.~~
~~7 SBA, “SBA’s Economic Injury Disaster Loans and Advance Program Reopened to All Eligible Small Businesses and~~
~~Non-Profits Impacted by COVID-19 Pandemic,” June 15, 2020, at https://www.sba.gov/about-sba/sba-newsroom/~~
~~press-releases-media-advisories/sbas-economic-injury-disaster-loans-and-advance-program-reopened-all-eligible-~~
~~small-businesses-and?utm_medium=email&utm_source=govdelivery.~~
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payroll costs and up to 40% be used for covered mortgage interest, rent, and payroll costs and up to 40% be used for covered mortgage interest, rent, and
utility payments;utility payments;89
 provided borrowers a “safe harbor” from the loan forgiveness rehiring  provided borrowers a “safe harbor” from the loan forgiveness rehiring
requirement if the borrower is unable to rehire an individual who was an requirement if the borrower is unable to rehire an individual who was an
employee of the recipient on or before February 15, 2020, or if the borrower can employee of the recipient on or before February 15, 2020, or if the borrower can
demonstrate an inability to hire similarly qualified employees on or before demonstrate an inability to hire similarly qualified employees on or before
December 31, 2020; December 31, 2020;
 provided borrowers another “safe harbor” from the loan forgiveness rehiring  provided borrowers another “safe harbor” from the loan forgiveness rehiring
requirement if the business can document that it was unable to operate between requirement if the business can document that it was unable to operate between
February 15, 2020, and the end of the covered period at the same level of February 15, 2020, and the end of the covered period at the same level of
business activity as before February 15, 2020, due to compliance with business activity as before February 15, 2020, due to compliance with
requirements established or guidance issued between March 1, 2020, and requirements established or guidance issued between March 1, 2020, and
December 31, 2020, by the U.S. Department of Health and Human Services, the December 31, 2020, by the U.S. Department of Health and Human Services, the
Centers for Disease Control and Prevention, or the Occupational Safety and Centers for Disease Control and Prevention, or the Occupational Safety and
Health Administration, related to the maintenance of standards for sanitation, Health Administration, related to the maintenance of standards for sanitation,
social distancing, or any other worker or customer safety requirement related to social distancing, or any other worker or customer safety requirement related to
COVID-19 (the SBA indicates that this safe harbor includes state and local COVID-19 (the SBA indicates that this safe harbor includes state and local
government directives based on these requirements or guidance);government directives based on these requirements or guidance);910
 established a minimum PPP loan maturity of five years for loans made on or after  established a minimum PPP loan maturity of five years for loans made on or after
the date of enactment; and the date of enactment; and
 extended the PPP loan deferral period from six months (under SBA regulations)  extended the PPP loan deferral period from six months (under SBA regulations)
to the date that the SBA remits the borrower’s loan forgiveness amount to the to the date that the SBA remits the borrower’s loan forgiveness amount to the
lender or, if the borrower does not apply for loan forgiveness, 10 months after the lender or, if the borrower does not apply for loan forgiveness, 10 months after the
end of the borrower’s loan forgiveness covered period. end of the borrower’s loan forgiveness covered period.
Under the act, June 30, 2020, remained the last date on which a PPP loan application could be Under the act, June 30, 2020, remained the last date on which a PPP loan application could be
approved. A summary of the Paycheck Protection Program Flexibility Act is presented in the approved. A summary of the Paycheck Protection Program Flexibility Act is presented in the
Appendix.
As required by the CARES Act, the SBA stopped accepting new PPP loan applications at As required by the CARES Act, the SBA stopped accepting new PPP loan applications at
midnight on June 30, 2020. midnight on June 30, 2020.
9 If a borrower uses less than 60% of the PPP loan amount for payroll costs during the forgiveness covered period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60% of the loan forgiveness amount having been used for payroll costs. 10 SBA and Treasury, “Business Loan Program Temporary Changes; Paycheck Protection Program – Revisions to Loan Forgiveness and Loan Review Procedures Interim Final Rules,” 85 Federal Register 38309, June 26, 2020. Congressional Research Service 4 link to page 10 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options P.L. 116-147, to extend the authority for commitments for the paycheck protection program and P.L. 116-147, to extend the authority for commitments for the paycheck protection program and
separate amounts authorized for other loans under Section 7(a) of the Small Business Act, and for separate amounts authorized for other loans under Section 7(a) of the Small Business Act, and for
other purposes, enacted on July 4, 2020, extended the PPP covered loan period from June 30, other purposes, enacted on July 4, 2020, extended the PPP covered loan period from June 30,
2020, to August 8, 2020, and authorized $659 billion for PPP loan commitments and $30 billion 2020, to August 8, 2020, and authorized $659 billion for PPP loan commitments and $30 billion
for 7(a) loan commitments. The Senate passed the bill by voice vote on June 30, 2020, and the for 7(a) loan commitments. The Senate passed the bill by voice vote on June 30, 2020, and the
House passed it by unanimous consent on July 1, 2020. House passed it by unanimous consent on July 1, 2020.
On July 11, 2020, the SBA announced that it had stopped accepting Emergency EIDL Advance On July 11, 2020, the SBA announced that it had stopped accepting Emergency EIDL Advance
Payment grant applications because the program had reached its authorization limit of $20 billion Payment grant applications because the program had reached its authorization limit of $20 billion
in grants.in grants.1011 The SBA approved 5,781,390 Emergency EIDL Advance Payment grant applications.12 As of January 31, 2021, the SBA had approved 3,721,156 COVID-19-related EIDL loans, totaling over $199.2 billion.13 ~~The SBA approved 5,781,390 Emergency EIDL Advance Payment grant~~

~~8 If a borrower uses less than 60% of the PPP loan amount for payroll costs during the forgiveness covered period, the~~
~~borrower will continue to be eligible for partial loan forgiveness, subject to at least 60% of the loan forgiveness amount~~
~~having been used for payroll costs.~~
~~9 SBA and Treasury, “Business Loan Program Temporary Changes; Paycheck Protection Program – Revisions to Loan~~
~~Forgiveness and Loan Review Procedures Interim Final Rules,” 85 Federal Register 38309, June 26, 2020.~~
~~10 SBA, “SBA provided $20 billion to Small Businesses and Non-Profits Through the Emergency Economic Injury~~
~~Disaster Loan Advance Program,” press release, July 11, 2020, at https://www.sba.gov/about-sba/sba-newsroom/press-~~
~~releases-media-advisories/sba-provided-20-billion-small-businesses-and-non-profits-through-economic-injury-disaster-~~
~~Congressional Research Service~~
4

~~link to page 10~~ ~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

~~applications.11 As of November 22, 2020, the SBA had approved 3,645,556 COVID-19-related~~
~~EIDL loans, totaling over $194.3 billion.12~~
As required by P.L. 116-147, the SBA stopped accepting PPP loan applications on August 8, As required by P.L. 116-147, the SBA stopped accepting PPP loan applications on August 8,
2020. 2020.
As of August 8, 2020, the SBA had approved, after cancellations, 5,212,128 PPP loans, totaling As of August 8, 2020, the SBA had approved, after cancellations, 5,212,128 PPP loans, totaling
over $525 billion (seeover $525 billion (see Table 1). For comparative purposes, that loan approval amount is more . For comparative purposes, that loan approval amount is more
than the amount the SBA has approved in all of its loan programs, including disaster loans, during than the amount the SBA has approved in all of its loan programs, including disaster loans, during
the last 29 years (from October 1, 1991, through December 31, 2019; $509.9 billion).the last 29 years (from October 1, 1991, through December 31, 2019; $509.9 billion).1314
Table 1. Paycheck Protection Program Loan Approvals, After Cancellations, Through
August 8, 2020
Average Loan
Number of Loans
Amount
Characteristic
Approved
Amount Approved
Approved
Lenders
Approvals Approvals
5,212,128 5,212,128
$525,012,201,124 $525,012,201,124
$100,729 $100,729
5,460 5,460
(after cancellations) (after cancellations)
Source: Small Business Administration (SBA), “Additional Program Information: approvals as of August 8, 2020,” Small Business Administration (SBA), “Additional Program Information: approvals as of August 8, 2020,”
at https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program. at https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program.
Note: Cancellations include duplicative loans, loans not closed for any reason, and loans that have been paid off. Cancellations include duplicative loans, loans not closed for any reason, and loans that have been paid off.
As of August 8, 2020, four industry sectors had received at least 10% of PPP net loan amounts: As of August 8, 2020, four industry sectors had received at least 10% of PPP net loan amounts:
 Health Care and Social Assistance (12.9%);  Health Care and Social Assistance (12.9%);
 Professional, Scientific, and Technical Services (12.7%);  Professional, Scientific, and Technical Services (12.7%);
~~ Construction (12.4%); and~~
~~ Manufacturing (10.3%).14~~
~~House and Senate leaders continued negotiations on legislation to reopen and amend the PPP~~
~~throughout the summer and fall. P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses,~~
~~Nonprofits, and Venues Act (Division N, Title III of the Consolidated Appropriations Act of~~
~~2021), enacted on December 27, 2020, among other provisions,~~
~~ extends the PPP loan covered period from August 8, 2020, to March 31, 2021;~~
~~ expands the list of allowable uses of proceeds and loan forgiveness to include~~
~~personal protective equipment, supplier costs, payments for software, cloud~~
~~computing, and other human resources and accounting needs, and costs related to~~

11 SBA, “SBA provided $20 billion to Small Businesses and Non-Profits Through the Emergency Economic Injury Disaster Loan Advance Program,” press release, July 11, 2020, at https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/sba-provided-20-billion-small-businesses-and-non-profits-through-economic-injury-disaster-loan. loan.
As of April 24, 2020, the SBA had approved nearly 1.2 million Emergency EIDL grants, totaling $4.8 billion. See As of April 24, 2020, the SBA had approved nearly 1.2 million Emergency EIDL grants, totaling $4.8 billion. See
SBA, “COVID-19 EIDL Advance Reports, April 24, 2020,” at https://www.sba.gov/document/report-covid-19-eidl-SBA, “COVID-19 EIDL Advance Reports, April 24, 2020,” at https://www.sba.gov/document/report-covid-19-eidl-
advance-report-04-24-20. advance-report-04-24-20.
1112 SBA, “Disaster Assistance Update EIDL Advance July 15, 2020 (figures as of July 14, 2020),” at SBA, “Disaster Assistance Update EIDL Advance July 15, 2020 (figures as of July 14, 2020),” at
https://www.sba.gov/sites/default/files/2020-07/EIDL%20COVID-19%20Advance%207.15.20.pdf. https://www.sba.gov/sites/default/files/2020-07/EIDL%20COVID-19%20Advance%207.15.20.pdf.
1213 SBA, “ SBA, “SBA Disaster Assistance Update Nationwide EIDL LoansDisaster Assistance Update Nationwide EIDL Loans ~~November 23, 2020~~/COVID-19, February 1, 2021 (figures as of (figures as of ~~November 22, 2020~~January 31, 2021),” ),”
at https://www.sba.gov/document/report-covid-19-eidl-loans-report-at https://www.sba.gov/document/report-covid-19-eidl-loans-report-~~11-23-20.~~
132021. 14 SBA, “WDS Lending Data File,” October 18, 2019; and SBA, “Small Business Administration loan program SBA, “WDS Lending Data File,” October 18, 2019; and SBA, “Small Business Administration loan program
performance: Table 2 - Gross Approval Amount by Program, December 31, 2019,” at https://www.sba.gov/document/performance: Table 2 - Gross Approval Amount by Program, December 31, 2019,” at https://www.sba.gov/document/
report-small-business-administration-loan-program-performance. report-small-business-administration-loan-program-performance.
~~14 SBA, “Paycheck Protection Program (PPP) Report: Approvals through August 8, 2020; Industry by NAICS Sector,”~~
~~at https://www.sba.gov/document/report-paycheck-protection-program-report-through-august-8-2020.~~
~~Congressional Research Service~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

Congressional Research Service 5 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options  Construction (12.4%); and  Manufacturing (10.3%).15 House and Senate leaders continued negotiations on legislation to reopen and amend the PPP throughout the summer and fall. P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, Title III of the Consolidated Appropriations Act of 2021), enacted on December 27, 2020, among other provisions,  extends the PPP loan covered period from August 8, 2020, to March 31, 2021;  expands the list of allowable uses of proceeds and loan forgiveness to include personal protective equipment, supplier costs, payments for software, cloud computing, and other human resources and accounting needs, and costs related to property damage from public disturbances that occurred in 2020 that are not property damage from public disturbances that occurred in 2020 that are not
covered by insurance; covered by insurance;
 allows borrowers to select a PPP loan forgiveness covered period of either 8  allows borrowers to select a PPP loan forgiveness covered period of either 8
weeks after the loan’s origination date or 24 weeks after the loan’s origination weeks after the loan’s origination date or 24 weeks after the loan’s origination
date regardless of when the loan was disbursed; date regardless of when the loan was disbursed;
 creates a simplified loan forgiveness application process for loans of $150,000 or  creates a simplified loan forgiveness application process for loans of $150,000 or
less, which includes an application form that is not more than one page in length less, which includes an application form that is not more than one page in length
and only requires borrowers to provide a description of the number of employees and only requires borrowers to provide a description of the number of employees
the borrower was able to retain because of the loan, the estimated amount of the the borrower was able to retain because of the loan, the estimated amount of the
loan amount spent on payroll costs, and the total loan amount. The borrower must loan amount spent on payroll costs, and the total loan amount. The borrower must
also attest that they complied with all PPP loan requirements. Borrowers must also attest that they complied with all PPP loan requirements. Borrowers must
retain relevant employment records for four years following submission of the retain relevant employment records for four years following submission of the
form and other relevant records for three years. The SBA retains the right to form and other relevant records for three years. The SBA retains the right to
review and audit these loans for fraud. Reporting of demographic information is review and audit these loans for fraud. Reporting of demographic information is
optional; optional;
 allows PPP borrowers that have fewer than 300 employees, have or will use the  allows PPP borrowers that have fewer than 300 employees, have or will use the
full amount of their PPP loan, and can document quarterly revenue losses of at full amount of their PPP loan, and can document quarterly revenue losses of at
least 25% in the first, second, or third quarter of 2020 relative to the same quarter least 25% in the first, second, or third quarter of 2020 relative to the same quarter
of 2019 to receive a second-draw PPP loan of up to $2 million; of 2019 to receive a second-draw PPP loan of up to $2 million;
 increases the PPP loan authorization level from $659 billion to $806.45 billion,  increases the PPP loan authorization level from $659 billion to $806.45 billion,
appropriates an additional $284.45 billion for the PPP, and rescinds $146.5 appropriates an additional $284.45 billion for the PPP, and rescinds $146.5
billion from the SBA’s business loans program account (appropriated funds that billion from the SBA’s business loans program account (appropriated funds that
were not spent prior to enactment); were not spent prior to enactment);
 sets aside funds for new and smaller small businesses, for borrowers in low- and  sets aside funds for new and smaller small businesses, for borrowers in low- and
moderate-income communities, and for community and smaller lenders. These moderate-income communities, and for community and smaller lenders. These
set asides include: $15 billion across first and second draw PPP loans for lending set asides include: $15 billion across first and second draw PPP loans for lending
by community financial institutions; $15 billion across first and second draw PPP by community financial institutions; $15 billion across first and second draw PPP
loans for lending by insured depository institutions, credit unions, and farm credit loans for lending by insured depository institutions, credit unions, and farm credit
system institutions with consolidated assets of less than $10 billion; $35 billion system institutions with consolidated assets of less than $10 billion; $35 billion
for new first draw PPP borrowers; and $15 billion and $25 billion for first draw for new first draw PPP borrowers; and $15 billion and $25 billion for first draw
and second draw PPP loans, respectively, for borrowers with a maximum of 10 and second draw PPP loans, respectively, for borrowers with a maximum of 10
employees or for loans less than $250,000 to borrowers in low- or moderate-employees or for loans less than $250,000 to borrowers in low- or moderate-
income neighborhoods; income neighborhoods;
15 SBA, “Paycheck Protection Program (PPP) Report: Approvals through August 8, 2020; Industry by NAICS Sector,” at https://www.sba.gov/document/report-paycheck-protection-program-report-through-august-8-2020. Congressional Research Service 6 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options  extends the covered period for Emergency EIDL advance payments (grants) from  extends the covered period for Emergency EIDL advance payments (grants) from
December 31, 2020, to December 31, 2021, extends the time for the SBA to December 31, 2020, to December 31, 2021, extends the time for the SBA to
approve and disburse the funds from three to 21 days, and repeals the approve and disburse the funds from three to 21 days, and repeals the
requirement that borrowers deduct the amount of their EIDL advance payment requirement that borrowers deduct the amount of their EIDL advance payment
from their PPP loan forgiveness amount if the advance payment was refinanced from their PPP loan forgiveness amount if the advance payment was refinanced
into their PPP loan; into their PPP loan;
 appropriates $20 billion for an EIDL Targeted advance payment (grant) program  appropriates $20 billion for an EIDL Targeted advance payment (grant) program
that provides a $10,000 advance payment to borrowers located in low-income that provides a $10,000 advance payment to borrowers located in low-income
communities that have suffered a revenue loss greater than 30% over specified communities that have suffered a revenue loss greater than 30% over specified
time periods and have no more than 300 employees; applicants that meet these time periods and have no more than 300 employees; applicants that meet these
requirements and received an Emergency EIDL advance payment previously are requirements and received an Emergency EIDL advance payment previously are
eligible to receive an amount equal to the difference of what the borrower eligible to receive an amount equal to the difference of what the borrower
received and $10,000. The SBA is required to provide first priority in awarding received and $10,000. The SBA is required to provide first priority in awarding
the grants to eligible borrowers located in low-income communities that received the grants to eligible borrowers located in low-income communities that received
an Emergency EIDL advance payment of less than $10,000 previously, and an Emergency EIDL advance payment of less than $10,000 previously, and
~~Congressional Research Service~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

second priority to eligible first-time applicants located in low-income second priority to eligible first-time applicants located in low-income
communities; communities;
 increases the 7(a) loan guarantee program’s authorization limit from $30 billion  increases the 7(a) loan guarantee program’s authorization limit from $30 billion
to $75 billion in FY2021, and appropriates $1.918 billion for 7(a) loan guarantee to $75 billion in FY2021, and appropriates $1.918 billion for 7(a) loan guarantee
program subsidy costs, and costs related to (1) increasing the 7(a) program’s loan program subsidy costs, and costs related to (1) increasing the 7(a) program’s loan
guarantee percentage from 75% and 85%, depending on the loan amount, to 90% guarantee percentage from 75% and 85%, depending on the loan amount, to 90%
for all 7(a) loans; (2) increasing the SBAExpress loan amount from $350,000 to for all 7(a) loans; (2) increasing the SBAExpress loan amount from $350,000 to
$1 million on January 1, 2021 (reverts permanently to $500,000 on October 1, $1 million on January 1, 2021 (reverts permanently to $500,000 on October 1,
2021); (3) increasing the SBAExpress loan guarantee percentage from 50% to 2021); (3) increasing the SBAExpress loan guarantee percentage from 50% to
75% for loans of $350,000 or less (reverts permanently to 50% for all 75% for loans of $350,000 or less (reverts permanently to 50% for all
SBAExpress loans on October 1, 2021); (4) waiving 7(a) and 504/CDC lender SBAExpress loans on October 1, 2021); (4) waiving 7(a) and 504/CDC lender
and borrower fees in FY2021; and (5) providing lower interest rates for the and borrower fees in FY2021; and (5) providing lower interest rates for the
504/CDC refinancing program; 504/CDC refinancing program;
 appropriates $3.5 billion to resume the first six months of payments of principal,  appropriates $3.5 billion to resume the first six months of payments of principal,
interest, and fees for SBA 7(a) loans, 504/CDC loans, and Microloans, capped at interest, and fees for SBA 7(a) loans, 504/CDC loans, and Microloans, capped at
$9,000 per month per borrower. Payments are dependent on when the loan was $9,000 per month per borrower. Payments are dependent on when the loan was
disbursed, the type of loan received, and the business’s industry. For example, the disbursed, the type of loan received, and the business’s industry. For example, the
SBA will pay at least three additional monthly payments on loans that were in SBA will pay at least three additional monthly payments on loans that were in
repayment before March 27, 2020, starting with the next payment due on or after repayment before March 27, 2020, starting with the next payment due on or after
February 1, 2021. After the first three monthly payments are provided, businesses February 1, 2021. After the first three monthly payments are provided, businesses
with an SBA Community Advantage loan, Microloan, or operating in specified with an SBA Community Advantage loan, Microloan, or operating in specified
economically hard-hit industries will receive an additional five monthly economically hard-hit industries will receive an additional five monthly
payments.payments.1516 Also, loans approved from February 1, 2021, through September 30, Also, loans approved from February 1, 2021, through September 30,
2021, will receive six monthly payments beginning with the first payment due; 2021, will receive six monthly payments beginning with the first payment due;
 appropriates $15 billion for grants to eligible live venue operators or promoters,  appropriates $15 billion for grants to eligible live venue operators or promoters,
theatrical producers, live performing arts organization operators, museum theatrical producers, live performing arts organization operators, museum
operators, motion picture theatre operators, or talent representatives who operators, motion picture theatre operators, or talent representatives who
demonstrate a 25% reduction in revenue over specified time periods. The SBA demonstrate a 25% reduction in revenue over specified time periods. The SBA
can award an initial grant to eligible individuals or entities of up to $10 million can award an initial grant to eligible individuals or entities of up to $10 million
based on a specified formula and a supplemental grant equal to half of the initial based on a specified formula and a supplemental grant equal to half of the initial
16 Economically hard-hit industries are defined as those industries assigned a North American Industry Classification System (NAICS) code beginning with 61, 71, 72, 213, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812 (food service and accommodation; arts, entertainment and recreation; education; and laundry and personal care services). Congressional Research Service 7 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options grant, also based on a specified formula. Funding must be used for specified grant, also based on a specified formula. Funding must be used for specified
purposes, such as payroll, rent, utilities, and personal protective equipment; and purposes, such as payroll, rent, utilities, and personal protective equipment; and
 appropriates $57 million for Microloan program enhancements, including $50  appropriates $57 million for Microloan program enhancements, including $50
million for Microloan technical assistance grants and $7 million in loan credit million for Microloan technical assistance grants and $7 million in loan credit
subsidies to support up to $64 million in additional Microloan lending. subsidies to support up to $64 million in additional Microloan lending.
On January 6, 2021, the SBA released two interim final rules to enable implementation of P.L. On January 6, 2021, the SBA released two interim final rules to enable implementation of P.L.
116-260’s PPP-related provisions.116-260’s PPP-related provisions.1617 On January 8, 2021, the SBA announced that it would reopen On January 8, 2021, the SBA announced that it would reopen
the PPP loan portal on January 11, 2021, on a restricted basis. Initially, only community financial the PPP loan portal on January 11, 2021, on a restricted basis. Initially, only community financial
institutions were allowed to submit PPP loan applications (first-draw loans were accepted starting institutions were allowed to submit PPP loan applications (first-draw loans were accepted starting

~~15 Economically hard-hit industries are defined as those industries assigned a North American Industry Classification~~
~~System (NAICS) code beginning with 61, 71, 72, 213, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812 (food~~
~~service and accommodation; arts, entertainment and recreation; education; and laundry and personal care services).~~
~~16 These rules were subsequently printed in the Federal Register on January 14, 2021. See SBA and Department of the~~
~~Treasury, “Business Loan Program Temporary Changes; Paycheck Protection Program as Amended by Economic Aid~~
~~Act,” 86 Federal Register 3692-3712, January 14, 2021; and SBA and Department of the Treasury, “Business Loan~~
~~Program Temporary Changes; Paycheck Protection Program Second Draw Loans,” 86 Federal Register 3712-3723,~~
~~January 14, 2021.~~
~~Congressional Research Service~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

on January 11 and second-draw loans were accepted starting on January 13) as a means to on January 11 and second-draw loans were accepted starting on January 13) as a means to
promote PPP loan access for minority, underserved, veteran and women-owned small promote PPP loan access for minority, underserved, veteran and women-owned small
businesses.businesses.1718 Community financial institutions are generally recognized as more likely to serve Community financial institutions are generally recognized as more likely to serve
these populations than are other lending institutions. these populations than are other lending institutions.
The SBA The SBA ~~also announced on January 13, 2021, that it will reopen~~reopened the PPP loan portal to PPP- the PPP loan portal to PPP-
eligible lenders with $1 billion or less in assets on January 15, 2021, and to all PPP-eligible eligible lenders with $1 billion or less in assets on January 15, 2021, and to all PPP-eligible
lenders on January 19, 2021.lenders on January 19, 2021.18
19 As of February 11, 2021, the SBA had approved 6,913,622 PPP loans totaling $640.3 billion, including 1,701,494 PPP loans totaling $115.3 billion during 2021.20 Disaster Loans
Overview
SBA disaster assistance is provided in the form of loans, not grants, which must be repaid to the SBA disaster assistance is provided in the form of loans, not grants, which must be repaid to the
federal government. The SBA’s disaster loans are unique in two respects: (1) they go directly to federal government. The SBA’s disaster loans are unique in two respects: (1) they go directly to
the ultimate borrower, and (2) they are not limited to small businesses.the ultimate borrower, and (2) they are not limited to small businesses.1921
SBA disaster loans for physical damage are available to individuals, businesses of all sizes, and SBA disaster loans for physical damage are available to individuals, businesses of all sizes, and
nonprofit organizations in declared disaster areas.nonprofit organizations in declared disaster areas.2022 SBA disaster loans for economic injury SBA disaster loans for economic injury
~~(EIDL) are available to eligible small businesses, small agricultural cooperatives, small~~
~~businesses engaged in aquaculture, and most private, nonprofit organizations in declared disaster~~
~~areas. The SBA issues about 80% of its direct disaster loans to individuals and households~~
~~(renters and property owners) to repair and replace homes and personal property. The SBA~~
~~disbursed $401 million in disaster loans in FY2016, $889 million in FY2017, $3.59 billion in~~
~~FY2018, and $1.5 billion in FY2019.21~~
~~Types of Disaster Loans~~
~~The SBA Disaster Loan Program includes home disaster loans, business physical disaster loans,~~
~~and EIDLs.22 This report focuses on the EIDL program because it is currently being used to~~
~~address the adverse economic impact of COVID-19 on small businesses and other EIDL-eligible~~
~~organizations.~~

17 17 These rules were subsequently printed in the Federal Register on January 14, 2021. See SBA and Department of the Treasury, “Business Loan Program Temporary Changes; Paycheck Protection Program as Amended by Economic Aid Act,” 86 Federal Register 3692-3712, January 14, 2021; and SBA and Department of the Treasury, “Business Loan Program Temporary Changes; Paycheck Protection Program Second Draw Loans,” 86 Federal Register 3712-3723, January 14, 2021. 18 SBA, “Guidance on Accessing Capital for Minority, Underserved, Veteran and Women-Owned Business Concerns,” SBA, “Guidance on Accessing Capital for Minority, Underserved, Veteran and Women-Owned Business Concerns,”
January 6, 2021, at https://www.sba.gov/sites/default/files/2021-January 6, 2021, at https://www.sba.gov/sites/default/files/2021-
01/Guidance%20on%20Accessing%20Capital%20for%20Minority%20Underserved%20Veteran%20and%20Women01/Guidance%20on%20Accessing%20Capital%20for%20Minority%20Underserved%20Veteran%20and%20Women
%20Owned%20Business%20Concerns%20.pdf?utm_medium=email&utm_source=govdelivery; and SBA, “SBA and %20Owned%20Business%20Concerns%20.pdf?utm_medium=email&utm_source=govdelivery; and SBA, “SBA and
Treasury Announce PPP Re-Opening; Issue New Guidance,” January 8, 2021. Treasury Announce PPP Re-Opening; Issue New Guidance,” January 8, 2021.
1819 SBA, “SBA Re-Opening Paycheck Protection Program to Small Lenders on Friday, January 15 and All Lenders on SBA, “SBA Re-Opening Paycheck Protection Program to Small Lenders on Friday, January 15 and All Lenders on
Tuesday, January 19,” at https://www.sba.gov/article/2021/jan/13/sba-re-opening-paycheck-protection-program-small-Tuesday, January 19,” at https://www.sba.gov/article/2021/jan/13/sba-re-opening-paycheck-protection-program-small-
lenders-friday-january-15-all-lenders-tuesday. lenders-friday-january-15-all-lenders-tuesday.
~~19 13 C.F.R. §123.200.~~
~~20 13 C.F.R. §123.105 and 13 C.F.R. §123.203.~~
~~21 SBA, Office of Legislative and Congressional Affairs, “WDS Report Amount Fiscal Year 2019, Table 1.4~~
~~Disbursements by Program,” October 18, 2019.~~
~~22 The SBA also offers military reservist economic injury disaster loans. These loans are available when economic~~
~~injury is incurred as a direct result of a business owner or an essential employee being called to active duty. These loans~~
~~are generally not associated with disasters. See CRS Report R42695,~~ ~~SBA Veterans Assistance Programs: An Analysis~~
~~of Contemporary Issues, by Robert Jay Dilger and Sean Lowry.~~
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20 SBA, “Paycheck Protection Program, data as of February 11, 2021” at https://www.sba.gov/document/report-sba-covid-relief-program-report. As of February 15, 2021, five industries received at least 10% of 2021 PPP net loan amounts: Accommodation and Food Services (18%); Construction (13%); Professional, Scientific, and Technical Services (11%); Health Care and Social Assistance (10%); and Manufacturing (10%). 21 13 C.F.R. §123.200. 22 13 C.F.R. §123.105 and 13 C.F.R. §123.203. Congressional Research Service 8 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options (EIDL) are available to eligible small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, nonprofit organizations in declared disaster areas. The SBA issues about 80% of its direct disaster loans to individuals and households (renters and property owners) to repair and replace homes and personal property. The SBA disbursed $401 million in disaster loans in FY2016, $889 million in FY2017, $3.59 billion in FY2018, $1.5 billion in FY2019, and $178.5 billion in FY2020 (primarily for COVID-19-related assistance).23 Types of Disaster Loans The SBA Disaster Loan Program includes home disaster loans, business physical disaster loans, and EIDLs.24 This report focuses on the EIDL program because it is currently being used to address the adverse economic impact of COVID-19 on small businesses and other EIDL-eligible organizations. P.L. 116-123, the Coronavirus Preparedness and Response Supplemental Appropriations Act, P.L. 116-123, the Coronavirus Preparedness and Response Supplemental Appropriations Act,
2020, deemed the coronavirus to be a disaster under the EIDL program. This change made 2020, deemed the coronavirus to be a disaster under the EIDL program. This change made
economic injury from the coronavirus an eligible EIDL expense. The act also provided the SBA economic injury from the coronavirus an eligible EIDL expense. The act also provided the SBA
an additional $20 million for disaster loan administrative expenses. an additional $20 million for disaster loan administrative expenses.
For a discussion of all SBA disaster loans, see CRS Report R41309, For a discussion of all SBA disaster loans, see CRS Report R41309, The SBA Disaster Loan
Program: Overview and Possible Issues for Congress, by Bruce R. Lindsay. , by Bruce R. Lindsay.
Economic Injury Disaster Loans
EIDLs provide up to $2 million for working capital (including fixed debts, payroll, accounts EIDLs provide up to $2 million for working capital (including fixed debts, payroll, accounts
payable and other bills that cannot be paid because of the disaster’s impact) to help small payable and other bills that cannot be paid because of the disaster’s impact) to help small
businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most
private, nonprofit organizations meet their financial obligations and operating expenses that private, nonprofit organizations meet their financial obligations and operating expenses that
cannot be met as a direct result of the disaster.cannot be met as a direct result of the disaster.23
25 As mentioned, due to unprecedented demand, in March 2020, the SBA lowered the maximum COVID-19 EIDL amount from $2 million to $500,000, and, on May 3, 2020, reduced it to $150,000. Public nonprofit organizations and several specific business types are not eligible for EIDL Public nonprofit organizations and several specific business types are not eligible for EIDL
assistance. Ineligible businesses include, but are not limited to, the following: assistance. Ineligible businesses include, but are not limited to, the following:
 businesses that do not meet the SBA’s small business eligibility criteria,  businesses that do not meet the SBA’s small business eligibility criteria,
including the SBA’s size standards; including the SBA’s size standards;
23 SBA, Office of Legislative and Congressional Affairs, “WDS Report Amount Fiscal Year 2019, Table 1.4 Disbursements by Program,” October 18, 2019; and SBA, “Agency Financial Report, Fiscal Year 2020,” p. 82, at https://www.sba.gov/document/report-agency-financial-report. 24 The SBA also offers military reservist economic injury disaster loans. These loans are available when economic injury is incurred as a direct result of a business owner or an essential employee being called to active duty. These loans are generally not associated with disasters. See CRS Report R42695, SBA Veterans Assistance Programs: An Analysis of Contemporary Issues, by Robert Jay Dilger and Sean Lowry. 25 SBA, “Fact Sheet – Economic Injury Disaster Loans, California Declaration #16332,” March 19, 2020, at https://disasterloan.sba.gov/ela/Declarations/DeclarationDetails?declNumber=3485&direct=false (hereinafter cited as SBA, “Fact Sheet”). Congressional Research Service 9 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options  businesses that derive more than one-third of their annual gross revenue from  businesses that derive more than one-third of their annual gross revenue from
legal gambling activities; legal gambling activities;
 casinos and racetracks;  casinos and racetracks;
 religious organizations;  religious organizations;
 political and lobbying concerns;  political and lobbying concerns;
 government-owned concerns (expect for businesses owned or controlled by a  government-owned concerns (expect for businesses owned or controlled by a
Native American tribe); and Native American tribe); and
 businesses determined by the SBA to have credit available elsewhere.  businesses determined by the SBA to have credit available elsewhere.2426
EIDL loan amounts are based on actual economic injury and financial needs, regardless of EIDL loan amounts are based on actual economic injury and financial needs, regardless of
whether the business or eligible nonprofit suffered any property damage. If an applicant is a whether the business or eligible nonprofit suffered any property damage. If an applicant is a
major source of employment, the SBA may waive the $2 million statutory limit.major source of employment, the SBA may waive the $2 million statutory limit.2527 In addition, In addition,
EIDL loan proceeds cannot be used to refinance long-term debt, expand facilities, pay dividends EIDL loan proceeds cannot be used to refinance long-term debt, expand facilities, pay dividends
or bonuses, or for relocation.or bonuses, or for relocation.2628
Applicants must have a credit history acceptable to the SBA, the ability to repay the loan, and Applicants must have a credit history acceptable to the SBA, the ability to repay the loan, and
present collateral for all EIDL loans over $25,000 if available. The SBA collateralizes real estate present collateral for all EIDL loans over $25,000 if available. The SBA collateralizes real estate
or other assets when available, but it will not deny a loan for lack of collateral.or other assets when available, but it will not deny a loan for lack of collateral.27

~~23 SBA, “Fact Sheet – Economic Injury Disaster Loans, California Declaration #16332,” March 19, 2020, at~~
~~https://disasterloan.sba.gov/ela/Declarations/DeclarationDetails?declNumber=3485&direct=false (hereinafter cited as~~
~~SBA, “Fact Sheet”).~~
~~24 SBA, “Disaster Assistance Program, SOP 50 30 9, pp. 70, 71, at https://www.sba.gov/document/sop-50-30-9-~~
~~disaster-assistance-program-posted-05-31 (hereinafter cited as SBA, “Disaster Assistance Program SOP”).~~
~~25 SBA, “Fact Sheet.”~~
~~26 For the full list of ineligible uses of EIDL loan proceeds, see SBA, “Disaster Assistance Program SOP,” pp. 75-76.~~
~~27 SBA, “Fact Sheet.”~~
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29
EIDL interest rates are determined by formulas established in law (discussed later) and are fixed EIDL interest rates are determined by formulas established in law (discussed later) and are fixed
for the life of the loan. EIDL interest rate ceilings are statutorily set at no more than 4% per for the life of the loan. EIDL interest rate ceilings are statutorily set at no more than 4% per
annum. EIDL applicants are not eligible if the SBA determines that the applicant has credit annum. EIDL applicants are not eligible if the SBA determines that the applicant has credit
available elsewhere. available elsewhere.
EIDL loans can have maturities up to 30 years. The SBA determines an appropriate installment EIDL loans can have maturities up to 30 years. The SBA determines an appropriate installment
payment based on each borrower’s financial condition, which, in turn, determines the loan term.payment based on each borrower’s financial condition, which, in turn, determines the loan term.2830
There are no prepayment penalties. There are no prepayment penalties.
SBA EIDL assistance is not automatically available. It must be requested in one of two ways: (1) SBA EIDL assistance is not automatically available. It must be requested in one of two ways: (1)
a state or territory governor can submit a request to the President for a major disaster declaration a state or territory governor can submit a request to the President for a major disaster declaration
under the Robert T. Stafford Disaster Relief and Emergency Assistance under the Robert T. Stafford Disaster Relief and Emergency Assistance ~~Act29~~Act31 or (2) a state or or (2) a state or
governor can submit a request for SBA EIDL from the SBA Administrator under the Small governor can submit a request for SBA EIDL from the SBA Administrator under the Small
Business Act. Business Act.
There was some initial concern that COVID-19 would not be a declarable disaster under the There was some initial concern that COVID-19 would not be a declarable disaster under the
Small Business Act because it did not meet the legal definition for a disaster. As mentioned, to Small Business Act because it did not meet the legal definition for a disaster. As mentioned, to
prevent any potential ambiguity, Title II of P.L. 116-123 deemed the coronavirus a disaster under prevent any potential ambiguity, Title II of P.L. 116-123 deemed the coronavirus a disaster under
Section 7(b)(2)(D) of the Small Business Act, making economic injury from the coronavirus an Section 7(b)(2)(D) of the Small Business Act, making economic injury from the coronavirus an
eligible expense under the SBA’s Economic Injury Disaster Loan program. eligible expense under the SBA’s Economic Injury Disaster Loan program.
26 SBA, “Disaster Assistance Program, SOP 50 30 9, pp. 70, 71, at https://www.sba.gov/document/sop-50-30-9-disaster-assistance-program-posted-05-31 (hereinafter cited as SBA, “Disaster Assistance Program SOP”). 27 SBA, “Fact Sheet.” 28 For the full list of ineligible uses of EIDL loan proceeds, see SBA, “Disaster Assistance Program SOP,” pp. 75-76. 29 SBA, “Fact Sheet.” 30 SBA, “Fact Sheet.” 31 P.L. 93-288, as amended. Tribal nations are also authorized to request and receive major disaster assistance. Congressional Research Service 10 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options Initial EIDL Response to COVID-19
On March 16, 2020, the SBA Administrator began issuing declarations for SBA EIDLs in On March 16, 2020, the SBA Administrator began issuing declarations for SBA EIDLs in
response to states seeking SBA disaster assistance for small businesses.response to states seeking SBA disaster assistance for small businesses.3032 The SBA changed its The SBA changed its
requirement that a state or territory “provide documentation certifying that at least five small requirement that a state or territory “provide documentation certifying that at least five small
businesses have suffered substantial economic injury as a result of the disaster, with at least one businesses have suffered substantial economic injury as a result of the disaster, with at least one
business located in each declared county/parish.”business located in each declared county/parish.”3133 Under new criteria, states and territories now Under new criteria, states and territories now
“are only required to certify that at least five small businesses within the state/territory have “are only required to certify that at least five small businesses within the state/territory have
suffered substantial economic injury, regardless of where the businesses are located.”suffered substantial economic injury, regardless of where the businesses are located.”3234 The SBA The SBA
announced that under the new criteria EIDL assistance may be available statewide instead of just announced that under the new criteria EIDL assistance may be available statewide instead of just
within specific identified counties in declarations related to COVID-19. within specific identified counties in declarations related to COVID-19.
EIDL Funding
Prior to the CARES Act’s enactment, the SBA had about $1.1 billion in disaster loan credit Prior to the CARES Act’s enactment, the SBA had about $1.1 billion in disaster loan credit
subsidy available to support about $7 billion to $8 billion in disaster loans. Loan credit subsidy is subsidy available to support about $7 billion to $8 billion in disaster loans. Loan credit subsidy is
the amount provided to cover the government’s cost of extending or guaranteeing credit.the amount provided to cover the government’s cost of extending or guaranteeing credit.~~33 The~~

~~28 SBA, “Fact Sheet.”~~
~~29 P.L. 93-288, as amended. Tribal nations are also authorized to request and receive major disaster assistance.~~
3035 The loan credit subsidy amount is about one-seventh of the cost of each disaster loan.36 The credit subsidy amount is used to protect the government against the risk of estimated shortfalls in loan repayments. There was some concern that the SBA’s funding for disaster loan credit subsidies would have proven to be insufficient to meet the demand for disaster loans now that EIDL eligibility has been extended to economic injuries related to COVID-19. The CARES Act addressed this issue by providing an additional $562 million to support disaster loans and $10 billion to support the Emergency EIDL grant program. As mentioned, the Paycheck Protection Program and Health Care Enhancement Act (P.L. 116-139) appropriated an additional $50 billion for EIDL and $10 billion for Emergency EIDL grants. Also, as mentioned, P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, Title III of the Consolidated Appropriations Act of 2021), appropriated an additional $20 billion for the EIDL Targeted advance payment (grant) program. 32 A similar definitional issue may exist under the Stafford Act which does not specify an infectious disease as an A similar definitional issue may exist under the Stafford Act which does not specify an infectious disease as an
incident in its definition of a major disaster. There are, however, indications that the President considers COVID-19 a incident in its definition of a major disaster. There are, however, indications that the President considers COVID-19 a
major disaster. See the White House, major disaster. See the White House, Letter from President Donald J. Trump on Emergency Determination Under the
Stafford Act, March 13, 2020, at https://www.whitehouse.gov/briefings-statements/letter-president-donald-j-trump-, March 13, 2020, at https://www.whitehouse.gov/briefings-statements/letter-president-donald-j-trump-
emergency-determination-stafford-act/. emergency-determination-stafford-act/.
3133 SBA, SBA, SBA Updates Criteria on States for Requesting Disaster Assistance Loans for Small Businesses Impacted by
Coronavirus (COVID-19), March 17, 2020, at https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-, March 17, 2020, at https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-
advisories/sba-updates-criteria-states-requesting-disaster-assistance-loans-small-businesses-impacted (hereinafter cited advisories/sba-updates-criteria-states-requesting-disaster-assistance-loans-small-businesses-impacted (hereinafter cited
as SBA, as SBA, SBA Updates Criteria on States for Requesting Disaster Assistance). ).
3234 SBA, SBA, SBA Updates Criteria on States for Requesting Disaster Assistance. .
3335 “The Federal Credit Reform Act of 1990 (FCRA) requires agencies to estimate the cost to the government of “The Federal Credit Reform Act of 1990 (FCRA) requires agencies to estimate the cost to the government of
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~~loan credit subsidy amount is about one-seventh of the cost of each disaster loan.34 The credit~~
~~subsidy amount is used to protect the government against the risk of estimated shortfalls in loan~~
~~repayments. There was some concern that the SBA’s funding for disaster loan credit subsidies~~
~~would have proven to be insufficient to meet the demand for disaster loans now that EIDL~~
~~eligibility has been extended to economic injuries related to COVID-19.~~
~~The CARES Act addressed this issue by providing an additional $562 million to support disaster~~
~~loans and $10 billion to support the Emergency EIDL grant program. As mentioned, the Paycheck~~
~~Protection Program and Health Care Enhancement Act (P.L. 116-139) appropriated an additional~~
~~$50 billion for EIDL and $10 billion for Emergency EIDL grants. Also, as mentioned, P.L. 116-~~
~~260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N,~~
~~Title III of the Consolidated Appropriations Act of 2021), appropriated an additional $20 billion~~
~~for the EIDL Targeted advance payment (grant) program.~~extending or guaranteeing credit. This cost, referred to as subsidy cost, equals the net present value of estimated cash flows from the government (e.g., loan disbursements and claim payments to lenders) minus estimated cash flows to the government (e.g., loan repayments, interest payments, fees, and recoveries on defaulted loans) over the life of the loan, excluding administrative costs.” See U.S. Government Accountability Office, Current Method to Estimate Credit Subsidy Costs Is More Appropriate for Budget Estimates Than a Fair Value Approach, GAO-16-41, January 29, 2016, p. i, at https://www.gao.gov/products/GAO-16-41. 36 SBA, FY2021 Congressional Budget Justification FY2019 Annual Performance Report,” p. 13, at https://www.sba.gov/document/report—congressional-budget-justification-annual-performance-report (hereinafter cited as SBA, FY2021 Congressional Budget Justification FY2019 Annual Performance Report”). Congressional Research Service 11 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options
Surge Issues and Loan Processing Times
Historically, the majority (80%) of SBA disaster loans have been for individuals and households. Historically, the majority (80%) of SBA disaster loans have been for individuals and households.
The significant number of businesses that will likely apply for EIDL assistance because of the The significant number of businesses that will likely apply for EIDL assistance because of the
economic damage the coronavirus caused may require the SBA to enhance its disaster business economic damage the coronavirus caused may require the SBA to enhance its disaster business
loan portfolio and increase staff to meet demand. As mentioned, in anticipation of increased EIDL loan portfolio and increase staff to meet demand. As mentioned, in anticipation of increased EIDL
demand, Title II of P.L. 116-123 provided the SBA with an additional $20 million, to remain demand, Title II of P.L. 116-123 provided the SBA with an additional $20 million, to remain
available until expended, for SBA Disaster Loan Program administrative expenses. available until expended, for SBA Disaster Loan Program administrative expenses.
A Government Accountability Office (GAO) report found that the SBA provided disaster loans in A Government Accountability Office (GAO) report found that the SBA provided disaster loans in
roughly 18 days or less in response to Hurricanes Harvey, Irma, and Maria in 2017.roughly 18 days or less in response to Hurricanes Harvey, Irma, and Maria in 2017.3537 Although Although
the 2017 hurricanes created a high demand at that time for SBA disaster loans, it is unclear if the 2017 hurricanes created a high demand at that time for SBA disaster loans, it is unclear if
GAO’s findings can be extrapolated to the current COVID-19 pandemic. The sheer volume of GAO’s findings can be extrapolated to the current COVID-19 pandemic. The sheer volume of
EIDL applications in response to COVID-19 could be significantly higher because COVID-19 EIDL applications in response to COVID-19 could be significantly higher because COVID-19
affects a much larger number of small businesses and organizations. In addition, the time needed affects a much larger number of small businesses and organizations. In addition, the time needed
for the SBA to expand the disaster loan portfolio and hire and train new and existing staff could for the SBA to expand the disaster loan portfolio and hire and train new and existing staff could
compromise loan processing times. compromise loan processing times.
Loan processing times may be of significant concern to Congress and business owners alike. If Loan processing times may be of significant concern to Congress and business owners alike. If
loans are not processed quickly enough, businesses nationwide may suffer economic damage and, loans are not processed quickly enough, businesses nationwide may suffer economic damage and,
potentially, collapse. Consequently, Congress may examine options that could expedite loan potentially, collapse. Consequently, Congress may examine options that could expedite loan
processing, such as increased staffing and surge capabilities, waiving application requirements, processing, such as increased staffing and surge capabilities, waiving application requirements,
and the use of expedited loans or bridge loans. and the use of expedited loans or bridge loans.

~~extending or guaranteeing credit. This cost, referred to as subsidy cost, equals the net present value of estimated cash~~
~~flows from the government (e.g., loan disbursements and claim payments to lenders) minus estimated cash flows to the~~
~~government (e.g., loan repayments, interest payments, fees, and recoveries on defaulted loans) over the life of the loan,~~
~~excluding administrative costs.” See U.S. Government Accountability Office,~~ ~~Current Method to Estimate Credit~~
~~Subsidy Costs Is More Appropriate for Budget Estimates Than a Fair Value Approach, GAO-16-41, January 29, 2016,~~
~~p. i, at https://www.gao.gov/products/GAO-16-41.~~
~~34 SBA, FY2021 Congressional Budget Justification FY2019 Annual Performance Report,” p. 13, at~~
~~https://www.sba.gov/document/report—congressional-budget-justification-annual-performance-report (hereinafter~~
~~cited as SBA, FY2021 Congressional Budget Justification FY2019 Annual Performance Report”).~~
35 Expedited Disaster Loans and Bridge Loans In response to criticism of SBA’s disaster loan processing following the Gulf Coast hurricanes of 2005 and 2008, Congress passed P.L. 110-234, the Small Business Disaster Response and Loan Improvements Act of 2008.38 The act created several programs to improve the disaster loan processing.39 Among them were the following:  Expedited Disaster Assistance Loan Program (EDALP) to provide eligible EIDL applicants with expedited access to short-term guaranteed loans of up to $150,000.40  Immediate Disaster Assistance Program (IDAP) to provide eligible EIDL applicants with guaranteed bridge loans of up to $25,000 from private-sector lenders, with an SBA decision within 36 hours of a lender’s application on behalf of a borrower.41  Private Disaster Assistance Program (PDAP) to make guaranteed loans available to homeowners and eligible EIDL applicants in an amount up to $2 million.42 37 U.S. Government Accountability Office, U.S. Government Accountability Office, Disaster Loan Processing Was Timelier, but Planning Improvements and
Pilot Program Evaluation Needed, GAO-20-369, March 9, 2020, at https://www.gao.gov/products/GAO-20-168. , GAO-20-369, March 9, 2020, at https://www.gao.gov/products/GAO-20-168.
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~~Expedited Disaster Loans and Bridge Loans~~
~~In response to criticism of SBA’s disaster loan processing following the Gulf Coast hurricanes of~~
~~2005 and 2008, Congress passed P.L. 110-234, the Small Business Disaster Response and Loan~~
~~Improvements Act of 2008.36 The act created several programs to improve the disaster loan~~
~~processing.37 Among them were the following:~~
~~ Expedited Disaster Assistance Loan Program (EDALP) to provide eligible EIDL~~
~~applicants with expedited access to short-term guaranteed loans of up to~~
~~$150,000.38~~
~~ Immediate Disaster Assistance Program (IDAP) to provide eligible EIDL~~
~~applicants with guaranteed bridge loans of up to $25,000 from private-sector~~
~~lenders, with an SBA decision within 36 hours of a lender’s application on behalf~~
~~of a borrower.39~~
~~ Private Disaster Assistance Program (PDAP) to make guaranteed loans available~~
~~to homeowners and eligible EIDL applicants in an amount up to $2 million.40~~38 P.L. 110-234, the Small Business Disaster Response and Loan Improvements Act of 2008 (Title XII, subtitle B of the Food, Conservation, and Energy Act of 2008), as amended by P.L. 110-246, the Food, Conservation, and Energy Act of 2008 (Title XII, subtitle B of the Food, Conservation, and Energy Act of 2008) (hereinafter cited as P.L. 110-234). 39 SBA, “Immediate, Expedited, and Private Disaster Assistance Loan Programs,” 80 Federal Register 63715-63717, October 21, 2015. 40 P.L. 110-234, Sec. 12085. 41 P.L. 110-234, Sec. 12084. 42 P.L. 110-234, Sec. 12083. Congressional Research Service 12 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options
The SBA, however, had difficulty implementing these programs. In his statement before the The SBA, however, had difficulty implementing these programs. In his statement before the
House Committee on Small Business, then-acting (and now the current) SBA Inspector General, House Committee on Small Business, then-acting (and now the current) SBA Inspector General,
Hannibal “Mike” Ware, stated the following: Hannibal “Mike” Ware, stated the following:
In the wake of disasters like Hurricane Sandy, congressional representatives expressed In the wake of disasters like Hurricane Sandy, congressional representatives expressed
concern that SBA did not effectively develop and utilize programmatic innovations concern that SBA did not effectively develop and utilize programmatic innovations
intended to assist in disbursing funds quickly and effectively. For instance, SBA did not intended to assist in disbursing funds quickly and effectively. For instance, SBA did not
implement statutory provisions of the Immediate Disaster Assistance Program (IDAP), implement statutory provisions of the Immediate Disaster Assistance Program (IDAP),
Economic Injury Disaster Assistance Program (EDAP), and the Private Disaster Assistance Economic Injury Disaster Assistance Program (EDAP), and the Private Disaster Assistance
Programs (PDAP), collectively known as the “Guaranteed Disaster Assistance Programs” Programs (PDAP), collectively known as the “Guaranteed Disaster Assistance Programs”
mandated by Congress in 2008. These provisions were enacted with the expectation that mandated by Congress in 2008. These provisions were enacted with the expectation that
they would allow SBA to provide expedited disaster loans in partnership with private sector they would allow SBA to provide expedited disaster loans in partnership with private sector
lenders. These provisions remain unimplemented.lenders. These provisions remain unimplemented.4143
He added that the SBA had difficulty implementing the programs because private lenders were He added that the SBA had difficulty implementing the programs because private lenders were
reluctant to participate in the program. He mentioned the following impediments: reluctant to participate in the program. He mentioned the following impediments:
[the] cost of program participation under the current pricing structure and the lender’s lack [the] cost of program participation under the current pricing structure and the lender’s lack
of infrastructure to deliver loans that meet SBA standards (such as evaluating eligibility of infrastructure to deliver loans that meet SBA standards (such as evaluating eligibility
and duplication of benefits); loan terms that include longer maturities than conventional and duplication of benefits); loan terms that include longer maturities than conventional
lending practices; the high cost of providing these loans; inadequate collateral security; and lending practices; the high cost of providing these loans; inadequate collateral security; and
their lack of expertise in the home loan sector. Lenders were also concerned that loan their lack of expertise in the home loan sector. Lenders were also concerned that loan
guarantees would be denied due to improper eligibility determinations. guarantees would be denied due to improper eligibility determinations.

~~36 P.L. 110-234, the Small Business Disaster Response and Loan Improvements Act of 2008 (Title XII, subtitle B of the~~
~~Food, Conservation, and Energy Act of 2008), as amended by P.L. 110-246, the Food, Conservation, and Energy Act of~~
~~2008 (Title XII, subtitle B of the Food, Conservation, and Energy Act of 2008) (hereinafter cited as P.L. 110-234).~~
~~37 SBA, “Immediate, Expedited, and Private Disaster Assistance Loan Programs,” 80 Federal Register 63715-63717,~~
~~October 21, 2015.~~
~~38 P.L. 110-234, Sec. 12085.~~
~~39 P.L. 110-234, Sec. 12084.~~
~~40 P.L. 110-234, Sec. 12083.~~
~~41 Testimony of Hannibal “Mike” Ware, Acting Inspector General, United States Small Business Administration, U.S.~~
~~Congress, House Committee on Small Business,~~ ~~Storm Watch: Making Sure SBA’s Disaster Loan Program Is~~
~~Prepared, 115th Cong., 1st sess., April 26, 2017, p. 33.~~
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Because these programs had limited use, Congress included a provision in P.L. 115-141, the Because these programs had limited use, Congress included a provision in P.L. 115-141, the
Consolidated Appropriations Act, 2018, which permanently cancelled $2.6 million in unobligated Consolidated Appropriations Act, 2018, which permanently cancelled $2.6 million in unobligated
balances available for the IDAP and the EDALP. balances available for the IDAP and the EDALP.
The CARES Act addressed loan processing issues by authorizing the SBA Administrator, in The CARES Act addressed loan processing issues by authorizing the SBA Administrator, in
response to economic injuries caused by COVID-19, to response to economic injuries caused by COVID-19, to
 waive the “credit not available elsewhere” requirement,  waive the “credit not available elsewhere” requirement,
 approve an applicant based solely on their credit score,  approve an applicant based solely on their credit score,
 not require applicants to submit a tax return or tax return transcript for approval,  not require applicants to submit a tax return or tax return transcript for approval,
 waive any rules related to the personal guarantee on advances and loans of not  waive any rules related to the personal guarantee on advances and loans of not
more than $200,000, and more than $200,000, and
 waive the requirement that the applicant needs to be in business for the one-year  waive the requirement that the applicant needs to be in business for the one-year
period before the disaster declaration (except that no waiver may be made for a period before the disaster declaration (except that no waiver may be made for a
business that was not in operation on January 31, 2020). business that was not in operation on January 31, 2020).
SBA EIDL Repayment and Forgiveness
Under present law and regulations, the first SBA EIDL payment is normally due five months after Under present law and regulations, the first SBA EIDL payment is normally due five months after
disbursement. However, on March 23, 2020, the SBA announced that it would defer payments on disbursement. However, on March 23, 2020, the SBA announced that it would defer payments on
existing disaster loans through December 31, 2020, “to help borrowers during this unprecedented existing disaster loans through December 31, 2020, “to help borrowers during this unprecedented
time.”time.”4244 The SBA also announced that payments on new EIDL loans would be deferred for one The SBA also announced that payments on new EIDL loans would be deferred for one
year (interest does accrue). year (interest does accrue).
43 Testimony of Hannibal “Mike” Ware, Acting Inspector General, United States Small Business Administration, U.S. Congress, House Committee on Small Business, Storm Watch: Making Sure SBA’s Disaster Loan Program Is Prepared, 115th Cong., 1st sess., April 26, 2017, p. 33. 44 SBA, “Carranza Implements Automatic Deferment on Existing SBA Disaster Loans Through End of 2020,” March Congressional Research Service 13 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options The CARES Act provides “impacted borrowers” adversely affected by COVID-19 complete The CARES Act provides “impacted borrowers” adversely affected by COVID-19 complete
payment deferment relief on a covered loan in its Paycheck Protection Program (PPP). The payment deferment relief on a covered loan in its Paycheck Protection Program (PPP). The
deferment may be for not less than six months and not more than one year if the borrower was in deferment may be for not less than six months and not more than one year if the borrower was in
operation on February 15, 2020, and has an application for a covered loan approved or pending operation on February 15, 2020, and has an application for a covered loan approved or pending
approval on or after the date of enactment. The SBA announced that PPP loan payments will be approval on or after the date of enactment. The SBA announced that PPP loan payments will be
deferred for six months. However, interest will continue to accrue on these loans during the six-deferred for six months. However, interest will continue to accrue on these loans during the six-
month deferment.month deferment.4345
The CARES Act also provides for PPP loan forgiveness under specified conditions related to the The CARES Act also provides for PPP loan forgiveness under specified conditions related to the
borrower’s retention of employees. Loan forgiveness is rare, but has been used in the past to help borrower’s retention of employees. Loan forgiveness is rare, but has been used in the past to help
businesses that were having difficulty repaying their loans. For example, loan forgiveness was businesses that were having difficulty repaying their loans. For example, loan forgiveness was
granted after Hurricane Betsy, when President Lyndon B. Johnson signed the Southeast Hurricane granted after Hurricane Betsy, when President Lyndon B. Johnson signed the Southeast Hurricane
Disaster Relief Act of 1965.Disaster Relief Act of 1965.4446 Section 3 of the act authorized the SBA Administrator to grant Section 3 of the act authorized the SBA Administrator to grant
disaster loan forgiveness or issue waivers for property lost or damaged in Florida, Louisiana, and disaster loan forgiveness or issue waivers for property lost or damaged in Florida, Louisiana, and
Mississippi as a result of the hurricane. The act stated that Mississippi as a result of the hurricane. The act stated that
to the extent such loss or damage is not compensated for by insurance or otherwise, (1) to the extent such loss or damage is not compensated for by insurance or otherwise, (1)
shall at the borrower’s option on that part of any loan in excess of $500, (A) cancel up to shall at the borrower’s option on that part of any loan in excess of $500, (A) cancel up to
$1,800 of the loan, or (B) waive interest due on the loan in a total amount of not more than $1,800 of the loan, or (B) waive interest due on the loan in a total amount of not more than
$1,800 over a period not to exceed three years; and (2) may lend to a privately owned $1,800 over a period not to exceed three years; and (2) may lend to a privately owned

~~42 SBA, “Carranza Implements Automatic Deferment on Existing SBA Disaster Loans Through End of 2020,” March~~
~~23, 2020, at https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/carranza-implements-~~
~~automatic-deferment-existing-sba-disaster-loans-through-end-2020.~~
~~43 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program,” 85 Federal Register 20813,~~
~~April 15, 2020.~~
~~44 P.L. 89-339, 79 Stat. 1301.~~
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school, college, or university without regard to whether the required financial assistance is school, college, or university without regard to whether the required financial assistance is
otherwise available from private sources, and may waive interest payments and defer otherwise available from private sources, and may waive interest payments and defer
principal payments on such a loan for the first three years of the term of the loan.principal payments on such a loan for the first three years of the term of the loan.4547
Disaster Grants
Historically, businesses that suffer uninsured loss as a result of a major disaster declaration are Historically, businesses that suffer uninsured loss as a result of a major disaster declaration are
not eligible for Federal Emergency Management Agency (FEMA) grant assistance, and grant not eligible for Federal Emergency Management Agency (FEMA) grant assistance, and grant
assistance from other federal sources is limited. On some occasions, Congress has provided assistance from other federal sources is limited. On some occasions, Congress has provided
disaster assistance to businesses through the Department of Housing and Urban Development’s disaster assistance to businesses through the Department of Housing and Urban Development’s
(HUD’s) Community Development Block Grant (CDBG) program. The CDBG program provides (HUD’s) Community Development Block Grant (CDBG) program. The CDBG program provides
loans and grants to eligible businesses to help them recover from disasters as well as grants loans and grants to eligible businesses to help them recover from disasters as well as grants
intended to attract new businesses to the disaster-stricken area. In a few cases, CDBG has also intended to attract new businesses to the disaster-stricken area. In a few cases, CDBG has also
been used to compensate businesses and workers for lost wages or revenues. been used to compensate businesses and workers for lost wages or revenues.
Although the President issued the first major disaster declaration to New York for COVID-19, Although the President issued the first major disaster declaration to New York for COVID-19,4648
CDBG disaster assistance is not available for all major disasters. States can use CDBG funding to CDBG disaster assistance is not available for all major disasters. States can use CDBG funding to
respond to emergencies or other “urgent needs” through the conventional CDBG entitlement and respond to emergencies or other “urgent needs” through the conventional CDBG entitlement and
states program,states program,4749 but existing (or future) CDBG monies generally must be reprogrammed in 23, 2020, at https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/carranza-implements-automatic-deferment-existing-sba-disaster-loans-through-end-2020. 45 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program,” 85 Federal Register 20813, April 15, 2020. 46 P.L. 89-339, 79 Stat. 1301. 47 P.L. 89-339, 79 Stat. 1301. 48 Federal Emergency Management Agency, New York Covid-19 Pandemic (DR-4480), March 3, 2020, at https://www.fema.gov/disaster/4480. 49 For example, the City of Seattle is currently administering $10,000 grants to small businesses using CDBG funds to respond to COVID-19. Congressional Research Service 14 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options ~~but existing (or future) CDBG monies generally must be reprogrammed in~~
consultation with HUD to respond to the emergency.consultation with HUD to respond to the emergency.4850 For these reasons, CDBG is generally used For these reasons, CDBG is generally used
for long-term recovery needs rather than providing immediate, direct disaster assistance. for long-term recovery needs rather than providing immediate, direct disaster assistance.
Thus, Congress could consider providing business grants through FEMA or the SBA. Enlisting Thus, Congress could consider providing business grants through FEMA or the SBA. Enlisting
FEMA to administer the program may offer several benefits. First, FEMA already has grant FEMA to administer the program may offer several benefits. First, FEMA already has grant
processing operations in place. It might be relatively easier to expand the operations to include processing operations in place. It might be relatively easier to expand the operations to include
small businesses disaster grants rather than establishing new grant-making operations within small businesses disaster grants rather than establishing new grant-making operations within
SBA. Second, having FEMA administer the small business disaster grant program may limit SBA. Second, having FEMA administer the small business disaster grant program may limit
duplication of administrative functions between FEMA and SBA. Third, it would provide access duplication of administrative functions between FEMA and SBA. Third, it would provide access
to FEMA’s Disaster Relief Fund (DRF) which, as of July 31, 2020, had roughly $74 billion for to FEMA’s Disaster Relief Fund (DRF) which, as of July 31, 2020, had roughly $74 billion for
disaster assistance activities.disaster assistance activities.4951
In contrast, Congress could decide to have SBA administer the program because it already has a In contrast, Congress could decide to have SBA administer the program because it already has a
framework in place to evaluate business disaster needs and disaster loan eligibility. Congress may framework in place to evaluate business disaster needs and disaster loan eligibility. Congress may

~~45 P.L. 89-339, 79 Stat. 1301.~~
~~46 Federal Emergency Management Agency, New York Covid-19 Pandemic (DR-4480), March 3, 2020, at~~
~~https://www.fema.gov/disaster/4480.~~
~~47 For example, the City of Seattle is currently administering $10,000 grants to small businesses using CDBG funds to~~
~~respond to COVID-19.~~
48need to make statutory changes to SBA’s disaster loan account or authorize a new account to receive appropriations for disaster grants. Another concern about providing grants to businesses is whether businesses provided SBA EIDL will be eligible for grant assistance. For example, in some cases homeowners and businesses that accepted disaster loans were deemed ineligible for disaster grants. This may make some businesses reluctant to apply for SBA EIDL and instead hold out for the possibility of a grant. Congress may therefore allow businesses to use grant money to pay down their SBA EIDL. Another potential concern is waste, fraud, and abuse. For example, Section 1210 of the Disaster Recovery Reform Act of 2018 (DRRA, Division D of P.L. 115-254) prohibits the President from determining loans as duplicative assistance provided all federal assistance is used toward loss resulting from an emergency or major disaster under the Stafford Act. Consequently, businesses that obtain SBA EIDL and a grant for the same purposes would conceivably not be required to pay back the duplicative award. Congress could consider limiting grants to relatively small businesses as compared to what is considered a small business according to SBA size standards.52 For example, business grants could be limited to businesses with 10 or fewer employees. The CARES Act authorizes the SBA Administrator to provide up to $10,000 as an advance payment in the amount requested within three days after receiving an EIDL application from an eligible entity. Applicants are not required to repay the advance payment, referred to in the CARES Act as an Emergency EIDL grant, even if subsequently denied an EIDL loan. Due to 50 For eligible Community Development Block Grant activities related to COVID-19, see U.S. Department of Housing For eligible Community Development Block Grant activities related to COVID-19, see U.S. Department of Housing
and Urban Development, “Quick Guide to CDBG Eligible Activities to Support Infectious Disease Response,” March and Urban Development, “Quick Guide to CDBG Eligible Activities to Support Infectious Disease Response,” March
19, 2020, at https://files.hudexchange.info/resources/documents/Quick-Guide-CDBG-Infectious-Disease-Response.pdf. 19, 2020, at https://files.hudexchange.info/resources/documents/Quick-Guide-CDBG-Infectious-Disease-Response.pdf.
4951 Federal Emergency Management Agency, Federal Emergency Management Agency, Disaster Relief Fund: Monthly Report, August 7, 2020, at , August 7, 2020, at
https://www.fema.gov/about/reports-and-data/disaster-relief-fund-monthly-reports. For more information on the DRF https://www.fema.gov/about/reports-and-data/disaster-relief-fund-monthly-reports. For more information on the DRF
see CRS Report R45484, see CRS Report R45484, The Disaster Relief Fund: Overview and Issues, by William L. Painter. , by William L. Painter.
Also, on August 8, 2020, President Trump issued a memorandum directing “up to $44 billion from the Disaster Relief Also, on August 8, 2020, President Trump issued a memorandum directing “up to $44 billion from the Disaster Relief
Fund at the statutorily mandated 75 percent Federal cost share be made available for lost wages assistance to eligible Fund at the statutorily mandated 75 percent Federal cost share be made available for lost wages assistance to eligible
claimants, to supplement State expenditures in providing these payments. At least $25 billion of total DRF balances claimants, to supplement State expenditures in providing these payments. At least $25 billion of total DRF balances
will be set aside to support ongoing disaster response and recovery efforts and potential 2020 major disaster costs.” See will be set aside to support ongoing disaster response and recovery efforts and potential 2020 major disaster costs.” See
President Donald Trump, “Memorandum on Authorizing the Other Needs Assistance Program for Major Disaster President Donald Trump, “Memorandum on Authorizing the Other Needs Assistance Program for Major Disaster
Declarations Related to Coronavirus Disease 2019,” August 8, 2020, at https://www.whitehouse.gov/presidential-Declarations Related to Coronavirus Disease 2019,” August 8, 2020, at https://www.whitehouse.gov/presidential-
actions/memorandum-authorizing-needs-assistance-program-major-disaster-declarations-related-coronavirus-disease-actions/memorandum-authorizing-needs-assistance-program-major-disaster-declarations-related-coronavirus-disease-
2019/. 2019/.
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~~need to make statutory changes to SBA’s disaster loan account or authorize a new account to~~
~~receive appropriations for disaster grants.~~
~~Another concern about providing grants to businesses is whether businesses provided SBA EIDL~~
~~will be eligible for grant assistance. For example, in some cases homeowners and businesses that~~
~~accepted disaster loans were deemed ineligible for disaster grants. This may make some~~
~~businesses reluctant to apply for SBA EIDL and instead hold out for the possibility of a grant.~~
~~Congress may therefore allow businesses to use grant money to pay down their SBA EIDL.~~
~~Another potential concern is waste, fraud, and abuse. For example, Section 1210 of the Disaster~~
~~Recovery Reform Act of 2018 (DRRA, Division D of P.L. 115-254) prohibits the President from~~
~~determining loans as duplicative assistance provided all federal assistance is used toward loss~~
~~resulting from an emergency or major disaster under the Stafford Act. Consequently, businesses~~
~~that obtain SBA EIDL and a grant for the same purposes would conceivably not be required to~~
~~pay back the duplicative award.~~
~~Congress could consider limiting grants to relatively small businesses as compared to what is~~
~~considered a small business according to SBA size standards.50 For example, business grants~~
~~could be limited to businesses with 10 or fewer employees.~~
~~The CARES Act authorizes the SBA Administrator to provide up to $10,000 as an advance~~
~~payment in the amount requested within three days after receiving an EIDL application from an~~
~~eligible entity. Applicants are not required to repay the advance payment, referred to in the~~
~~CARES Act as an Emergency EIDL grant, even if subsequently denied an EIDL loan. Due to~~
52 For more information and analysis concerning SBA size standards, see CRS Report R40860, Small Business Size Standards: A Historical Analysis of Contemporary Issues, by Robert Jay Dilger. Congressional Research Service 15 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options anticipated demand, the SBA limited Emergency EIDL grants to $1,000 per employee, up to a anticipated demand, the SBA limited Emergency EIDL grants to $1,000 per employee, up to a
maximum of $10,000. maximum of $10,000.
The CARES Act addressed waste, fraud, and abuse by providing the SBA’s OIG $25 million for The CARES Act addressed waste, fraud, and abuse by providing the SBA’s OIG $25 million for
oversight of the SBA’s administration of its lending programs and for investigations to serve as a oversight of the SBA’s administration of its lending programs and for investigations to serve as a
general deterrent to fraud, waste, and abuse. general deterrent to fraud, waste, and abuse.
Also, as mentioned, P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, Also, as mentioned, P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits,
and Venues Act (Division N, Title III of the Consolidated Appropriations Act of 2021), and Venues Act (Division N, Title III of the Consolidated Appropriations Act of 2021),
appropriated an additional $20 billion for the EIDL Targeted advance payment (grant) program. appropriated an additional $20 billion for the EIDL Targeted advance payment (grant) program.
SBA’s OIG is to receive $20 million of that amount “to prevent waste, fraud, and abuse” in the SBA’s OIG is to receive $20 million of that amount “to prevent waste, fraud, and abuse” in the
awarding of the grants. awarding of the grants.
SBA EIDL Interest Rates
~~According to the SBA’s March 17, 2020, press release,~~ SBA EIDL interest rates for COVD-19 SBA EIDL interest rates for COVD-19
are 3.75% for businesses and 2.75% for nonprofit organizations.are 3.75% for businesses and 2.75% for nonprofit organizations.5153
SBA disaster loan interest rates have been a long-standing congressional concern. First, there is SBA disaster loan interest rates have been a long-standing congressional concern. First, there is
concern about the ability of disaster victims to pay off their loans. Second, there is concern about concern about the ability of disaster victims to pay off their loans. Second, there is concern about
how interest rates are determined given the complexity of the statutory language about disaster how interest rates are determined given the complexity of the statutory language about disaster
loan interest rates. 15 U.S.C. §636(d)(5)(C)) states that interest rates are “in the case of a loan interest rates. 15 U.S.C. §636(d)(5)(C)) states that interest rates are “in the case of a

~~50 For more information and analysis concerning SBA size standards, see CRS Report R40860,~~ ~~Small Business Size~~
~~Standards: A Historical Analysis of Contemporary Issues, by Robert Jay Dilger.~~
~~51 Small Business Administration,~~ ~~SBA Updates Criteria on States for Requesting Disaster Assistance Loans for Small~~
~~Businesses Impacted by Coronavirus (COVID-19), March 17, 2020, at https://www.sba.gov/about-sba/sba-newsroom/~~
~~press-releases-media-advisories/sba-updates-criteria-states-requesting-disaster-assistance-loans-small-businesses-~~
~~impacted.~~
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business, private nonprofit organization, or other concern, including agricultural cooperatives, business, private nonprofit organization, or other concern, including agricultural cooperatives,
unable to obtain credit elsewhere, not to exceed 4 per centum per annum.”unable to obtain credit elsewhere, not to exceed 4 per centum per annum.”5254 To determine EIDL To determine EIDL
interest rates, SBA uses a formula under 15 U.S.C. §636(d)(4)(A): interest rates, SBA uses a formula under 15 U.S.C. §636(d)(4)(A):
Notwithstanding the provisions of the constitution of any State or the laws of any State Notwithstanding the provisions of the constitution of any State or the laws of any State
limiting the rate or amount of interest which may be charged, taken, received, or reserved, limiting the rate or amount of interest which may be charged, taken, received, or reserved,
the maximum legal rate of interest on any financing made on a deferred basis pursuant to the maximum legal rate of interest on any financing made on a deferred basis pursuant to
this subsection shall not exceed a rate prescribed by the Administration, and the rate of this subsection shall not exceed a rate prescribed by the Administration, and the rate of
interest for the Administration’s share of any direct or immediate participation loan shall interest for the Administration’s share of any direct or immediate participation loan shall
not exceed the current average market yield on outstanding marketable obligations of the not exceed the current average market yield on outstanding marketable obligations of the
United States with remaining periods to maturity comparable to the average maturities of United States with remaining periods to maturity comparable to the average maturities of
such loans and adjusted to the nearest one-eighth of 1 per centum, and an additional amount such loans and adjusted to the nearest one-eighth of 1 per centum, and an additional amount
as determined by the Administration, but not to exceed 1 per centum per annum: Provided, as determined by the Administration, but not to exceed 1 per centum per annum: Provided,
That for those loans to assist any public or private organization for the handicapped or to That for those loans to assist any public or private organization for the handicapped or to
assist any handicapped individual as provided in paragraph (10) of this subsection, the assist any handicapped individual as provided in paragraph (10) of this subsection, the
interest rate shall be 3 per centum per annum. interest rate shall be 3 per centum per annum.
Congress could request SBA to reevaluate its interpretation of 15 U.S.C. §636(d)(4)(A) and Congress could request SBA to reevaluate its interpretation of 15 U.S.C. §636(d)(4)(A) and
provide detailed information explaining how the formula provides nonprofit organizations with provide detailed information explaining how the formula provides nonprofit organizations with
lower interest rates than small businesses. Alternatively, Congress could change the formula lower interest rates than small businesses. Alternatively, Congress could change the formula
under the Small Business Act if it considered the language ambiguous, or it could designate an under the Small Business Act if it considered the language ambiguous, or it could designate an
interest rate (including a zero interest rate) for all SBA EIDL for the duration of COVID-19. interest rate (including a zero interest rate) for all SBA EIDL for the duration of COVID-19.
53 SBA, SBA Updates Criteria on States for Requesting Disaster Assistance Loans for Small Businesses Impacted by Coronavirus (COVID-19), March 17, 2020, at https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/sba-updates-criteria-states-requesting-disaster-assistance-loans-small-businesses-impacted. 54 Only businesses and nonprofit organizations that cannot get credit elsewhere are eligible for SBA EIDL. Congressional Research Service 16 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options SBA Capital Access Programs
Overview
The SBA has authority to make direct loans but, with the exception of disaster loans and loans to The SBA has authority to make direct loans but, with the exception of disaster loans and loans to
Microloan program intermediaries, has not exercised that authority since 1998.Microloan program intermediaries, has not exercised that authority since 1998.5355 The SBA The SBA
indicated that it stopped issuing direct business loans primarily because the subsidy rate was “10 indicated that it stopped issuing direct business loans primarily because the subsidy rate was “10
to 15 times higher” than the subsidy rate for its loan guaranty programs.to 15 times higher” than the subsidy rate for its loan guaranty programs.5456 Instead of making Instead of making
direct loans, the SBA guarantees loans issued by approved lenders to encourage those lenders to direct loans, the SBA guarantees loans issued by approved lenders to encourage those lenders to
provide loans to small businesses “that might not otherwise obtain financing on reasonable terms provide loans to small businesses “that might not otherwise obtain financing on reasonable terms

~~52 Only businesses and nonprofit organizations that cannot get credit elsewhere are eligible for SBA EIDL.~~
53and conditions.”57 With few exceptions, to qualify for SBA assistance, an organization must be both a for-profit business and small.58 What Is a “Small Business”? To participate in any of the SBA loan guaranty programs, a business must meet the Small Business Act’s definition of small business. This is a business that  is organized for profit;  has a place of business in the United States;  operates primarily within the United States or makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials, or labor;  is independently owned and operated;  is not dominant in its field on a national basis;59 and  does not exceed size standards established, and updated periodically, by the SBA.60 The business may be a sole proprietorship, partnership, corporation, or any other legal form. 55 Prior to October 1, 1985, the SBA provided direct business loans to qualified small businesses. From October 1, Prior to October 1, 1985, the SBA provided direct business loans to qualified small businesses. From October 1,
1985, to September 30, 1994, SBA direct business loan eligibility was limited to qualified small businesses owned by 1985, to September 30, 1994, SBA direct business loan eligibility was limited to qualified small businesses owned by
individuals with low incomes or located in areas of high unemployment, owned by Vietnam-era or disabled veterans, individuals with low incomes or located in areas of high unemployment, owned by Vietnam-era or disabled veterans,
owned by the handicapped or certain organizations employing them, and certified under the minority small business owned by the handicapped or certain organizations employing them, and certified under the minority small business
capital ownership development program. Microloan program intermediaries were also eligible. On October 1, 1994, capital ownership development program. Microloan program intermediaries were also eligible. On October 1, 1994,
SBA direct loan eligibility was limited to Microloan program intermediaries and small businesses owned by the SBA direct loan eligibility was limited to Microloan program intermediaries and small businesses owned by the
handicapped. Funding to support direct loans to the handicapped through the Handicapped Assistance (renamed the handicapped. Funding to support direct loans to the handicapped through the Handicapped Assistance (renamed the
Disabled Assistance) Loan program ended in 1996. The last loan under the Disabled Assistance Loan program was Disabled Assistance) Loan program ended in 1996. The last loan under the Disabled Assistance Loan program was
issued in FY1998. See U.S. Congress, House Committee on Small Business, issued in FY1998. See U.S. Congress, House Committee on Small Business, Summary of Activities, 105rd Cong., 2nd , 105rd Cong., 2nd
sess., January 2, 1999, H.Rept. 105-849 (Washington, DC: GPO, 1999), p. 8. sess., January 2, 1999, H.Rept. 105-849 (Washington, DC: GPO, 1999), p. 8.
5456 U.S. Congress, Senate Committee on Small Business, U.S. Congress, Senate Committee on Small Business, Hearing on the Proposed Fiscal Year 1995 Budget for the
Small Business Administration, 103rd Cong., 2nd sess., February 22, 1994, S.Hrg. 103-583 (Washington, DC: GPO, , 103rd Cong., 2nd sess., February 22, 1994, S.Hrg. 103-583 (Washington, DC: GPO,
1994), p. 20. 1994), p. 20.
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~~and conditions.”55 With few exceptions, to qualify for SBA assistance, an organization must be~~
~~both a for-profit business and small.56~~
~~What Is a “Small Business”?~~
~~To participate in any of the SBA loan guaranty programs, a business must meet the Small~~
~~Business Act’s definition of small business. This is a business that~~
~~ is organized for profit;~~
~~ has a place of business in the United States;~~
~~ operates primarily within the United States or makes a significant contribution to~~
~~the U.S. economy through payment of taxes or use of American products,~~
~~materials, or labor;~~
~~ is independently owned and operated;~~
~~ is not dominant in its field on a national basis;57 and~~
~~ does not exceed size standards established, and updated periodically, by the~~
~~SBA.58~~
~~The business may be a sole proprietorship, partnership, corporation, or any other legal form.~~
~~What Is “Small”?59~~57 SBA, Fiscal Year 2010 Congressional Budget Justification, p. 30, at https://www.sba.gov/sites/default/files/Congressional_Budget_Justification_2010.pdf. 58 The SBA provides financial assistance to nonprofit organizations to provide training to small business owners and to provide loans to small businesses through the SBA Microloan program. Also, nonprofit child care centers are eligible to participate in SBA’s Microloan program. 59 13 C.F.R. §121.105. 60 P.L. 111-240, the Small Business Jobs Act of 2010, requires the SBA to conduct a detailed review of not less than Congressional Research Service 17 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options What Is “Small”?61
The SBA uses two measures to determine if a business is small: SBA-derived industry specific The SBA uses two measures to determine if a business is small: SBA-derived industry specific
size standards or a combination of the business’s net worth and net income. For example, size standards or a combination of the business’s net worth and net income. For example,
businesses participating in the SBA’s 7(a) loan guaranty program are deemed small if they either businesses participating in the SBA’s 7(a) loan guaranty program are deemed small if they either
meet the SBA’s industry-specific size standards for firms in 1,047 industrial classifications in 18 meet the SBA’s industry-specific size standards for firms in 1,047 industrial classifications in 18
subindustry activities described in the North American Industry Classification System (NAICS) subindustry activities described in the North American Industry Classification System (NAICS)
or do not have more than $15 million in tangible net worth and not more than $5 million in or do not have more than $15 million in tangible net worth and not more than $5 million in
average net income after federal taxes (excluding any carryover losses) for the two full fiscal average net income after federal taxes (excluding any carryover losses) for the two full fiscal
years before the date of the application. All of the company’s subsidiaries, parent companies, and years before the date of the application. All of the company’s subsidiaries, parent companies, and
affiliates are considered in determining if it meets the size standard.affiliates are considered in determining if it meets the size standard.6062
The SBA’s industry size standards vary by industry, and they are based on one of the following The SBA’s industry size standards vary by industry, and they are based on one of the following
four measures: the firm’s (1) average annual receipts in the previous three (or five) years, (2) four measures: the firm’s (1) average annual receipts in the previous three (or five) years, (2)
number of employees, (3) asset size, or (4) for refineries, a combination of number of employees number of employees, (3) asset size, or (4) for refineries, a combination of number of employees
and barrel per day refining capacity. Historically, the SBA has used the number of employees to and barrel per day refining capacity. Historically, the SBA has used the number of employees to

~~55 SBA, Fiscal Year 2010 Congressional Budget Justification, p. 30, at https://www.sba.gov/sites/default/files/~~
~~Congressional_Budget_Justification_2010.pdf.~~
~~56 The SBA provides financial assistance to nonprofit organizations to provide training to small business owners and to~~
~~provide loans to small businesses through the SBA Microloan program. Also, nonprofit child care centers are eligible~~
~~to participate in SBA’s Microloan program.~~
~~57 13 C.F.R. §121.105.~~
~~58 P.L. 111-240, the Small Business Jobs Act of 2010, requires the SBA to conduct a detailed review of not less than~~
~~one-third of the SBA’s industry size standards every 18 months beginning on the new law’s date of enactment~~
~~(September 27, 2010) and ensure that each size standard is reviewed at least once every five years.~~
~~59 For additional information and analysis, see CRS Report R40860,~~ ~~Small Business Size Standards: A Historical~~
~~Analysis of Contemporary Issues, by Robert Jay Dilger.~~
~~60 13 C.F.R. §121.201 and P.L. 111-240, the Small Business Act of 2010, §1116. Alternative Size Standards.~~
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determine if manufacturing and mining companies are small and average annual receipts for most determine if manufacturing and mining companies are small and average annual receipts for most
other industries. other industries.
The SBA’s size standards are designed to encourage competition within each industry. They are The SBA’s size standards are designed to encourage competition within each industry. They are
derived through an assessment of the following four economic factors: “average firm size, derived through an assessment of the following four economic factors: “average firm size,
average assets size as a proxy of start-up costs and entry barriers, the 4-firm concentration ratio as average assets size as a proxy of start-up costs and entry barriers, the 4-firm concentration ratio as
a measure of industry competition, and size distribution of firms.”a measure of industry competition, and size distribution of firms.”6163 The SBA also considers the The SBA also considers the
ability of small businesses to compete for federal contracting opportunities and, when necessary, ability of small businesses to compete for federal contracting opportunities and, when necessary,
several secondary factors “as they are relevant to the industries and the interests of small several secondary factors “as they are relevant to the industries and the interests of small
businesses, including technological change, competition among industries, industry growth businesses, including technological change, competition among industries, industry growth
trends, and impacts of size standard revisions on small businesses.”trends, and impacts of size standard revisions on small businesses.”6264
SBA Loan Guarantee Programs
Overview
The SBA provides loan guarantees for small businesses that cannot obtain credit elsewhere. Its The SBA provides loan guarantees for small businesses that cannot obtain credit elsewhere. Its
largest loan guaranty programs are the 7(a) loan guaranty program, the 504/CDC loan guaranty largest loan guaranty programs are the 7(a) loan guaranty program, the 504/CDC loan guaranty
program, and the Microloan program. program, and the Microloan program.
The SBA’s loan guaranty programs require personal guarantees from borrowers and share the risk The SBA’s loan guaranty programs require personal guarantees from borrowers and share the risk
of default with lenders by making the guaranty less than 100%. In the event of a default, the of default with lenders by making the guaranty less than 100%. In the event of a default, the
borrower owes the amount contracted less the value of any collateral liquidated. The SBA can borrower owes the amount contracted less the value of any collateral liquidated. The SBA can
attempt to recover the unpaid debt through administrative offset, salary offset, or IRS tax refund attempt to recover the unpaid debt through administrative offset, salary offset, or IRS tax refund
offset. Most types of businesses are eligible for loan guarantees. A list of ineligible businesses offset. Most types of businesses are eligible for loan guarantees. A list of ineligible businesses
one-third of the SBA’s industry size standards every 18 months beginning on the new law’s date of enactment (September 27, 2010) and ensure that each size standard is reviewed at least once every five years. 61 For additional information and analysis, see CRS Report R40860, Small Business Size Standards: A Historical Analysis of Contemporary Issues, by Robert Jay Dilger. 62 13 C.F.R. §121.201 and P.L. 111-240, the Small Business Act of 2010, §1116. Alternative Size Standards. 63 SBA, Office of Government Contracting and Business Development, “SBA Size Standards Methodology,” April 2019, p. 29, at https://www.sba.gov/document/support—size-standards-methodology-white-paper (hereinafter cited as SBA, “SBA Size Standards Methodology”). 64 SBA, “SBA Size Standards Methodology,” p. 1. Congressional Research Service 18 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options (such as insurance companies, real estate investment firms, firms involved in financial (such as insurance companies, real estate investment firms, firms involved in financial
speculation or pyramid sales, and businesses involved in illegal activities) is contained in 13 speculation or pyramid sales, and businesses involved in illegal activities) is contained in 13
C.F.R. §120.110.C.F.R. §120.110.6365 With one exception, nonprofit and charitable organizations are also With one exception, nonprofit and charitable organizations are also
ineligible.ineligible.6466
Most of these programs charge fees to help offset program costs, including costs related to loan Most of these programs charge fees to help offset program costs, including costs related to loan
defaults. In most instances, the fees are set in statute. For example, for 7(a) loans with a maturity defaults. In most instances, the fees are set in statute. For example, for 7(a) loans with a maturity
exceeding 12 months, the SBA is authorized to charge lenders an up-front guaranty fee of up to exceeding 12 months, the SBA is authorized to charge lenders an up-front guaranty fee of up to
2% for the SBA guaranteed portion of loans of $150,000 or less, up to 3% for the SBA guaranteed 2% for the SBA guaranteed portion of loans of $150,000 or less, up to 3% for the SBA guaranteed
portion of loans exceeding $150,000 but not more than $700,000, and up to 3.5% for the SBA portion of loans exceeding $150,000 but not more than $700,000, and up to 3.5% for the SBA
guaranteed portion of loans exceeding $700,000. Lenders who have a 7(a) loan that has a SBA guaranteed portion of loans exceeding $700,000. Lenders who have a 7(a) loan that has a SBA
guaranteed portion in excess of $1 million can be charged an additional fee not to exceed 0.25% guaranteed portion in excess of $1 million can be charged an additional fee not to exceed 0.25%
of the guaranteed amount in excess of $1 million. of the guaranteed amount in excess of $1 million.

~~61 SBA, Office of Government Contracting and Business Development, “SBA Size Standards Methodology,” April~~
~~2019, p. 29, at https://www.sba.gov/document/support—size-standards-methodology-white-paper (hereinafter cited as~~
~~SBA, “SBA Size Standards Methodology”).~~
~~62 SBA, “SBA Size Standards Methodology,” p. 1.~~
~~63 Title 13 of the Code of Federal Regulations can be viewed at https://www.gpo.gov/fdsys/browse/~~
~~collectionCfr.action?selectedYearFrom=2016&go=Go.~~
~~64 P.L. 105-135, the Small Business Reauthorization Act of 1997, expanded the SBA’s Microloan program’s eligibility~~
~~to include borrowers establishing a nonprofit child care business.~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

7(a) loans are also subject to an ongoing servicing fee not to exceed 0.55% of the outstanding 7(a) loans are also subject to an ongoing servicing fee not to exceed 0.55% of the outstanding
balance of the guaranteed portion of the loan.balance of the guaranteed portion of the loan.6567 In addition, lenders are authorized to collect fees In addition, lenders are authorized to collect fees
from borrowers to offset their administrative expenses. from borrowers to offset their administrative expenses.
The SBA’s goal is to achieve a zero subsidy rate, meaning that the appropriation of budget The SBA’s goal is to achieve a zero subsidy rate, meaning that the appropriation of budget
authority for new loan guaranties is not required. authority for new loan guaranties is not required.
In an effort to assist small business owners, the SBA has, from time-to-time, reduced its fees. For In an effort to assist small business owners, the SBA has, from time-to-time, reduced its fees. For
example, in FY2019, the SBA waived the annual service fee for 7(a) loans of $150,000 or less example, in FY2019, the SBA waived the annual service fee for 7(a) loans of $150,000 or less
made to small businesses located in a rural area or a HUBZone and reduced the up-front one-time made to small businesses located in a rural area or a HUBZone and reduced the up-front one-time
guaranty fee for these loans from 2% to 0.6667% of the guaranteed portion of the loan.guaranty fee for these loans from 2% to 0.6667% of the guaranteed portion of the loan.6668
In an effort to assist small businesses adversely affected by COVID-19, the CARES Act In an effort to assist small businesses adversely affected by COVID-19, the CARES Act
permanently required the SBA to waive the up-front, one-time guaranty fee on all veteran loans permanently required the SBA to waive the up-front, one-time guaranty fee on all veteran loans
under the 7(a) SBAExpress program.under the 7(a) SBAExpress program.6769 In addition, P.L. 116-260, the Economic Aid to Hard-Hit In addition, P.L. 116-260, the Economic Aid to Hard-Hit
Small Businesses, Nonprofits, and Venues Act (Division N, Title III of the Consolidated Small Businesses, Nonprofits, and Venues Act (Division N, Title III of the Consolidated
Appropriations Act of 2021), waives SBA fees in the 7(a) and 504/CDC loan guarantee programs Appropriations Act of 2021), waives SBA fees in the 7(a) and 504/CDC loan guarantee programs
in FY2021. in FY2021.
The 7(a) Loan Guaranty ~~Program68~~Program70
The 7(a) loan guaranty program is named after the section of the Small Business Act that The 7(a) loan guaranty program is named after the section of the Small Business Act that
authorizes it. The loans are made by SBA lending partners (mostly banks but also some other authorizes it. The loans are made by SBA lending partners (mostly banks but also some other
~~financial institutions) and partially guaranteed by the SBA. Borrowers may use 7(a) loan proceeds~~
~~to establish a new business or to assist in the operation, acquisition, or expansion of an existing~~
~~business. 7(a) loan proceeds may be used to~~
~~ acquire land (by purchase or lease);~~
~~ improve a site (e.g., grading, streets, parking lots, landscaping), including up to~~
~~5% for community improvements such as curbs and sidewalks;~~
~~ purchase one or more existing buildings;~~
~~ convert, expand, or renovate one or more existing buildings;~~
~~ construct one or more new buildings;~~
~~ acquire (by purchase or lease) and install fixed assets;~~
~~ purchase inventory, supplies, and raw materials;~~
~~ finance working capital; and~~

~~65 15 U.S.C. §636(a)(23)(a).~~
66 65 Title 13 of the Code of Federal Regulations can be viewed at https://www.gpo.gov/fdsys/browse/collectionCfr.action?selectedYearFrom=2016&go=Go. 66 P.L. 105-135, the Small Business Reauthorization Act of 1997, expanded the SBA’s Microloan program’s eligibility to include borrowers establishing a nonprofit child care business. 67 15 U.S.C. §636(a)(23)(a). 68 SBA, “SBA Information Notice: 7(a) Fees Effective on October 1, 2018,” at https://www.sba.gov/document/ SBA, “SBA Information Notice: 7(a) Fees Effective on October 1, 2018,” at https://www.sba.gov/document/
information-notice-5000-180010-7a-fees-effective-october-1-2018. information-notice-5000-180010-7a-fees-effective-october-1-2018.
6769 The SBA had waived the up-front, one-time guaranty fee on all veteran loans under the 7(a) SBAExpress program The SBA had waived the up-front, one-time guaranty fee on all veteran loans under the 7(a) SBAExpress program
from January 1, 2014, through the end of FY2015. P.L. 114-38 made the SBAExpress program’s veteran fee waiver from January 1, 2014, through the end of FY2015. P.L. 114-38 made the SBAExpress program’s veteran fee waiver
permanent, except during any upcoming fiscal year for which the President’s budget, submitted to Congress, includes a permanent, except during any upcoming fiscal year for which the President’s budget, submitted to Congress, includes a
cost for the 7(a) program, in its entirety, that is above zero. The SBA waived the fee, pursuant to P.L. 114-38, in cost for the 7(a) program, in its entirety, that is above zero. The SBA waived the fee, pursuant to P.L. 114-38, in
FY2016, FY2017, FY2018, and FY2019. P.L. 116-136, the CARES Act, removed the requirement that the cost for the FY2016, FY2017, FY2018, and FY2019. P.L. 116-136, the CARES Act, removed the requirement that the cost for the
7(a) program is above zero. 7(a) program is above zero.
6870 For further information and analysis, see CRS Report R41146, For further information and analysis, see CRS Report R41146, Small Business Administration 7(a) Loan Guaranty
Program, by Robert Jay Dilger. , by Robert Jay Dilger.
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COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options

financial institutions) and partially guaranteed by the SBA. Borrowers may use 7(a) loan proceeds to establish a new business or to assist in the operation, acquisition, or expansion of an existing business. 7(a) loan proceeds may be used to  acquire land (by purchase or lease);  improve a site (e.g., grading, streets, parking lots, landscaping), including up to 5% for community improvements such as curbs and sidewalks;  purchase one or more existing buildings;  convert, expand, or renovate one or more existing buildings;  construct one or more new buildings;  acquire (by purchase or lease) and install fixed assets;  purchase inventory, supplies, and raw materials;  finance working capital; and  refinance certain outstanding debts.71~~ refinance certain outstanding debts.69~~
Lenders are permitted to charge borrowers fees to recoup specified expenses and are allowed to Lenders are permitted to charge borrowers fees to recoup specified expenses and are allowed to
charge borrowers “a reasonable fixed interest rate” or, with the SBA’s approval, a variable charge borrowers “a reasonable fixed interest rate” or, with the SBA’s approval, a variable
interest rate.interest rate.7072 The SBA uses a multistep formula to determine the maximum allowable fixed The SBA uses a multistep formula to determine the maximum allowable fixed
interest rate for all 7(a) loans (with the exception of the Export Working Capital Program and interest rate for all 7(a) loans (with the exception of the Export Working Capital Program and
Community Advantage loans) and periodically publishes that rate and the maximum allowable Community Advantage loans) and periodically publishes that rate and the maximum allowable
variable interest rate in the variable interest rate in the Federal Register..7173
In In ~~January~~February 2021, the maximum allowable fixed interest rates are 11.25% for 7(a) loans of $25,000 2021, the maximum allowable fixed interest rates are 11.25% for 7(a) loans of $25,000
or less; 10.25% for loans over $25,000 but not exceeding $50,000; 9.25% for loans over $50,000 or less; 10.25% for loans over $25,000 but not exceeding $50,000; 9.25% for loans over $50,000
up to and including $250,000; and 8.25% for loans greater than $250,000.up to and including $250,000; and 8.25% for loans greater than $250,000.7274
Maximum interest rates allowed on variable-rate 7(a) loans are pegged to either the prime rate, Maximum interest rates allowed on variable-rate 7(a) loans are pegged to either the prime rate,
the 30-day London Interbank Offered Rate (LIBOR) plus 3%, or the SBA optional peg rate, the 30-day London Interbank Offered Rate (LIBOR) plus 3%, or the SBA optional peg rate,
which is a weighted average of rates that the federal government pays for loans with maturities which is a weighted average of rates that the federal government pays for loans with maturities
similar to the guaranteed loan. The allowed spread over the prime rate, LIBOR base rate, or SBA similar to the guaranteed loan. The allowed spread over the prime rate, LIBOR base rate, or SBA
optional peg rate depends on the loan amount and the loan’s maturity (under seven years or seven optional peg rate depends on the loan amount and the loan’s maturity (under seven years or seven
years or more).years or more).7375 The adjustment period can be no more than monthly and cannot change over the The adjustment period can be no more than monthly and cannot change over the
life of the loan. life of the loan.
In FY2020, the SBA approved 42,302 7(a) loans, totaling $22.6 billion. In FY2020, the SBA approved 42,302 7(a) loans, totaling $22.6 billion.7476 In FY2019, there were 1,708 active lending partners providing 7(a) loans. 71 13 C.F.R. §120.120. 72 13 C.F.R. §120.213. 73 ~~In FY2019, there were~~
~~1,708 active lending partners providing 7(a) loans.~~
~~As mentioned, the CARES Act appropriated $17 billion to pay the principal, interest, and any~~
~~associated fees that are owed on an existing 7(a) loan, 504/CDC loan, or Microloan and for loans~~
~~subsequently approved and fully disbursed prior to September 27, 2020, for a six-month period.75~~
~~P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act~~
~~(Division N, Title III of the Consolidated Appropriations Act of 2021), appropriated $3.5 billion~~
~~to resume these payments, capped at $9,000 per month per borrower. Payments are dependent on~~
~~when the loan was disbursed, the type of loan received, and the business’s industry.~~
~~For example, the SBA will pay at least three additional monthly payments on loans that were in~~
~~repayment before March 27, 2020, starting with the next payment due on or after February 1,~~
~~2021. After the first three monthly payments are provided, businesses with an SBA Community~~
~~Advantage loan, Microloan, or operating in specified economically hard-hit industries will~~

~~69 13 C.F.R. §120.120.~~
~~70 13 C.F.R. §120.213.~~
71 SBA, “Maximum Allowable 7(a) Fixed Interest Rates,” 83 SBA, “Maximum Allowable 7(a) Fixed Interest Rates,” 83 Federal Register 55478, November 6, 2018. For the 55478, November 6, 2018. For the
previously used fixed interest rates formula, see SBA, “Business Loan Program Maximum Allowable Fixed Rate,” 74 previously used fixed interest rates formula, see SBA, “Business Loan Program Maximum Allowable Fixed Rate,” 74
Federal Register 50263-50264, September 30, 2009. The SBA has a separate formula for Community Advantage loan 50263-50264, September 30, 2009. The SBA has a separate formula for Community Advantage loan
interest rates and does not prescribe interest rates for the Export Working Capital Loans, but it does monitor the rates interest rates and does not prescribe interest rates for the Export Working Capital Loans, but it does monitor the rates
charged for reasonableness. charged for reasonableness.
7274 Colson Services Corp., “SBA Base Rates,” New York, at https://colsonservices.bnymellon.com/news/sba-base- Colson Services Corp., “SBA Base Rates,” New York, at https://colsonservices.bnymellon.com/news/sba-base-
rates.jsp. rates.jsp.
7375 SBA, “SOP 50 10 5(K): Lender and Development Company Loan Programs,” (effective April 1, 2019), p. 153, at SBA, “SOP 50 10 5(K): Lender and Development Company Loan Programs,” (effective April 1, 2019), p. 153, at
https://www.sba.gov/document/sop-50-10-5-lender-development-company-loan-programs. https://www.sba.gov/document/sop-50-10-5-lender-development-company-loan-programs.
7476 SBA, “Weekly Approvals Report with data as of 9/30 for each FY,” September 30, 2020, at https://www.sba.gov/ SBA, “Weekly Approvals Report with data as of 9/30 for each FY,” September 30, 2020, at https://www.sba.gov/
~~sites/default/files/2020-10/WebsiteReport_asof_20200930-508.pdf.~~
~~75 Payments for loans in a regular servicing status begin on the next payment due. Payments for loans in deferment~~
~~begin on the next payment due following the deferment period.~~
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Congressional Research Service 20 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options As mentioned, the CARES Act appropriated $17 billion to pay the principal, interest, and any associated fees that are owed on an existing 7(a) loan, 504/CDC loan, or Microloan and for loans subsequently approved and fully disbursed prior to September 27, 2020, for a six-month period.77 P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, Title III of the Consolidated Appropriations Act of 2021), appropriated $3.5 billion to resume these payments, capped at $9,000 per month per borrower. Payments are dependent on when the loan was disbursed, the type of loan received, and the business’s industry. For example, the SBA will pay at least three additional monthly payments on loans that were in repayment before March 27, 2020, starting with the next payment due on or after February 1, 2021. After the first three monthly payments are provided, businesses with an SBA Community Advantage loan, Microloan, or operating in specified economically hard-hit industries will receive an additional five monthly payments. Loans approved from February 1, 2021, through receive an additional five monthly payments. Loans approved from February 1, 2021, through
September 30, 2021, will receive six monthly payments beginning with the first payment due.September 30, 2021, will receive six monthly payments beginning with the first payment due.7678
P.L. 116-260 also waives SBA fees for the 7(a) and 504/CDC loan guarantee programs in FY2021 P.L. 116-260 also waives SBA fees for the 7(a) and 504/CDC loan guarantee programs in FY2021
and increases the 7(a) program’s current guaranty rate from 85% for loans of $150,000 or less and increases the 7(a) program’s current guaranty rate from 85% for loans of $150,000 or less
and 75% for loans greater than $150,000 (up to a maximum guaranty of $3.75 million—75% of and 75% for loans greater than $150,000 (up to a maximum guaranty of $3.75 million—75% of
$5 million) to 90% through October 1, 2021. $5 million) to 90% through October 1, 2021.
The 504/CDC Loan Guaranty ~~Program77~~Program79
The 504/CDC loan guaranty program uses Certified Development Companies (CDCs), which are The 504/CDC loan guaranty program uses Certified Development Companies (CDCs), which are
private, nonprofit corporations established to contribute to economic development within their private, nonprofit corporations established to contribute to economic development within their
communities. Each CDC has its own geographic territory. The program provides long-term, communities. Each CDC has its own geographic territory. The program provides long-term,
fixed-rate loans for major fixed assets, such as land, structures, machinery, and equipment. fixed-rate loans for major fixed assets, such as land, structures, machinery, and equipment.
Program loans cannot be used for working capital, inventory, or repaying debt. A commercial Program loans cannot be used for working capital, inventory, or repaying debt. A commercial
lender provides up to 50% of the financing package, which is secured by a senior lien. The lender provides up to 50% of the financing package, which is secured by a senior lien. The
CDC’s loan of up to 40% is secured by a junior lien. The SBA backs the CDC with a guaranteed CDC’s loan of up to 40% is secured by a junior lien. The SBA backs the CDC with a guaranteed
debenture.debenture.7880 The small business must contribute at least 10% as equity. The small business must contribute at least 10% as equity.
To participate in the program, small businesses cannot exceed $15 million in tangible net worth To participate in the program, small businesses cannot exceed $15 million in tangible net worth
and cannot have average net income of more than $5 million for two full fiscal years before the and cannot have average net income of more than $5 million for two full fiscal years before the
date of application. Also, CDCs must intend to create or retain one job for every $75,000 of the date of application. Also, CDCs must intend to create or retain one job for every $75,000 of the
debenture ($120,000 for small manufacturers) or meet an alternative job creation standard if they debenture ($120,000 for small manufacturers) or meet an alternative job creation standard if they
meet any one of 15 community or public policy goals. meet any one of 15 community or public policy goals.
Maximum 504/CDC participation in a single project is $5 million and $5.5 million for Maximum 504/CDC participation in a single project is $5 million and $5.5 million for
manufacturers and specified energy-related projects; the minimum is $25,000. There is no limit manufacturers and specified energy-related projects; the minimum is $25,000. There is no limit
on the project size. Loan maturity is 10 years for equipment and 20 or 25 years for real estate. on the project size. Loan maturity is 10 years for equipment and 20 or 25 years for real estate.
Unguaranteed financing may have a shorter term. The maximum fixed interest rate allowed is Unguaranteed financing may have a shorter term. The maximum fixed interest rate allowed is
sites/default/files/2020-10/WebsiteReport_asof_20200930-508.pdf. 77 Payments for loans in a regular servicing status begin on the next payment due. Payments for loans in deferment begin on the next payment due following the deferment period. 78 Economically hard-hit industries are defined as those assigned a North American Industry Classification System (NAICS) code beginning with 61, 71, 72, 213, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812 (food service and accommodation; arts, entertainment and recreation; education; and laundry and personal care services). 79 For further information and analysis, see CRS Report R41184, Small Business Administration 504/CDC Loan Guaranty Program, by Robert Jay Dilger. 80 A debenture is a bond that is not secured by a lien on specific collateral. Congressional Research Service 21 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options established when the debenture backing the loan is sold and is pegged to an increment above the established when the debenture backing the loan is sold and is pegged to an increment above the
current market rate for 5-year and 10-year U.S. Treasury issues. current market rate for 5-year and 10-year U.S. Treasury issues.
The SBA is authorized to charge CDCs The SBA is authorized to charge CDCs
 a one-time, up-front guaranty fee of up to 0.5% of the debenture (0.5% in  a one-time, up-front guaranty fee of up to 0.5% of the debenture (0.5% in
FY2021), FY2021),
 an annual servicing fee of up to 0.9375% of the unpaid principal balance  an annual servicing fee of up to 0.9375% of the unpaid principal balance
(0.4517% for regular 504/CDC loans and 0.4865% for 504/CDC debt refinance (0.4517% for regular 504/CDC loans and 0.4865% for 504/CDC debt refinance
loans in FY2021), loans in FY2021),
 a funding fee (not to exceed 0.25% of the debenture), an annual development  a funding fee (not to exceed 0.25% of the debenture), an annual development
company fee (0.125% of the debenture’s outstanding principal balance), and company fee (0.125% of the debenture’s outstanding principal balance), and
 a one-time participation fee (0.5% of the senior mortgage loan if in a senior lien  a one-time participation fee (0.5% of the senior mortgage loan if in a senior lien
position to the SBA and the loan was approved after September 30, 1996). position to the SBA and the loan was approved after September 30, 1996).

~~76 Economically hard-hit industries are defined as those assigned a North American Industry Classification System~~
~~(NAICS) code beginning with 61, 71, 72, 213, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812 (food service~~
~~and accommodation; arts, entertainment and recreation; education; and laundry and personal care services).~~
~~77 For further information and analysis, see CRS Report R41184,~~ ~~Small Business Administration 504/CDC Loan~~
~~Guaranty Program, by Robert Jay Dilger.~~
~~78 A debenture is a bond that is not secured by a lien on specific collateral.~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

In addition, CDCs are allowed to charge borrowers a processing (or packaging) fee of up to 1.5% In addition, CDCs are allowed to charge borrowers a processing (or packaging) fee of up to 1.5%
of the net debenture proceeds and a closing fee, servicing fee, late fee, assumption fee, Central of the net debenture proceeds and a closing fee, servicing fee, late fee, assumption fee, Central
Servicing Agent (CSA) fee, other agent fees, and an underwriters’ fee. Servicing Agent (CSA) fee, other agent fees, and an underwriters’ fee.
In FY2020, the SBA approved 7,119 504/CDC loans, totaling over $5.8 billion. In FY2020, the SBA approved 7,119 504/CDC loans, totaling over $5.8 billion.7981 In FY2019, 212 In FY2019, 212
CDCs provided at least one 504/CDC loan.CDCs provided at least one 504/CDC loan.8082
As mentioned, the CARES Act appropriated $17 billion to pay the principal, interest, and any As mentioned, the CARES Act appropriated $17 billion to pay the principal, interest, and any
associated fees that are owed on an existing 7(a) loan, 504/CDC loan, or Microloan and for loans associated fees that are owed on an existing 7(a) loan, 504/CDC loan, or Microloan and for loans
subsequently approved and fully disbursed prior to September 27, 2020, for a six-month period.subsequently approved and fully disbursed prior to September 27, 2020, for a six-month period.8183
P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act
(Division N, Title III of the Consolidated Appropriations Act of 2021), appropriated $3.5 billion (Division N, Title III of the Consolidated Appropriations Act of 2021), appropriated $3.5 billion
to resume these payments, capped at $9,000 per month per borrower. Payments are dependent on to resume these payments, capped at $9,000 per month per borrower. Payments are dependent on
when the loan was disbursed, the type of loan received, and the business’s industry. when the loan was disbursed, the type of loan received, and the business’s industry.
In addition, in an effort to assist small businesses adversely affected by COVID-19, P.L. 116-260 In addition, in an effort to assist small businesses adversely affected by COVID-19, P.L. 116-260
waives SBA fees in the 7(a) and 504/CDC loan guarantee programs in FY2021. waives SBA fees in the 7(a) and 504/CDC loan guarantee programs in FY2021.
504/CDC Refinancing Program
During the Great Recession (2007-2009), Congress authorized the SBA to temporarily allow, During the Great Recession (2007-2009), Congress authorized the SBA to temporarily allow,
under specified circumstances, the use of 504/CDC program funds to refinance existing under specified circumstances, the use of 504/CDC program funds to refinance existing
commercial debt (e.g., not from SBA-guaranteed loans) for business expansion under the commercial debt (e.g., not from SBA-guaranteed loans) for business expansion under the
504/CDC program.504/CDC program.8284 In 2010, Congress authorized, for two years, the expansion of the types of In 2010, Congress authorized, for two years, the expansion of the types of
~~projects eligible for refinancing of existing debt under the 504/CDC program to include projects~~
~~not involving business expansion, provided the projects met specific criteria.83 In the 114th~~
~~Congress, Congress reinstated the expansion of the types of projects eligible for refinancing under~~
~~the 504/CDC loan guaranty program in any fiscal year in which the refinancing program and the~~
~~504/CDC program as a whole do not have credit subsidy costs.84 Specifically, each CDC is~~

79 81 SBA, “Weekly Approvals Report with data as of 9/30 for each FY,” September 30, 2020, at https://www.sba.gov/ SBA, “Weekly Approvals Report with data as of 9/30 for each FY,” September 30, 2020, at https://www.sba.gov/
sites/default/files/2020-10/WebsiteReport_asof_20200930-508.pdf. sites/default/files/2020-10/WebsiteReport_asof_20200930-508.pdf.
8082 SBA, SBA, FY2021 Congressional Budget Justification and FY2019 Annual Performance Report, pp. 41, 166. , pp. 41, 166.
8183 Payments for loans in a regular servicing status begin on the next payment due. Payments for loans in deferment Payments for loans in a regular servicing status begin on the next payment due. Payments for loans in deferment
begin on the next payment due following the deferment period. begin on the next payment due following the deferment period.
8284 P.L. 111-5, the American Recovery and Reinvestment Act of 2009 (ARRA). The specified circumstances include the P.L. 111-5, the American Recovery and Reinvestment Act of 2009 (ARRA). The specified circumstances include the
following: the amount of existing indebtedness does not exceed 50% of the project cost of the expansion; the proceeds following: the amount of existing indebtedness does not exceed 50% of the project cost of the expansion; the proceeds
of the indebtedness were used to acquire land, including the building situated thereon, to construct a building thereon, of the indebtedness were used to acquire land, including the building situated thereon, to construct a building thereon,
or to purchase equipment; the existing indebtedness is collateralized by fixed assets; the existing indebtedness was or to purchase equipment; the existing indebtedness is collateralized by fixed assets; the existing indebtedness was
incurred for the benefit of a small business; the financing is used only for refinancing existing indebtedness or costs incurred for the benefit of a small business; the financing is used only for refinancing existing indebtedness or costs
related to the project being financed; the refinancing provides a substantial benefit to the borrower; the borrower has related to the project being financed; the refinancing provides a substantial benefit to the borrower; the borrower has
been current on all payments due on the existing debt for not less than one year preceding the date of refinancing; and been current on all payments due on the existing debt for not less than one year preceding the date of refinancing; and
the financing provided will have better terms or rate of interest than the existing indebtedness. the financing provided will have better terms or rate of interest than the existing indebtedness.
~~83 P.L. 111-240, the Small Business Jobs Act of 2010. A project that does not involve the expansion of a small business~~
~~concern may include the refinancing of qualified debt if (I) the amount of the financing is not be more than 90% of the~~
~~value of the collateral for the financing, except that, if the appraised value of the eligible fixed assets serving as~~
~~collateral for the financing is less than the amount equal to 125% of the amount of the financing, the borrower may~~
~~provide additional cash or other collateral to eliminate any deficiency; (II) the borrower has been in operation for all of~~
~~the two-year period ending on the date of the loan; and (III) for a financing for which the Administrator determines~~
~~there will be an additional cost attributable to the refinancing of the qualified debt, the borrower agrees to pay a fee in~~
~~an amount equal to the anticipated additional cost.~~
~~84 P.L. 114-113, the Consolidated Appropriations Act, 2016. For additional information and analysis, see CRS Report~~
~~R41184, Small Business Administration 504/CDC Loan Guaranty Program, by Robert Jay Dilger.~~
~~Congressional Research Service~~
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Congressional Research Service 22 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options projects eligible for refinancing of existing debt under the 504/CDC program to include projects not involving business expansion, provided the projects met specific criteria.85 In the 114th Congress, Congress reinstated the expansion of the types of projects eligible for refinancing under the 504/CDC loan guaranty program in any fiscal year in which the refinancing program and the 504/CDC program as a whole do not have credit subsidy costs.86 Specifically, each CDC is required to limit its refinancing so that, during any fiscal year, the new refinancing does not required to limit its refinancing so that, during any fiscal year, the new refinancing does not
exceed 50% of the dollars it loaned under the 504/CDC program during the previous fiscal year. exceed 50% of the dollars it loaned under the 504/CDC program during the previous fiscal year.
This limitation may be waived if the SBA determines that the refinance loan is needed for good This limitation may be waived if the SBA determines that the refinance loan is needed for good
cause. cause.
Commercial loans eligible for the 504/CDC refinancing program being used to finance long-term Commercial loans eligible for the 504/CDC refinancing program being used to finance long-term
fixed asset debt cannot have a loan-to-value (LTV) ratio of more than 90% of the fair market fixed asset debt cannot have a loan-to-value (LTV) ratio of more than 90% of the fair market
value of the eligible fixed asset(s) serving as collateral. Loans that are used to partly refinance value of the eligible fixed asset(s) serving as collateral. Loans that are used to partly refinance
eligible business operating expenses (e.g., salaries, rent, utilities) cannot exceed an LTV ratio of eligible business operating expenses (e.g., salaries, rent, utilities) cannot exceed an LTV ratio of
more than 85% of the fair market value of the collateral. The fees associated with the 504/CDC more than 85% of the fair market value of the collateral. The fees associated with the 504/CDC
refinancing program are the same as the 504/CDC loan guaranty program except the ongoing refinancing program are the same as the 504/CDC loan guaranty program except the ongoing
guaranty servicing fee may vary. In FY2020, the annual guaranty servicing fee is 0.3205% for guaranty servicing fee may vary. In FY2020, the annual guaranty servicing fee is 0.3205% for
regular 504/CDC loans and 0.322% for 504/CDC debt refinance loans. regular 504/CDC loans and 0.322% for 504/CDC debt refinance loans.
In FY2019, the SBA approved 166 refinancing loans totaling $154.8 million. In FY2019, the SBA approved 166 refinancing loans totaling $154.8 million.8587
The P.L. 116-260-authorized 504/CDC loan guarantee fee waiver and debt relief payments also The P.L. 116-260-authorized 504/CDC loan guarantee fee waiver and debt relief payments also
apply to the 504/CDC refinancing program. apply to the 504/CDC refinancing program.
The Microloan ~~Program86~~Program88
The Microloan program provides direct loans to qualified nonprofit intermediary Microloan The Microloan program provides direct loans to qualified nonprofit intermediary Microloan
lenders that, in turn, provide “microloans” of up to $50,000 to small businesses and nonprofit lenders that, in turn, provide “microloans” of up to $50,000 to small businesses and nonprofit
child care centers. Microloan lenders also provide marketing, management, and technical child care centers. Microloan lenders also provide marketing, management, and technical
assistance to Microloan borrowers and potential borrowers. assistance to Microloan borrowers and potential borrowers.
The program was authorized in 1991 as a five-year demonstration project and became operational The program was authorized in 1991 as a five-year demonstration project and became operational
in 1992. It was made permanent, subject to reauthorization, by P.L. 105-135, the Small Business in 1992. It was made permanent, subject to reauthorization, by P.L. 105-135, the Small Business
Reauthorization Act of 1997. Although the program is open to all small businesses, it targets new Reauthorization Act of 1997. Although the program is open to all small businesses, it targets new
and early stage businesses in underserved markets, including borrowers with little to no credit and early stage businesses in underserved markets, including borrowers with little to no credit
history, low-income borrowers, and women and minority entrepreneurs in both rural and urban history, low-income borrowers, and women and minority entrepreneurs in both rural and urban
areas who generally do not qualify for conventional loans or other, larger SBA guaranteed loans. areas who generally do not qualify for conventional loans or other, larger SBA guaranteed loans.
85 P.L. 111-240, the Small Business Jobs Act of 2010. A project that does not involve the expansion of a small business concern may include the refinancing of qualified debt if (I) the amount of the financing is not be more than 90% of the value of the collateral for the financing, except that, if the appraised value of the eligible fixed assets serving as collateral for the financing is less than the amount equal to 125% of the amount of the financing, the borrower may provide additional cash or other collateral to eliminate any deficiency; (II) the borrower has been in operation for all of the two-year period ending on the date of the loan; and (III) for a financing for which the Administrator determines there will be an additional cost attributable to the refinancing of the qualified debt, the borrower agrees to pay a fee in an amount equal to the anticipated additional cost. 86 P.L. 114-113, the Consolidated Appropriations Act, 2016. For additional information and analysis, see CRS Report R41184, Small Business Administration 504/CDC Loan Guaranty Program, by Robert Jay Dilger. 87 SBA, Office of Congressional and Legislative Affairs, “WDS Report Amount and Count Summary, September 30, 2019: DRAFT Table 2.7. Approvals by Program and Cohort,” October 18, 2018. For historical data, see Table 3 in CRS Report R41184, Small Business Administration 504/CDC Loan Guaranty Program, by Robert Jay Dilger. 88 For further information and analysis, see CRS Report R41057, Small Business Administration Microloan Program, by Robert Jay Dilger. Congressional Research Service 23 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options Microloans can be used for working capital and acquisition of materials, supplies, furniture, Microloans can be used for working capital and acquisition of materials, supplies, furniture,
fixtures, and equipment. Loans cannot be made to acquire land or property. Loan terms are up to fixtures, and equipment. Loans cannot be made to acquire land or property. Loan terms are up to
seven years. seven years.
The SBA charges intermediaries an interest rate that is based on the five-year Treasury rate, The SBA charges intermediaries an interest rate that is based on the five-year Treasury rate,
adjusted to the nearest one-eighth percent (called the Base Rate), less 1.25% if the intermediary adjusted to the nearest one-eighth percent (called the Base Rate), less 1.25% if the intermediary
maintains a historic portfolio of Microloans averaging more than $10,000 and less 2% if the maintains a historic portfolio of Microloans averaging more than $10,000 and less 2% if the
intermediary maintains a historic portfolio of Microloans averaging $10,000 or less. The Base intermediary maintains a historic portfolio of Microloans averaging $10,000 or less. The Base
Rate, after adjustment, is called the Intermediary’s Cost of Funds. The Intermediary’s Cost of Rate, after adjustment, is called the Intermediary’s Cost of Funds. The Intermediary’s Cost of
Funds is initially calculated one year from the date of the note and is reviewed annually and Funds is initially calculated one year from the date of the note and is reviewed annually and
adjusted as necessary (called recasting). The interest rate cannot be less than zero. adjusted as necessary (called recasting). The interest rate cannot be less than zero.
On loans of more than $10,000, the maximum interest rate that can be charged to the borrower is On loans of more than $10,000, the maximum interest rate that can be charged to the borrower is
the interest rate charged by the SBA on the loan to the intermediary, plus 7.75%. On loans of the interest rate charged by the SBA on the loan to the intermediary, plus 7.75%. On loans of
$10,000 or less, the maximum interest rate that can be charged to the borrower is the interest $10,000 or less, the maximum interest rate that can be charged to the borrower is the interest

~~85 SBA, Office of Congressional and Legislative Affairs, “WDS Report Amount and Count Summary, September 30,~~
~~2019: DRAFT Table 2.7. Approvals by Program and Cohort,” October 18, 2018. For historical data, see Table 3 in~~
~~CRS Report R41184, Small Business Administration 504/CDC Loan Guaranty Program, by Robert Jay Dilger.~~
~~86 For further information and analysis, see CRS Report R41057, Small Business Administration Microloan Program,~~
~~by Robert Jay Dilger.~~
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charged by the SBA on the loan to the intermediary, plus 8.5%. Rates are negotiated between the charged by the SBA on the loan to the intermediary, plus 8.5%. Rates are negotiated between the
borrower and the intermediary and typically range from 6% to 9%. borrower and the intermediary and typically range from 6% to 9%.
The SBA does not charge intermediaries up-front or ongoing service fees under the Microloan The SBA does not charge intermediaries up-front or ongoing service fees under the Microloan
program. program.
In FY2020, 5,890 small businesses received a Microloan, totaling $85 million. In FY2020, 5,890 small businesses received a Microloan, totaling $85 million.8789 The average The average
Microloan was $14,434 and the average interest rate was 6.5%.Microloan was $14,434 and the average interest rate was 6.5%.8890
As mentioned, the CARES Act appropriated $17 billion to pay the principal, interest, and any As mentioned, the CARES Act appropriated $17 billion to pay the principal, interest, and any
associated fees that are owed on an existing 7(a) loan, 504/CDC loan, or Microloan and for loans associated fees that are owed on an existing 7(a) loan, 504/CDC loan, or Microloan and for loans
subsequently approved and fully disbursed prior to September 27, 2020, for a six-month period.subsequently approved and fully disbursed prior to September 27, 2020, for a six-month period.8991
P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act
(Division N, Title III of the Consolidated Appropriations Act of 2021), appropriated $3.5 billion (Division N, Title III of the Consolidated Appropriations Act of 2021), appropriated $3.5 billion
to resume these payments, capped at $9,000 per month per borrower. Payments are dependent on to resume these payments, capped at $9,000 per month per borrower. Payments are dependent on
when the loan was disbursed, the type of loan received, and the business’s industry. when the loan was disbursed, the type of loan received, and the business’s industry.
SBA Loan Enhancements to Address the Great Recession
Many of the proposals under consideration to address the capital needs of small businesses Many of the proposals under consideration to address the capital needs of small businesses
adversely affected by the COVID-19 pandemic were used to address the severe economic adversely affected by the COVID-19 pandemic were used to address the severe economic
slowdown during and immediately following the Great Recession (2007-2009). The main slowdown during and immediately following the Great Recession (2007-2009). The main
difference is that given the unique nature of the COVID-19 pandemic’s impact on households, difference is that given the unique nature of the COVID-19 pandemic’s impact on households,
especially physical distancing and the resulting decrease in consumer spending, there is an added especially physical distancing and the resulting decrease in consumer spending, there is an added
emphasis today on SBA loan deferrals, loan forgiveness, and expanded eligibility, including, for emphasis today on SBA loan deferrals, loan forgiveness, and expanded eligibility, including, for
the first time, specified types of nonprofit organizations. the first time, specified types of nonprofit organizations.
During the 111th Congress, P.L. 111-5, the American Recovery and Reinvestment Act of 2009 During the 111th Congress, P.L. 111-5, the American Recovery and Reinvestment Act of 2009
(ARRA), provided the SBA an additional $730 million, including $375 million to temporarily (ARRA), provided the SBA an additional $730 million, including $375 million to temporarily
subsidize the 7(a) and 504/CDC loan guaranty programs’ fees ($299 million) and to temporarily subsidize the 7(a) and 504/CDC loan guaranty programs’ fees ($299 million) and to temporarily
increase the 7(a) program’s maximum loan guaranty percentage to 90% ($76 million).increase the 7(a) program’s maximum loan guaranty percentage to 90% ($76 million).~~90 ARRA~~
~~also included provisions designed to increase the amount of leverage issued under the SBA’s~~
~~Small Business Investment Company (SBIC venture capital) program.91 SBICs provide loans and~~
~~equity investments in small businesses.~~
~~ARRA’s funding for the fee subsidies and 90% maximum loan guaranty percentage was about to~~
~~be exhausted in November 2009, when Congress passed the first of six laws to provide additional~~
~~funding to extend the loan subsidies and 90% maximum loan guaranty percentage.~~
~~ P.L. 111-118, the Department of Defense Appropriations Act, 2010, provided the~~
~~SBA $125 million to continue the fee subsidies and 90% maximum loan guaranty~~
~~percentage through February 28, 2010.~~
92 ARRA
8789 SBA, “Nationwide Microloan Report, October 1, 2019 through September 30, 2020,” November 18, 2020. SBA, “Nationwide Microloan Report, October 1, 2019 through September 30, 2020,” November 18, 2020.
8890 SBA, “Nationwide Microloan Report, October 1, 2019 through September 30, 2020,” November 18, 2020. SBA, “Nationwide Microloan Report, October 1, 2019 through September 30, 2020,” November 18, 2020.
8991 Payments for loans in a regular servicing status begin on the next payment due. Payments for loans in deferment Payments for loans in a regular servicing status begin on the next payment due. Payments for loans in deferment
begin on the next payment due following the deferment period. begin on the next payment due following the deferment period.
9092 SBA, “Recovery Act Agency Plan,” May 15, 2009, at https://www.sba.gov/sites/default/files/recovery_act_reports/ SBA, “Recovery Act Agency Plan,” May 15, 2009, at https://www.sba.gov/sites/default/files/recovery_act_reports/
~~sba_recovery_act_plan.pdf.~~
~~91 For additional information and analysis, see CRS Report R41456,~~ ~~SBA Small Business Investment Company~~
~~Program, by Robert Jay Dilger.~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~
Congressional Research Service 24 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options also included provisions designed to increase the amount of leverage issued under the SBA’s Small Business Investment Company (SBIC venture capital) program.93 SBICs provide loans and equity investments in small businesses. ARRA’s funding for the fee subsidies and 90% maximum loan guaranty percentage was about to be exhausted in November 2009, when Congress passed the first of six laws to provide additional funding to extend the loan subsidies and 90% maximum loan guaranty percentage.  P.L. 111-118, the Department of Defense Appropriations Act, 2010, provided the SBA $125 million to continue the fee subsidies and 90% maximum loan guaranty percentage through February 28, 2010.
 P.L. 111-144, the Temporary Extension Act of 2010, provided the SBA $60  P.L. 111-144, the Temporary Extension Act of 2010, provided the SBA $60
million to continue the fee subsidies and 90% maximum loan guaranty million to continue the fee subsidies and 90% maximum loan guaranty
percentage through March 28, 2010. percentage through March 28, 2010.
 P.L. 111-150, an act to extend the Small Business Loan Guarantee Program, and  P.L. 111-150, an act to extend the Small Business Loan Guarantee Program, and
for other purposes, provided the SBA authority to reprogram $40 million in for other purposes, provided the SBA authority to reprogram $40 million in
previously appropriated funds to continue the fee subsidies and 90% maximum previously appropriated funds to continue the fee subsidies and 90% maximum
loan guaranty percentage through April 30, 2010. loan guaranty percentage through April 30, 2010.
 P.L. 111-157, the Continuing Extension Act of 2010, provided the SBA $80  P.L. 111-157, the Continuing Extension Act of 2010, provided the SBA $80
million to continue the SBA’s fee subsidies and 90% maximum loan guaranty million to continue the SBA’s fee subsidies and 90% maximum loan guaranty
percentage through May 31, 2010. percentage through May 31, 2010.
 P.L. 111-240, the Small Business Jobs Act of 2010, provided $505 million (plus  P.L. 111-240, the Small Business Jobs Act of 2010, provided $505 million (plus
an additional $5 million for administrative expenses) to continue the SBA’s fee an additional $5 million for administrative expenses) to continue the SBA’s fee
subsidies and 90% maximum loan guaranty percentage from the act’s date of subsidies and 90% maximum loan guaranty percentage from the act’s date of
enactment (September 27, 2010) through December 31, 2010. enactment (September 27, 2010) through December 31, 2010.
 P.L. 111-322, the Continuing Appropriations and Surface Transportation  P.L. 111-322, the Continuing Appropriations and Surface Transportation
Extensions Act, 2011, authorized the SBA to use funds provided under the Small Extensions Act, 2011, authorized the SBA to use funds provided under the Small
Business Jobs Act of 2010 to continue the SBA’s fee subsidies and 90% Business Jobs Act of 2010 to continue the SBA’s fee subsidies and 90%
maximum loan guaranty percentage through March 4, 2011, or until available maximum loan guaranty percentage through March 4, 2011, or until available
funding is exhausted. funding is exhausted.
On January 3, 2011, the SBA announced that the fee subsidies and 90% maximum guarantee On January 3, 2011, the SBA announced that the fee subsidies and 90% maximum guarantee
percentage ended because funding for these enhancements had been exhausted.percentage ended because funding for these enhancements had been exhausted.9294
In addition to providing additional funding for fee subsidies, P.L. 111-240, among other In addition to providing additional funding for fee subsidies, P.L. 111-240, among other
provisions, provisions,
 increased the 7(a) program’s gross loan limit from $2 million to $5 million;  increased the 7(a) program’s gross loan limit from $2 million to $5 million;
 increased the 504/CDC Program’s loan limits from $1.5 million to $5 million for  increased the 504/CDC Program’s loan limits from $1.5 million to $5 million for
“regular” borrowers, from $2 million to $5 million if the loan proceeds are “regular” borrowers, from $2 million to $5 million if the loan proceeds are
directed toward one or more specified public policy goals, and from $4 million to directed toward one or more specified public policy goals, and from $4 million to
$5.5 million for manufacturers; $5.5 million for manufacturers;
sba_recovery_act_plan.pdf. 93 For additional information and analysis, see CRS Report R41456, SBA Small Business Investment Company Program, by Robert Jay Dilger. 94 SBA, “Jobs Act Supported More Than $12 Billion in SBA Lending to Small Businesses in Just Three Months,” January 3, 2011, at https://www.sba.gov/content/jobs-act-supported-more-12-billion-sba-lending-small-businesses-just-three-months. Congressional Research Service 25 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options  temporarily expanded for two years the eligibility for low-interest refinancing  temporarily expanded for two years the eligibility for low-interest refinancing
under the SBA’s 504/CDC program for qualified debt; under the SBA’s 504/CDC program for qualified debt;
 temporarily increased for one year the SBAExpress Program’s loan limit from  temporarily increased for one year the SBAExpress Program’s loan limit from
$350,000 to $1 million (expired on September 26, 2011); $350,000 to $1 million (expired on September 26, 2011);
 increased the Microloan Program’s loan limit for borrowers from $35,000 to  increased the Microloan Program’s loan limit for borrowers from $35,000 to
$50,000; and increased the loan limits for Microloan intermediaries after their $50,000; and increased the loan limits for Microloan intermediaries after their
first year in the program from $3.5 million to $5 million; first year in the program from $3.5 million to $5 million;
 authorized the U.S. Treasury to make up to $30 billion of capital investments for  authorized the U.S. Treasury to make up to $30 billion of capital investments for
a Small Business Lending Fund ($4 billion was issued); a Small Business Lending Fund ($4 billion was issued);93

~~92 SBA, “Jobs Act Supported More Than $12 Billion in SBA Lending to Small Businesses in Just Three Months,”~~
~~January 3, 2011, at https://www.sba.gov/content/jobs-act-supported-more-12-billion-sba-lending-small-businesses-just-~~
~~three-months.~~
~~93 For additional information and analysis, see CRS Report R42045, The Small Business Lending Fund, by Robert Jay~~
~~Dilger.~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~
95
 authorized to be appropriated $1.5 billion for the State Small Business Credit  authorized to be appropriated $1.5 billion for the State Small Business Credit
Initiative Program; Initiative Program;9496
 authorized a three-year Intermediary Lending Pilot Program to allow the SBA to  authorized a three-year Intermediary Lending Pilot Program to allow the SBA to
make direct loans to not more than 20 eligible nonprofit lending intermediaries make direct loans to not more than 20 eligible nonprofit lending intermediaries
each year totaling not more than $20 million. The intermediaries, in turn, would each year totaling not more than $20 million. The intermediaries, in turn, would
be allowed to make loans to new or growing small businesses, not to exceed be allowed to make loans to new or growing small businesses, not to exceed
$200,000 per business; $200,000 per business;
 established an alternative size standard for the 7(a) and 504/CDC loan programs  established an alternative size standard for the 7(a) and 504/CDC loan programs
to enable more small businesses to qualify for assistance; to enable more small businesses to qualify for assistance;9597 and and
 provided small businesses with about $12 billion in tax relief.  provided small businesses with about $12 billion in tax relief.9698
There were also efforts during the 111th and 112th Congresses to require the SBA to reinstate There were also efforts during the 111th and 112th Congresses to require the SBA to reinstate
direct lending to small businesses. direct lending to small businesses.
During the 111th Congress During the 111th Congress
 H.R. 3854, the Small Business Financing and Investment Act of 2009, was  H.R. 3854, the Small Business Financing and Investment Act of 2009, was
passed by the House on October 29, 2009, by a vote of 389-32. It would have passed by the House on October 29, 2009, by a vote of 389-32. It would have
authorized a temporary SBA direct lending program.authorized a temporary SBA direct lending program.9799 During the 112th Congress 95 For additional information and analysis, see CRS Report R42045, The Small Business Lending Fund, by Robert Jay Dilger. 96
~~During the 112th Congress~~
~~ H.R. 3007, the Give Credit to Main Street Act of 2011, introduced on September~~
~~21, 2011, and referred to the House Committee on Small Business, would have~~
~~authorized the SBA to provide direct loans to small businesses that have been in~~
~~operation as a small business for at least two years prior to its application for a~~
~~direct loan. The maximum loan amount would have been the lesser of 10% of the~~
~~firm’s annual revenues or $500,000.~~
~~ H.R. 5835, the Veterans Access to Capital Act of 2012, introduced on May 18,~~
~~2012, and referred to the House Committee on Small Business, would have~~
~~authorized the SBA to provide up to 20% of the annual amount available for~~
~~guaranteed loans under the 7(a) and 504/CDC loan guaranty programs,~~
~~respectively, in direct loans to veteran-owned and -controlled small businesses.~~

94 For additional information and analysis, see CRS Report R42581, For additional information and analysis, see CRS Report R42581, State Small Business Credit Initiative:
Implementation and Funding Issues, by Robert Jay Dilger. , by Robert Jay Dilger.
9597 P.L. 111-240, the Small Business Jobs Act of 2010, established the following interim alternative size standard for P.L. 111-240, the Small Business Jobs Act of 2010, established the following interim alternative size standard for
both the 7(a) and 504/CDC programs: the business qualifies as small if it does not have a tangible net worth in excess both the 7(a) and 504/CDC programs: the business qualifies as small if it does not have a tangible net worth in excess
of $15 million and does not have an average net income after federal taxes (excluding any carry-over losses) in excess of $15 million and does not have an average net income after federal taxes (excluding any carry-over losses) in excess
of $5 million for two full fiscal years before the date of application. of $5 million for two full fiscal years before the date of application.
9698 P.L. 111-240 raised the exclusion of gains on the sale or exchange of qualified small business stock from the federal P.L. 111-240 raised the exclusion of gains on the sale or exchange of qualified small business stock from the federal
income tax to 100%, with the full exclusion applying only to stock acquired the day after the date of enactment through income tax to 100%, with the full exclusion applying only to stock acquired the day after the date of enactment through
the end of 2010; increased the deduction for qualified start-up expenditures from $5,000 to $10,000 in 2010, and raised the end of 2010; increased the deduction for qualified start-up expenditures from $5,000 to $10,000 in 2010, and raised
the phaseout threshold from $50,000 to $60,000 for 2010; placed limitations on the penalty for failure to disclose the phaseout threshold from $50,000 to $60,000 for 2010; placed limitations on the penalty for failure to disclose
reportable transactions based on resulting tax benefits; allowed general business credits of eligible small businesses for reportable transactions based on resulting tax benefits; allowed general business credits of eligible small businesses for
2010 to be carried back five years; exempted general business credits of eligible small businesses in 2010 from the 2010 to be carried back five years; exempted general business credits of eligible small businesses in 2010 from the
alternative minimum tax; allowed a temporary reduction in the recognition period for built-in gains tax; increased alternative minimum tax; allowed a temporary reduction in the recognition period for built-in gains tax; increased
expensing limitations for 2010 and 2011 and allowed certain real property to be treated as Section 179 property; expensing limitations for 2010 and 2011 and allowed certain real property to be treated as Section 179 property;
allowed additional first-year depreciation for 50% of the basis of certain qualified property; and removed cellular allowed additional first-year depreciation for 50% of the basis of certain qualified property; and removed cellular
telephones and similar telecommunications equipment from listed property so their cost can be deducted or depreciated telephones and similar telecommunications equipment from listed property so their cost can be deducted or depreciated
like other business property. like other business property.
9799 H.R. 3854, the Small Business Financing and Investment Act of 2009 (111th Congress), §111. Capital Backstop H.R. 3854, the Small Business Financing and Investment Act of 2009 (111th Congress), §111. Capital Backstop
Program. Program.
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COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options

 H.R. 3007, the Give Credit to Main Street Act of 2011, introduced on September 21, 2011, and referred to the House Committee on Small Business, would have authorized the SBA to provide direct loans to small businesses that have been in operation as a small business for at least two years prior to its application for a direct loan. The maximum loan amount would have been the lesser of 10% of the firm’s annual revenues or $500,000.  H.R. 5835, the Veterans Access to Capital Act of 2012, introduced on May 18, 2012, and referred to the House Committee on Small Business, would have authorized the SBA to provide up to 20% of the annual amount available for guaranteed loans under the 7(a) and 504/CDC loan guaranty programs, respectively, in direct loans to veteran-owned and -controlled small businesses. Current Issues, Debates, and Lessons Learned
During the 111th Congress (2009-2010), there was a consensus in Congress that the federal During the 111th Congress (2009-2010), there was a consensus in Congress that the federal
government had to take decisive action to address the capital needs of small businesses, primarily government had to take decisive action to address the capital needs of small businesses, primarily
as a means to promote job retention and creation. Similar sentiments are being expressed today as as a means to promote job retention and creation. Similar sentiments are being expressed today as
Congress considers proposals to assist small businesses adversely affected by the COVID-19 Congress considers proposals to assist small businesses adversely affected by the COVID-19
pandemic. pandemic.
Many Members of Congress argued during the 111th Congress that the SBA should be provided Many Members of Congress argued during the 111th Congress that the SBA should be provided
additional resources to assist small businesses in acquiring capital necessary to start, continue, or additional resources to assist small businesses in acquiring capital necessary to start, continue, or
expand operations with the expectation that in so doing small businesses will create jobs. Others expand operations with the expectation that in so doing small businesses will create jobs. Others
worried about the long-term adverse economic effects of spending programs that increase the worried about the long-term adverse economic effects of spending programs that increase the
federal deficit. They advocated business tax reduction, reform of financial credit market federal deficit. They advocated business tax reduction, reform of financial credit market
regulation, and federal fiscal restraint as the best means to help small businesses further economic regulation, and federal fiscal restraint as the best means to help small businesses further economic
growth and job creation. growth and job creation.
Given the coronavirus’s widespread adverse economic impact, including productivity losses, Given the coronavirus’s widespread adverse economic impact, including productivity losses,
supply chain disruptions, labor dislocation, and financial pressure on businesses and households, supply chain disruptions, labor dislocation, and financial pressure on businesses and households,
there has been relatively little concern expressed about federal fiscal restraint during the current there has been relatively little concern expressed about federal fiscal restraint during the current
pandemic. The debate has been primarily over which specific policies would have the greatest pandemic. The debate has been primarily over which specific policies would have the greatest
impact and which types of small businesses and small business owners should be helped the most. impact and which types of small businesses and small business owners should be helped the most.
As mentioned, many of the enhancements to the SBA’s capital access programs that were made As mentioned, many of the enhancements to the SBA’s capital access programs that were made
during the 111th Congress, such as increasing loan limits, providing fee subsidies, increasing loan during the 111th Congress, such as increasing loan limits, providing fee subsidies, increasing loan
guaranty percentages, and expanding eligibility criteria are being considered again. These guaranty percentages, and expanding eligibility criteria are being considered again. These
changes had a demonstrated impact on small business lending during and immediately following changes had a demonstrated impact on small business lending during and immediately following
the Great Recession. SBA lending increased. For example, the SBA’s OIG found that SBA 7(a) the Great Recession. SBA lending increased. For example, the SBA’s OIG found that SBA 7(a)
loan approvals increased 39% and 504/CDC loan approval increased 73% from March to July loan approvals increased 39% and 504/CDC loan approval increased 73% from March to July
2009, largely due to ARRA’s fee reductions and increased loan guarantee percentages. Lending 2009, largely due to ARRA’s fee reductions and increased loan guarantee percentages. Lending
volume remained below pre-recession levels, but was much higher than before the fee reductions volume remained below pre-recession levels, but was much higher than before the fee reductions
and increase in the loan guarantee percentage were implemented. and increase in the loan guarantee percentage were implemented.
The OIG also noted that the increased loan volume “may be impacting Agency staffing The OIG also noted that the increased loan volume “may be impacting Agency staffing
requirements and program risk.... Without adequate training and supervision, the increased requirements and program risk.... Without adequate training and supervision, the increased
demands on loan center staff could impact the quality of Agency loan reviews.”demands on loan center staff could impact the quality of Agency loan reviews.”98100
Also, in 2012, the SBA issued a press release lauding P.L. 111-240’s impact on SBA loan volume: Also, in 2012, the SBA issued a press release lauding P.L. 111-240’s impact on SBA loan volume:
100 SBA, OIG, Review of the Recovery Act’s Impact on SBA Lending, ROM 10-02, November 25, 2009, p. 4, at https://www.sba.gov/document/report-rom-10-02-rom-10-02-review-recovery-acts-impact-sba-lending. Congressional Research Service 27 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options With loan volume steadily increasing for the past six quarters, the U.S. Small Business With loan volume steadily increasing for the past six quarters, the U.S. Small Business
Administration’s loan programs posted the second largest dollar volume ever in FY 2012, Administration’s loan programs posted the second largest dollar volume ever in FY 2012,
supporting $30.25 billion in loans to small businesses. That amount was surpassed only by supporting $30.25 billion in loans to small businesses. That amount was surpassed only by
FY 2011, which was heavily boosted by the loan incentives under the Small Business Jobs FY 2011, which was heavily boosted by the loan incentives under the Small Business Jobs
Act of 2010.Act of 2010.99101
The data demonstrate that ARRA and the Small Business Jobs Act of 2010 helped small The data demonstrate that ARRA and the Small Business Jobs Act of 2010 helped small
businesses access capital. However, because the SBA primarily gathers data on program output businesses access capital. However, because the SBA primarily gathers data on program output
(e.g., loan volume, number of small businesses served, default rates) as opposed to program (e.g., loan volume, number of small businesses served, default rates) as opposed to program
outcomes (e.g., small business solvency, job creation, wealth generation) it is difficult to know outcomes (e.g., small business solvency, job creation, wealth generation) it is difficult to know

~~98 SBA, Office of Inspector General (OIG), Review of the Recovery Act’s Impact on SBA Lending, ROM 10-02,~~
~~November 25, 2009, p. 4, at https://www.sba.gov/document/report-rom-10-02-rom-10-02-review-recovery-acts-impact-~~
~~sba-lending.~~
~~99 SBA, “SBA Loan Dollars in FY 2012 Reach Second Largest Total Ever; $30.25 Billion Second Only to FY 2011,”~~
~~October 9, 2012, at https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/sba-loan-dollars-fy-~~
~~2012-reach-second-largest-total-ever-3025-billion-second-only-fy-2011.~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

how effective these programs were in assisting small businesses or if other approaches might how effective these programs were in assisting small businesses or if other approaches might
have produced better (or different) results. have produced better (or different) results.
Among the lessons learned from earlier small business stimulus packages is that additional Among the lessons learned from earlier small business stimulus packages is that additional
funding for the SBA OIG to conduct oversight of the SBA’s implementation of stimulus changes funding for the SBA OIG to conduct oversight of the SBA’s implementation of stimulus changes
could help Congress in its oversight responsibilities. Additional funding for the SBA OIG to could help Congress in its oversight responsibilities. Additional funding for the SBA OIG to
conduct investigations of potentially fraudulent behaviors by borrowers and lenders could also conduct investigations of potentially fraudulent behaviors by borrowers and lenders could also
prove useful in deterring fraud, waste, and abuse.prove useful in deterring fraud, waste, and abuse.~~100~~102 In addition, requiring the SBA to periodically In addition, requiring the SBA to periodically
report to Congress and on its website both output and outcome performance data could help report to Congress and on its website both output and outcome performance data could help
Congress in its oversight responsibilities and assure the public that the taxpayer’s dollars are Congress in its oversight responsibilities and assure the public that the taxpayer’s dollars are
being spent both efficiently and effectively. being spent both efficiently and effectively.
SBA Entrepreneurial Development ~~Programs101~~Programs103
Overview
The SBA has provided technical and managerial assistance to small businesses since it began The SBA has provided technical and managerial assistance to small businesses since it began
operations in 1953. Initially, the SBA provided its own small business management and technical operations in 1953. Initially, the SBA provided its own small business management and technical
assistance training programs. Over time, the SBA has relied increasingly on third parties to assistance training programs. Over time, the SBA has relied increasingly on third parties to
provide that training. provide that training.
Congressional interest in the SBA’s management and technical assistance training programs has Congressional interest in the SBA’s management and technical assistance training programs has
increased in recent years, primarily because these programs are viewed as a means to assist small increased in recent years, primarily because these programs are viewed as a means to assist small
businesses create and retain jobs. These programs received $239 million in FY2020 and $245.5 businesses create and retain jobs. These programs received $239 million in FY2020 and $245.5
million FY2021. These funds supported about 14,000 resource partners, including 63 lead small million FY2021. These funds supported about 14,000 resource partners, including 63 lead small
business development centers (SBDCs) and nearly 900 SBDC local outreach locations, over 200 business development centers (SBDCs) and nearly 900 SBDC local outreach locations, over 200
women’s business centers (WBCs), and more than 250 chapters of the mentoring program, women’s business centers (WBCs), and more than 250 chapters of the mentoring program,
SCORE.SCORE.~~102~~
~~The SBA reports that nearly a million aspiring entrepreneurs and small business owners receive~~
~~mentoring and training from an SBA-supported resource partner each year. Most of this training~~
~~is free, and some is offered at low cost.103~~

~~100~~104 101 SBA, “SBA Loan Dollars in FY 2012 Reach Second Largest Total Ever; $30.25 Billion Second Only to FY 2011,” October 9, 2012, at https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/sba-loan-dollars-fy-2012-reach-second-largest-total-ever-3025-billion-second-only-fy-2011. 102 P.L. 116-136, the CARES Act, provided the SBA’s OIG $25 million in additional funding for its oversight P.L. 116-136, the CARES Act, provided the SBA’s OIG $25 million in additional funding for its oversight
activities. On April 3, 2020, the SBA’s OIG issued its first CARES Act-related report, “White Paper: Risk Awareness activities. On April 3, 2020, the SBA’s OIG issued its first CARES Act-related report, “White Paper: Risk Awareness
and Lessons Learned from Prior Audits of Economic Stimulus Loans.” For a list of the SBA OIG’s oversight reports on and Lessons Learned from Prior Audits of Economic Stimulus Loans.” For a list of the SBA OIG’s oversight reports on
SBA’s credit and capital programs, including COVID-19-related relief programs, see https://www.sba.gov/document?SBA’s credit and capital programs, including COVID-19-related relief programs, see https://www.sba.gov/document?
sortBy=Effective%20Date&search=&documentType=Report&program=Credit/Capital&documentActivity=Audit/sortBy=Effective%20Date&search=&documentType=Report&program=Credit/Capital&documentActivity=Audit/
evaluation&office=7392&page=1. evaluation&office=7392&page=1.
~~101~~103 For additional information and analysis, see CRS Report R41352, For additional information and analysis, see CRS Report R41352, Small Business Management and Technical
Assistance Training Programs, by Robert Jay Dilger. , by Robert Jay Dilger.
~~102~~104 Other SBA entrepreneurial development programs include the following: the Microloan Technical Assistance Other SBA entrepreneurial development programs include the following: the Microloan Technical Assistance
~~Program; the Program for Investment in Microentrepreneurs (PRIME), Veterans Programs (including Veterans~~
~~Business Outreach Centers, Boots to Business, Veteran Women Igniting the Spirit of Entrepreneurship [VWISE],~~
~~Entrepreneurship Bootcamp for Veterans with Disabilities, and Boots to Business: Reboot), the Native American~~
~~Outreach Program, the Entrepreneurial Development Initiative (Regional Innovation Clusters), the Entrepreneurship~~
~~Education Initiative, the Growth Accelerators Initiative, and the 7(j) Technical Assistance Program.~~
~~103 SBA, FY2021 Congressional Budget Justification and FY2019 Annual Performance Report, p. 18.~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~
Congressional Research Service 28 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options The SBA reports that nearly a million aspiring entrepreneurs and small business owners receive mentoring and training from an SBA-supported resource partner each year. Most of this training is free, and some is offered at low cost.105
The Department of Commerce also provides management and technical assistance training for The Department of Commerce also provides management and technical assistance training for
small businesses. For example, its Minority Business Development Agency provides training to small businesses. For example, its Minority Business Development Agency provides training to
minority business owners to assist them in obtaining contracts and financial awards. minority business owners to assist them in obtaining contracts and financial awards.
Small Business Development Centers
SBDCs provide free or low-cost assistance to small businesses using programs customized to SBDCs provide free or low-cost assistance to small businesses using programs customized to
local conditions. SBDCs support small businesses in marketing and business strategy, finance, local conditions. SBDCs support small businesses in marketing and business strategy, finance,
technology transfer, government contracting, management, manufacturing, engineering, sales, technology transfer, government contracting, management, manufacturing, engineering, sales,
accounting, exporting, and other topics. SBDCs are funded by SBA grants and matching funds accounting, exporting, and other topics. SBDCs are funded by SBA grants and matching funds
equal to the grant amount. equal to the grant amount.
SBDC funding is allocated on a pro rata basis among the states (including the District of SBDC funding is allocated on a pro rata basis among the states (including the District of
Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, and American Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, and American
Samoa) by a statutory formula “based on the percentage of the population of each State, as Samoa) by a statutory formula “based on the percentage of the population of each State, as
compared to the population of the United States.”compared to the population of the United States.”~~104~~106 If, as is currently the case, SBDC funding If, as is currently the case, SBDC funding
exceeds $90 million, the minimum funding level is “the sum of $500,000, plus a percentage of exceeds $90 million, the minimum funding level is “the sum of $500,000, plus a percentage of
$500,000 equal to the percentage amount by which the amount made available exceeds $90 $500,000 equal to the percentage amount by which the amount made available exceeds $90
million.”million.”~~105~~107
There are 63 lead SBDC service centers, one located in each state (four in Texas and six in There are 63 lead SBDC service centers, one located in each state (four in Texas and six in
California), the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and American California), the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and American
Samoa. These centers manage more than 900 SBDC outreach locations. SBDCs were Samoa. These centers manage more than 900 SBDC outreach locations. SBDCs were
appropriated $135 million in FY2020 and $136 million in FY2021. The SBA also was provided appropriated $135 million in FY2020 and $136 million in FY2021. The SBA also was provided
an additional $192 million in supplemental funding for SBDC grants in FY2020 under the an additional $192 million in supplemental funding for SBDC grants in FY2020 under the
CARES Act.CARES Act.~~106~~108
In FY2019, SBDCs provided technical assistance training and counseling services to 254,821 In FY2019, SBDCs provided technical assistance training and counseling services to 254,821
unique SBDC clients, and 17,810 new businesses were started largely as a result of SBDC unique SBDC clients, and 17,810 new businesses were started largely as a result of SBDC
training and counseling.training and counseling.~~107~~109
Microloan Technical Assistance
Congress authorized the SBA’s Microloan lending program in 1991 (P.L. 102-140, the Congress authorized the SBA’s Microloan lending program in 1991 (P.L. 102-140, the
Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations
~~Act, 1992) to address the perceived disadvantages faced by women, low-income, veteran, and~~
~~minority entrepreneurs and business owners gaining access to capital to start or expand their~~
~~business. The program became operational in 1992. Initially, the SBA’s Microloan program was~~
~~authorized as a five-year demonstration project. It was made permanent, subject to~~
~~reauthorization, by P.L. 105-135, the Small Business Reauthorization Act of 1997.~~
~~The SBA’s Microloan Technical Assistance Program is affiliated with the SBA’s Microloan~~
~~lending program but receives a separate appropriation. This program provides grants to~~
~~Microloan intermediaries for management and technical training assistance to Microloan program~~

~~104 15 U.S.C. §648(a)(4)(C).~~
~~105~~ Program; the Program for Investment in Microentrepreneurs (PRIME), Veterans Programs (including Veterans Business Outreach Centers, Boots to Business, Veteran Women Igniting the Spirit of Entrepreneurship [VWISE], Entrepreneurship Bootcamp for Veterans with Disabilities, and Boots to Business: Reboot), the Native American Outreach Program, the Entrepreneurial Development Initiative (Regional Innovation Clusters), the Entrepreneurship Education Initiative, the Growth Accelerators Initiative, and the 7(j) Technical Assistance Program. 105 SBA, FY2021 Congressional Budget Justification and FY2019 Annual Performance Report, p. 18. 106 15 U.S.C. §648(a)(4)(C). 107 15 U.S.C. §648(a)(4)(C) and P.L. 106-554, the Consolidated Appropriations Act, 2001. 15 U.S.C. §648(a)(4)(C) and P.L. 106-554, the Consolidated Appropriations Act, 2001.
~~106~~108 The CARES Act also provides $25 million for SBA resource partners, including SBDCs, to establish a centralized The CARES Act also provides $25 million for SBA resource partners, including SBDCs, to establish a centralized
hub for COVID-19 information, which includes an online platform that consolidates resources and information across hub for COVID-19 information, which includes an online platform that consolidates resources and information across
multiple federal agencies and training program to education resource partner counselors. multiple federal agencies and training program to education resource partner counselors.
~~107~~109 SBA, SBA, FY2021 Congressional Budget Justification and FY2019 Annual Performance Report, p. 85. , p. 85.
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COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options

Act, 1992) to address the perceived disadvantages faced by women, low-income, veteran, and minority entrepreneurs and business owners gaining access to capital to start or expand their business. The program became operational in 1992. Initially, the SBA’s Microloan program was authorized as a five-year demonstration project. It was made permanent, subject to reauthorization, by P.L. 105-135, the Small Business Reauthorization Act of 1997. The SBA’s Microloan Technical Assistance Program is affiliated with the SBA’s Microloan lending program but receives a separate appropriation. This program provides grants to Microloan intermediaries for management and technical training assistance to Microloan program borrowers and prospective borrowers.110~~borrowers and prospective borrowers.108~~ There are currently 144 active Microloan intermediaries There are currently 144 active Microloan intermediaries
serving 49 states, the District of Columbia, and Puerto Rico.serving 49 states, the District of Columbia, and Puerto Rico.~~109~~111
Under the Microloan program, intermediaries are eligible to receive a Microloan technical Under the Microloan program, intermediaries are eligible to receive a Microloan technical
assistance grant “of not more than 25% of the total outstanding balance of loans made to it.”assistance grant “of not more than 25% of the total outstanding balance of loans made to it.”~~110~~112
Grant funds may be used only to provide marketing, management, and technical assistance to Grant funds may be used only to provide marketing, management, and technical assistance to
Microloan borrowers, and no more than 50% of the funds may be used to provide such assistance Microloan borrowers, and no more than 50% of the funds may be used to provide such assistance
to prospective Microloan borrowers and no more than 50% of the funds may be awarded to third to prospective Microloan borrowers and no more than 50% of the funds may be awarded to third
parties to provide that technical assistance. Grant funds also may be used to attend required parties to provide that technical assistance. Grant funds also may be used to attend required
training.training.~~111~~113
In most instances, intermediaries must contribute, solely from nonfederal sources, an amount In most instances, intermediaries must contribute, solely from nonfederal sources, an amount
equal to 25% of the grant amount.equal to 25% of the grant amount.~~112~~114 In addition to cash or other direct funding, the contribution In addition to cash or other direct funding, the contribution
may include indirect costs or in-kind contributions paid for under nonfederal programs.may include indirect costs or in-kind contributions paid for under nonfederal programs.~~113~~115
In an effort to assist small businesses adversely affected by COVID-19, P.L. 116-260, the In an effort to assist small businesses adversely affected by COVID-19, P.L. 116-260, the
Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, Title III of Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, Title III of
the Consolidated Appropriations Act of 2021), waives the Microloan Technical Assistance the Consolidated Appropriations Act of 2021), waives the Microloan Technical Assistance
Program’s matching requirement and the limitations on the use of those funds to provide training Program’s matching requirement and the limitations on the use of those funds to provide training
to prospective borrowers and on contracts to third parties to provide that training in FY2021. to prospective borrowers and on contracts to third parties to provide that training in FY2021.
The SBA does not require Microloan borrowers to participate in the Microloan Technical The SBA does not require Microloan borrowers to participate in the Microloan Technical
Assistance Program. However, intermediaries typically require Microloan borrowers to Assistance Program. However, intermediaries typically require Microloan borrowers to
participate in the training program as a condition of the receipt of a microloan. Combining loan participate in the training program as a condition of the receipt of a microloan. Combining loan
and intensive management and technical assistance training is one of the Microloan program’s and intensive management and technical assistance training is one of the Microloan program’s
distinguishing features.distinguishing features.~~114~~
~~The SBA was provided $34.5 million for Microloan technical assistance grants in FY2020 and~~
~~$85 million in FY2021 ($35 million in the Consolidated Appropriations Act, 2021 and an~~
~~additional $50 million in P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses,~~
~~Nonprofits, and Venues Act).~~
~~Women’s Business Centers~~
~~The WBC Renewable Grant Program was initially established by P.L. 100-533, the Women’s~~
~~Business Ownership Act of 1988, as the Women’s Business Demonstration Pilot Program,~~116

~~108~~110 For further analysis of the SBA’s Microloan program, see CRS Report R41057, For further analysis of the SBA’s Microloan program, see CRS Report R41057, Small Business Administration
Microloan Program, by Robert Jay Dilger. , by Robert Jay Dilger.
~~109~~111 SBA, SBA, FY2021 Congressional Budget Justification and FY2019 Annual Performance Report, p. 36. For a list of , p. 36. For a list of
Microloan intermediaries by state, see SBA, “List of Lenders,” at https://www.sba.gov/partners/lenders/microloan-Microloan intermediaries by state, see SBA, “List of Lenders,” at https://www.sba.gov/partners/lenders/microloan-
program/list-lenders. program/list-lenders.
~~110~~112 15 U.S.C. §636(m)(4)(A). 15 U.S.C. §636(m)(4)(A).
~~111~~113 13 C.F.R. §120.712. 13 C.F.R. §120.712.
~~112~~114 13 C.F.R. §120.712. 13 C.F.R. §120.712.
~~113~~115 13 C.F.R. §120.712. Intermediaries may not borrow their contribution. 13 C.F.R. §120.712. Intermediaries may not borrow their contribution.
~~114~~116 Intermediaries that make at least 25% of their loans to small businesses located in or owned by residents of an Intermediaries that make at least 25% of their loans to small businesses located in or owned by residents of an
Economically Distressed Area (defined as having 40% or more of its residents with an annual income that is at or (defined as having 40% or more of its residents with an annual income that is at or
below the poverty level), or have a portfolio of loans made under the program that averages not more than $10,000 below the poverty level), or have a portfolio of loans made under the program that averages not more than $10,000
during the period of the intermediary’s participation in the program are eligible to receive an additional training grant during the period of the intermediary’s participation in the program are eligible to receive an additional training grant
equal to 5% of the total outstanding balance of loans made to the intermediary. Intermediaries are not required to make equal to 5% of the total outstanding balance of loans made to the intermediary. Intermediaries are not required to make
a matching contribution as a condition of receiving these additional grant funds. See 13 C.F.R. §120.712; and 15 U.S.C. a matching contribution as a condition of receiving these additional grant funds. See 13 C.F.R. §120.712; and 15 U.S.C.
§636(m)(4)(C)(i). §636(m)(4)(C)(i).
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The SBA was provided $34.5 million for Microloan technical assistance grants in FY2020 and $85 million in FY2021 ($35 million in the Consolidated Appropriations Act, 2021 and an additional $50 million in P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act). Women’s Business Centers The WBC Renewable Grant Program was initially established by P.L. 100-533, the Women’s Business Ownership Act of 1988, as the Women’s Business Demonstration Pilot Program, targeting the needs of socially and economically disadvantaged women. The act directed the SBA targeting the needs of socially and economically disadvantaged women. The act directed the SBA
to provide financial assistance to private, nonprofit organizations to conduct demonstration to provide financial assistance to private, nonprofit organizations to conduct demonstration
projects giving financial, management, and marketing assistance to small businesses, including projects giving financial, management, and marketing assistance to small businesses, including
start-up businesses, owned and controlled by women. The WBC program was expanded and start-up businesses, owned and controlled by women. The WBC program was expanded and
provided permanent legislative status by P.L. 109-108, the Science, State, Justice, Commerce, and provided permanent legislative status by P.L. 109-108, the Science, State, Justice, Commerce, and
Related Agencies Appropriations Act, 2006. Related Agencies Appropriations Act, 2006.
Since the program’s inception, the SBA has awarded WBCs a grant of up to $150,000 per year. Since the program’s inception, the SBA has awarded WBCs a grant of up to $150,000 per year.
WBC initial grants are currently awarded for up to five years, consisting of a base period of 12 WBC initial grants are currently awarded for up to five years, consisting of a base period of 12
months from the date of the award and four 12-month option periods.months from the date of the award and four 12-month option periods.~~115~~117 The SBA determines if The SBA determines if
the option periods are exercised and makes that determination subject to the continuation of the option periods are exercised and makes that determination subject to the continuation of
program authority, the availability of funds, and the recipient organization’s compliance with program authority, the availability of funds, and the recipient organization’s compliance with
federal law, SBA regulations, and the terms and conditions specified in a cooperative agreement. federal law, SBA regulations, and the terms and conditions specified in a cooperative agreement.
WBCs that successfully complete the initial five-year grant period may apply for an unlimited WBCs that successfully complete the initial five-year grant period may apply for an unlimited
number of three-year funding intervals.number of three-year funding intervals.~~116~~118
During their initial five-year grant period, WBCs are required to provide a nonfederal match of During their initial five-year grant period, WBCs are required to provide a nonfederal match of
one nonfederal dollar for each two federal dollars in years one and two (1:2), and one nonfederal one nonfederal dollar for each two federal dollars in years one and two (1:2), and one nonfederal
dollar for each federal dollar in years three, four, and five (1:1). After the initial five-year grant dollar for each federal dollar in years three, four, and five (1:1). After the initial five-year grant
period, the matching requirement in subsequent three-year funding intervals is not more than 50% period, the matching requirement in subsequent three-year funding intervals is not more than 50%
of federal funding (1:1).of federal funding (1:1).~~117~~119 The nonfederal match may consist of cash, in-kind, and program The nonfederal match may consist of cash, in-kind, and program
income.income.~~118~~120
In an effort to assist small businesses adversely affected by COVID-19, the CARES Act waived In an effort to assist small businesses adversely affected by COVID-19, the CARES Act waived
the WBC matching requirement for three months following enactment (March 27, 2020). P.L. the WBC matching requirement for three months following enactment (March 27, 2020). P.L.
116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division
~~N, Title III of the Consolidated Appropriations Act of 2021), reactivated this waiver, made it~~
~~retroactive to March 27, 2020, and extended it through June 30, 2021.~~
~~Today, there are 136 WBCs located throughout most of the United States and the territories.119 In~~
~~FY2019, WBCs provided technical assistance training and counseling services to 64,527 unique~~
~~WBC clients, and 2,087 new businesses were started largely as a result of WBC training and~~
~~counseling.120~~

~~115~~ 117 P.L. 105-135, the Small Business Reauthorization Act of 1997, authorized the SBA to award grants to WBCs for up P.L. 105-135, the Small Business Reauthorization Act of 1997, authorized the SBA to award grants to WBCs for up
to five years—one base year and four option years. P.L. 106-165, the Women’s Business Centers Sustainability Act of to five years—one base year and four option years. P.L. 106-165, the Women’s Business Centers Sustainability Act of
1999, provided WBCs that had completed the initial five-year grant an opportunity to apply for an additional five-year 1999, provided WBCs that had completed the initial five-year grant an opportunity to apply for an additional five-year
sustainability grant. Thus, the act allowed successful WBCs to receive SBA funding for a total of 10 years. Because the sustainability grant. Thus, the act allowed successful WBCs to receive SBA funding for a total of 10 years. Because the
program has permitted permanent three-year funding intervals since 2007, the sustainability grants would be phased out program has permitted permanent three-year funding intervals since 2007, the sustainability grants would be phased out
by FY2012, leaving the initial five-year grants with the continuous three-year option. See SBA, by FY2012, leaving the initial five-year grants with the continuous three-year option. See SBA, FY2012 Congressional
Budget Justification and FY2010 Annual Performance Report, p. 49, at https://www.sba.gov/sites/default/files/, p. 49, at https://www.sba.gov/sites/default/files/
aboutsbaarticle/FINAL%20FY%202012%20CBJ%20FY%202010%20APR_0.pdf. aboutsbaarticle/FINAL%20FY%202012%20CBJ%20FY%202010%20APR_0.pdf.
~~116~~118 P.L. 110-28, the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations P.L. 110-28, the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations
Act, 2007, allowed WBCs that successfully completed the initial five-year grant to apply for an unlimited number of Act, 2007, allowed WBCs that successfully completed the initial five-year grant to apply for an unlimited number of
three-year funding renewals. three-year funding renewals.
~~117~~119 P.L. 110-28 reduced the federal share to not more than 50% for all grant years (1:1) following the initial five-year P.L. 110-28 reduced the federal share to not more than 50% for all grant years (1:1) following the initial five-year
grant. grant.
~~118~~120 P.L. 105-135 specified that not more than one-half of the nonfederal sector matching assistance may be in the form P.L. 105-135 specified that not more than one-half of the nonfederal sector matching assistance may be in the form
of in-kind contributions that are budget line items only, including office equipment and office space. of in-kind contributions that are budget line items only, including office equipment and office space.
~~119 SBA, “SBA Launches Largest Expansion of Women’s Business Centers in 30 Years,” January 4, 2021, at~~
~~https://www.sba.gov/article/2021/jan/04/sba-launches-largest-expansion-womens-business-centers-30-years; and SBA,~~
~~“Women’s Business Centers Directory,” at https://www.sba.gov/tools/local-assistance/wbc.~~
~~120 SBA, FY2021 Congressional Budget Justification and FY2019 Annual Performance Report, p. 87.~~
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Congressional Research Service 31 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options N, Title III of the Consolidated Appropriations Act of 2021), reactivated this waiver, made it retroactive to March 27, 2020, and extended it through June 30, 2021. Today, there are 136 WBCs located throughout most of the United States and the territories.121 In FY2019, WBCs provided technical assistance training and counseling services to 64,527 unique WBC clients, and 2,087 new businesses were started largely as a result of WBC training and counseling.122
The SBA was provided $22.5 million for WBC grants in FY2020 and $23 million in FY2021. The SBA was provided $22.5 million for WBC grants in FY2020 and $23 million in FY2021.
The SBA also was provided an additional $48 million in supplemental funding for WBC grants in The SBA also was provided an additional $48 million in supplemental funding for WBC grants in
FY2020 under the CARES Act.FY2020 under the CARES Act.~~121~~123
SCORE (formerly the Service Corps of Retired Executives)
SCORE was established on October 5, 1964, by then-SBA Administrator Eugene P. Foley as a SCORE was established on October 5, 1964, by then-SBA Administrator Eugene P. Foley as a
national, volunteer organization, uniting more than 50 independent nonprofit organizations into a national, volunteer organization, uniting more than 50 independent nonprofit organizations into a
single, national nonprofit organization. single, national nonprofit organization.
The SBA currently provides grants to SCORE to provide in-person mentoring, online training, The SBA currently provides grants to SCORE to provide in-person mentoring, online training,
and “nearly 9,000 local training workshops annually” to small businesses.and “nearly 9,000 local training workshops annually” to small businesses.~~122~~124 SCORE’s more than SCORE’s more than
250 chapters are located throughout the United States and partner with more than 10,000 250 chapters are located throughout the United States and partner with more than 10,000
volunteer counselors, who are working or retired business owners, executives and corporate volunteer counselors, who are working or retired business owners, executives and corporate
leaders, to provide management and training assistance to small businesses “at no charge or at leaders, to provide management and training assistance to small businesses “at no charge or at
very low cost.”very low cost.”~~123~~125
In FY2019, SCORE provided technical assistance training and counseling services to 195,242 In FY2019, SCORE provided technical assistance training and counseling services to 195,242
unique SCORE clients, and 480 new businesses were started largely as a result of SCORE unique SCORE clients, and 480 new businesses were started largely as a result of SCORE
training and counseling.training and counseling.~~124~~126
The SBA was provided $11.7 million for SCORE grants in FY2020 and $12.2 million in FY2021. The SBA was provided $11.7 million for SCORE grants in FY2020 and $12.2 million in FY2021.
Current Issues, Debates, and Lessons Learned
Congress provided additional funding for SBA entrepreneurial development programs during and Congress provided additional funding for SBA entrepreneurial development programs during and
immediately following the Great Recession. For example, ARRA provided an additional $24 immediately following the Great Recession. For example, ARRA provided an additional $24
million for Microloan technical assistance grants. The Small Business Jobs Act of 2010 provided million for Microloan technical assistance grants. The Small Business Jobs Act of 2010 provided
SBDCs an additional $50 million and temporarily waived SBDC, Microloan technical assistance, SBDCs an additional $50 million and temporarily waived SBDC, Microloan technical assistance,
and WBC matching requirements. and WBC matching requirements.
~~Similar proposals were made to address the COVID-19 pandemic. For example, during the 116th~~
~~Congress, the CARES Act appropriated an additional $265 million for SBA entrepreneurial~~
~~development programs ($192 million for SBDCs, $48 million for WBCs, and $25 million for~~
~~SBA resource partners to provide online information and training). The act also waived SBDC~~
~~and WBC matching requirements. P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses,~~
~~Nonprofits, and Venues Act (Division N, Title III of the Consolidated Appropriations Act of~~
~~2021), appropriated an additional $50 million for Microloan technical assistance grants, and~~
~~continued the waiver of the WBC matching requirement through June 30, 2021.~~

~~121~~ 121 SBA, “SBA Launches Largest Expansion of Women’s Business Centers in 30 Years,” January 4, 2021, at https://www.sba.gov/article/2021/jan/04/sba-launches-largest-expansion-womens-business-centers-30-years; and SBA, “Women’s Business Centers Directory,” at https://www.sba.gov/tools/local-assistance/wbc. 122 SBA, FY2021 Congressional Budget Justification and FY2019 Annual Performance Report, p. 87. 123 The CARES Act also provides $25 million for SBA resource partners, including WBCs, to establish a centralized The CARES Act also provides $25 million for SBA resource partners, including WBCs, to establish a centralized
hub for COVID-19 information, which includes an online platform that consolidates resources and information across hub for COVID-19 information, which includes an online platform that consolidates resources and information across
multiple federal agencies and training programs to educate resource partner counselors. multiple federal agencies and training programs to educate resource partner counselors.
~~122~~124 SBA, SBA, FY2013 Congressional Budget Justification and FY2011 Annual Performance Report, p. 45, at , p. 45, at
https://www.sba.gov/sites/default/files/files/1-https://www.sba.gov/sites/default/files/files/1-
508%20Compliant%20FY%202013%20CBJ%20FY%202011%20APR(1).pdf. 508%20Compliant%20FY%202013%20CBJ%20FY%202011%20APR(1).pdf.
~~123~~125 SCORE (Service Corps of Retired Executives), “About SCORE,” Washington, DC, at https://www.score.org/about- SCORE (Service Corps of Retired Executives), “About SCORE,” Washington, DC, at https://www.score.org/about-
score. score.
~~124~~126 SBA, SBA, FY2021 Congressional Budget Justification and FY2019 Annual Performance Report, p. 89. , p. 89.
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Similar proposals were made to address the COVID-19 pandemic. For example, during the 116th Congress, the CARES Act appropriated an additional $265 million for SBA entrepreneurial development programs ($192 million for SBDCs, $48 million for WBCs, and $25 million for SBA resource partners to provide online information and training). The act also waived SBDC and WBC matching requirements. P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, Title III of the Consolidated Appropriations Act of 2021), appropriated an additional $50 million for Microloan technical assistance grants, and continued the waiver of the WBC matching requirement through June 30, 2021. Congress could require the SBA’s resource partners to report to the SBA both output and Congress could require the SBA’s resource partners to report to the SBA both output and
outcome performance data for these grants and to require the SBA to report that information to outcome performance data for these grants and to require the SBA to report that information to
Congress and make that information available to the public on the SBA website. Congress and make that information available to the public on the SBA website.
SBA Contracting ~~Programs125~~Programs127
Overview
Federal agencies are required to facilitate the maximum participation of small businesses as prime Federal agencies are required to facilitate the maximum participation of small businesses as prime
contractors, subcontractors, and suppliers. For example, federal agencies are generally required to contractors, subcontractors, and suppliers. For example, federal agencies are generally required to
reserve contracts that have an anticipated value greater than the micro-purchase threshold reserve contracts that have an anticipated value greater than the micro-purchase threshold
(currently $10,000), but not greater than the simplified acquisition threshold (currently $250,000) (currently $10,000), but not greater than the simplified acquisition threshold (currently $250,000)
exclusively for small businesses unless the contracting officer is unable to obtain offers from two exclusively for small businesses unless the contracting officer is unable to obtain offers from two
or more small businesses that are competitive with market prices and the quality and delivery of or more small businesses that are competitive with market prices and the quality and delivery of
the goods or services being purchased.the goods or services being purchased.~~126~~128
Several SBA programs assist small businesses in obtaining and performing federal contracts and Several SBA programs assist small businesses in obtaining and performing federal contracts and
subcontracts. These include various prime contracting programs, subcontracting programs, and subcontracts. These include various prime contracting programs, subcontracting programs, and
other assistance (e.g., contracting technical training assistance and oversight of the federal small other assistance (e.g., contracting technical training assistance and oversight of the federal small
business goaling program and the Surety Bond Guarantee program).business goaling program and the Surety Bond Guarantee program).~~127~~129
8(a) ~~Program128~~Program130
The SBA’s 8(a) The SBA’s 8(a) ~~Minority Small Business and Capital Ownership~~Business Development Program provides Development Program provides
business development assistance to businesses owned and controlled by persons who are socially business development assistance to businesses owned and controlled by persons who are socially
and economically disadvantaged, have good character, and demonstrate a potential for success.and economically disadvantaged, have good character, and demonstrate a potential for success.~~129~~131
Although the 8(a) Program was originally established in the 1980s for the benefit of Although the 8(a) Program was originally established in the 1980s for the benefit of
disadvantaged individuals, Congress expanded the program to include small businesses owned by disadvantaged individuals, Congress expanded the program to include small businesses owned by
~~four disadvantaged groups. Small businesses owned by Alaska Native Corporations (ANCs),~~
~~Community Development Corporations (CDCs), Indian tribes, and Native Hawaiian~~
~~Organizations (NHOs) are also eligible to participate in the 8(a) Program under somewhat~~
~~different requirements.~~
~~Federal agencies are authorized to award contracts for goods or services, or to perform~~
~~construction work, to the SBA for subcontracting to 8(a) firms. The SBA is authorized to delegate~~
~~the function of executing contracts to the procuring agencies and often does so. Once the SBA has~~

~~125~~ 127 For additional information and analysis concerning SBA contracting programs, see CRS Report R45576, For additional information and analysis concerning SBA contracting programs, see CRS Report R45576, An
Overview of Small Business Contracting, by Robert Jay Dilger. , by Robert Jay Dilger.
~~126~~128 15 U.S.C. §644(j)(1). Certain regulations implementing this provision of the Small Business Act effectively narrows 15 U.S.C. §644(j)(1). Certain regulations implementing this provision of the Small Business Act effectively narrows
its scope. For example, certain small business contracts awarded or performed overseas are not necessarily required to its scope. For example, certain small business contracts awarded or performed overseas are not necessarily required to
be set aside for small businesses, and the small business provisions contained in Part 19 of the Federal Acquisition be set aside for small businesses, and the small business provisions contained in Part 19 of the Federal Acquisition
Regulation (FAR) generally do not apply to blanket purchase agreements and orders placed against Federal Supply Regulation (FAR) generally do not apply to blanket purchase agreements and orders placed against Federal Supply
Schedule contracts. Schedule contracts.
~~127~~129 For additional information and analysis concerning the SBA’s Surety Bond Program, see CRS Report R42037, For additional information and analysis concerning the SBA’s Surety Bond Program, see CRS Report R42037, SBA
Surety Bond Guarantee Program, by Robert Jay Dilger. , by Robert Jay Dilger.
~~128~~130 For additional information and analysis concerning the 8(a) Program, see CRS Report R44844, For additional information and analysis concerning the 8(a) Program, see CRS Report R44844, SBA’s “8(a)
Program”: Overview, History, and Current Issues, by Robert Jay Dilger. , by Robert Jay Dilger.
~~129~~131 Section 8(a) of the Small Business Act, P.L. 85-536, as amended, can be found at 15 U.S.C. §637(a). Regulations Section 8(a) of the Small Business Act, P.L. 85-536, as amended, can be found at 15 U.S.C. §637(a). Regulations
are in 13 C.F.R. §124. are in 13 C.F.R. §124.
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four disadvantaged groups. Small businesses owned by Alaska Native Corporations (ANCs), Community Development Corporations (CDCs), Indian tribes, and Native Hawaiian Organizations (NHOs) are also eligible to participate in the 8(a) Program under somewhat different requirements. Federal agencies are authorized to award contracts for goods or services, or to perform construction work, to the SBA for subcontracting to 8(a) firms. The SBA is authorized to delegate the function of executing contracts to the procuring agencies and often does so. Once the SBA has accepted a contract for the 8(a) Program, the contract is awarded through either a restricted accepted a contract for the 8(a) Program, the contract is awarded through either a restricted
competition limited to just 8(a) participants (a set aside) or on a sole source basis, with the competition limited to just 8(a) participants (a set aside) or on a sole source basis, with the
contract amount generally determining the acquisition method used. contract amount generally determining the acquisition method used.
For individually owned small businesses, when the contract’s anticipated total value, including For individually owned small businesses, when the contract’s anticipated total value, including
any options, any options, ~~is less than~~does not exceed $4.5 million ($7.5 million for manufacturing contracts), the contract is $4.5 million ($7.5 million for manufacturing contracts), the contract is
normally awarded without competition (as a sole source award). In contrast, when the contract’s normally awarded without competition (as a sole source award). In contrast, when the contract’s
anticipated value exceeds these thresholds, the contract generally must be awarded via a set aside anticipated value exceeds these thresholds, the contract generally must be awarded via a set aside
with competition limited to 8(a) firms so long as there is a reasonable expectation that at least two with competition limited to 8(a) firms so long as there is a reasonable expectation that at least two
eligible and responsible 8(a) firms will submit offers and the award can be made at fair market eligible and responsible 8(a) firms will submit offers and the award can be made at fair market
price.price.~~130~~132
Similar to other participants, firms owned by ANCs, CDCs, NHOs, and Indian tribes are eligible Similar to other participants, firms owned by ANCs, CDCs, NHOs, and Indian tribes are eligible
for 8(a) set asides and may receive sole source awards valued at less than $4 million ($7 million for 8(a) set asides and may receive sole source awards valued at less than $4 million ($7 million
for manufacturing contracts). However, firms owned by ANCs and Indian tribes can also receive for manufacturing contracts). However, firms owned by ANCs and Indian tribes can also receive
sole source awards in excess of $4.5 million ($7.5 million for manufacturing contracts) even sole source awards in excess of $4.5 million ($7.5 million for manufacturing contracts) even
when contracting officers reasonably expect that at least two eligible and responsible 8(a) firms when contracting officers reasonably expect that at least two eligible and responsible 8(a) firms
will submit offers and the award can be made at fair market price.will submit offers and the award can be made at fair market price.~~131~~133 NHO-owned firms may NHO-owned firms may
receive sole source awards from the Department of Defense under the same conditions.receive sole source awards from the Department of Defense under the same conditions.~~132~~134
The 8(a) program is designed to help federal agencies achieve their statutory goal of awarding at The 8(a) program is designed to help federal agencies achieve their statutory goal of awarding at
least 5% of their federal contracting dollars to small disadvantaged businesses. least 5% of their federal contracting dollars to small disadvantaged businesses.
In FY2019, the federal government awarded $30.3 billion to 8(a) firms. In FY2019, the federal government awarded $30.3 billion to 8(a) firms.
Historically Underutilized Business Zone ~~Program133~~Program135
The SBA oversees the Historically Underutilized Business Zones (HUBZones) Program. The The SBA oversees the Historically Underutilized Business Zones (HUBZones) Program. The
program assists small businesses located in HUBZone-designated areas through set asides, sole program assists small businesses located in HUBZone-designated areas through set asides, sole
source awards (so long as the award can be made at a fair and reasonable price, and the source awards (so long as the award can be made at a fair and reasonable price, and the
anticipated total value of the contract, including any options, anticipated total value of the contract, including any options, ~~is below~~does not exceed $4.5 million, or $7.5 $4.5 million, or $7.5
million for manufacturing contracts) and price evaluation preferences (of up to 10%) in full million for manufacturing contracts) and price evaluation preferences (of up to 10%) in full ~~and~~
~~open competitions.134 The HUBZone program targets assistance to small businesses located in~~
~~areas with low income, high poverty, or high unemployment.135 To be certified as a HUBZone~~
~~small business, at least 35% of the small business’s employees must generally reside in a~~
~~HUBZone.~~

~~130~~132 15 U.S.C. §637(a)(1)(D)(ii); and SBA, “Conforming Statutory Amendments and Technical Corrections to Small 15 U.S.C. §637(a)(1)(D)(ii); and SBA, “Conforming Statutory Amendments and Technical Corrections to Small
Business Government Contracting Regulations,” 83Business Government Contracting Regulations,” 83 Federal Register 12849, March 26, 2018. 12849, March 26, 2018.
~~131~~133 P.L. 100-656, §602(a), 102 Stat. 3887-88 (November 15, 1988) (codified at 15 U.S.C. §637 note); and 48 C.F.R. P.L. 100-656, §602(a), 102 Stat. 3887-88 (November 15, 1988) (codified at 15 U.S.C. §637 note); and 48 C.F.R.
§19.805-1(b)(2). §19.805-1(b)(2).
~~132~~134 DOD’s authority to make sole source awards to NHO-owned firms of contracts valued at more than $4 million ($7 DOD’s authority to make sole source awards to NHO-owned firms of contracts valued at more than $4 million ($7
million for manufacturing contracts) even if contracting officers reasonably expect that offers will be received from at million for manufacturing contracts) even if contracting officers reasonably expect that offers will be received from at
least two responsible small businesses existed on a temporary basis in 2004-2006 and became permanent in 2006. See least two responsible small businesses existed on a temporary basis in 2004-2006 and became permanent in 2006. See
P.L. 109-148, Department of Defense, Emergency Supplemental Appropriations to Address Hurricanes in the Gulf of P.L. 109-148, Department of Defense, Emergency Supplemental Appropriations to Address Hurricanes in the Gulf of
Mexico, and Pandemic Influenza Act of 2006, §8020, 119 Stat. 2702-03 (December 30, 2005); 48 C.F.R. §219.805-Mexico, and Pandemic Influenza Act of 2006, §8020, 119 Stat. 2702-03 (December 30, 2005); 48 C.F.R. §219.805-
1(b)(2)(A)-(B). 1(b)(2)(A)-(B).
~~133~~135 For additional information and analysis, see CRS Report R41268, For additional information and analysis, see CRS Report R41268, Small Business Administration HUBZone
Program, by Robert Jay Dilger. , by Robert Jay Dilger.
~~134 15 U.S.C. §657a(b)(2-3); and SBA, “Conforming Statutory Amendments and Technical Corrections to Small~~
~~Business Government Contracting Regulations,” 83 Federal Register 12849, March 26, 2018.~~
~~135 For specific criteria, see 15 U.S.C. §632(p)(4); and 13 C.F.R. §126.103.~~
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Congressional Research Service 34 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options and open competitions.136 The HUBZone program targets assistance to small businesses located in areas with low income, high poverty, or high unemployment.137 To be certified as a HUBZone small business, at least 35% of the small business’s employees must generally reside in a HUBZone. The HUBZone contracting program is designed to help federal agencies achieve their statutory The HUBZone contracting program is designed to help federal agencies achieve their statutory
goal of awarding at least 3% of their federal contracting dollars to HUBZone small businesses. goal of awarding at least 3% of their federal contracting dollars to HUBZone small businesses.
In FY2019, the federal government awarded $10.8 billion to HUBZone-certified small In FY2019, the federal government awarded $10.8 billion to HUBZone-certified small
businesses. businesses.
Service-Disabled Veteran-Owned Small Business Program
The SBA oversees the Service-Disabled Veteran-Owned Small Business (SDVOSB) Program. The SBA oversees the Service-Disabled Veteran-Owned Small Business (SDVOSB) Program.
The program allows agencies to set aside contracts for SDVOSBs. Federal agencies may award The program allows agencies to set aside contracts for SDVOSBs. Federal agencies may award
sole source contracts to SDVOSBs so long as the award can be made at a fair and reasonable sole source contracts to SDVOSBs so long as the award can be made at a fair and reasonable
price, and the anticipated total value of the contract, including any options, price, and the anticipated total value of the contract, including any options, ~~is below~~does not exceed $4 million $4 million
($7 million for manufacturing contracts).($7 million for manufacturing contracts).~~136~~138 For purposes of this program, veterans with service- For purposes of this program, veterans with service-
related disabilities are defined as they are under the statutes governing veterans affairs.related disabilities are defined as they are under the statutes governing veterans affairs.~~137~~139
The SDVOSB contracting program is designed to help federal agencies achieve their statutory The SDVOSB contracting program is designed to help federal agencies achieve their statutory
goal of awarding at least 3% of their federal contracting dollars to SDVOSBs. goal of awarding at least 3% of their federal contracting dollars to SDVOSBs.
In FY2019, the federal government awarded $23.5 billion to SDVOSBs. In FY2019, the federal government awarded $23.5 billion to SDVOSBs.
Women-Owned Small Business Program
The SBA oversees the Women-Owned Small Businesses (WOSB) Program. Under this program, The SBA oversees the Women-Owned Small Businesses (WOSB) Program. Under this program,
federal contracting officers may set aside federal contracts (or orders) for WOSBs and federal contracting officers may set aside federal contracts (or orders) for WOSBs and
Economically Disadvantaged Women-Owned Small Businesses (EDWOSBs) in industries in Economically Disadvantaged Women-Owned Small Businesses (EDWOSBs) in industries in
which the SBA determines WOSBs are substantially underrepresented in federal procurement. which the SBA determines WOSBs are substantially underrepresented in federal procurement.
Federal contracting officers can also set aside federal contracts for EDWOSBs exclusively in Federal contracting officers can also set aside federal contracts for EDWOSBs exclusively in
industries in which the SBA determines WOSBs are underrepresented in federal procurement. industries in which the SBA determines WOSBs are underrepresented in federal procurement.
The WOSB Program is designed to help federal agencies achieve their statutory goal of awarding The WOSB Program is designed to help federal agencies achieve their statutory goal of awarding
at least 5% of their federal contracting dollars to WOSBs. at least 5% of their federal contracting dollars to WOSBs.
Federal agencies may award sole source contracts to WOSBs so long as the award can be made at Federal agencies may award sole source contracts to WOSBs so long as the award can be made at
a fair and reasonable price, and the anticipated total value of the contract, including any options, a fair and reasonable price, and the anticipated total value of the contract, including any options,
~~is below~~does not exceed $4.5 million ($7 million for manufacturing contracts). $4.5 million ($7 million for manufacturing contracts).~~138~~
~~In FY2019, the federal government awarded $25 billion to WOSBs.~~

~~136~~140 136 15 U.S.C. §657a(b)(2-3); and SBA, “Conforming Statutory Amendments and Technical Corrections to Small Business Government Contracting Regulations,” 83 Federal Register 12849, March 26, 2018. 137 For specific criteria, see 15 U.S.C. §632(p)(4); and 13 C.F.R. §126.103. 138 15 U.S.C. §657f(a-b); and SBA, “Conforming Statutory Amendments and Technical Corrections to Small Business 15 U.S.C. §657f(a-b); and SBA, “Conforming Statutory Amendments and Technical Corrections to Small Business
Government Contracting Regulations,” 83Government Contracting Regulations,” 83 Federal Register 12849, March 26, 2018. 12849, March 26, 2018.
~~137~~139 38 U.S.C. §8127(f). Veteran-owned small businesses and service-disabled veteran-owned small businesses are 38 U.S.C. §8127(f). Veteran-owned small businesses and service-disabled veteran-owned small businesses are
eligible for separate preferences in procurements conducted by the Department of Veterans Affairs under the authority eligible for separate preferences in procurements conducted by the Department of Veterans Affairs under the authority
of P.L. 109-461, the Veterans Benefits, Health Care, and Information Technology Act of 2006, as amended by P.L. of P.L. 109-461, the Veterans Benefits, Health Care, and Information Technology Act of 2006, as amended by P.L.
110-389, the Veterans’ Benefits Improvements Act of 2008. 110-389, the Veterans’ Benefits Improvements Act of 2008.
~~138~~140 15 U.S.C. §637(m); and SBA, “Conforming Statutory Amendments and Technical Corrections to Small Business 15 U.S.C. §637(m); and SBA, “Conforming Statutory Amendments and Technical Corrections to Small Business
Government Contracting Regulations,” 83Government Contracting Regulations,” 83 Federal Register 12849, March 26, 2018. 12849, March 26, 2018.
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In FY2019, the federal government awarded $25 billion to WOSBs. SBA Surety Bond Program141~~SBA Surety Bond Program139~~
The SBA’s Surety Bond Guarantee Program has been operational since April 1971.The SBA’s Surety Bond Guarantee Program has been operational since April 1971.~~140~~142 It is It is
designed to increase small business’ access to federal, state, and local government contracting, as designed to increase small business’ access to federal, state, and local government contracting, as
well as private sector contracting, by guaranteeing bid, performance, payment, and specified well as private sector contracting, by guaranteeing bid, performance, payment, and specified
ancillary bonds “on contracts … for small and emerging contractors who cannot obtain bonding ancillary bonds “on contracts … for small and emerging contractors who cannot obtain bonding
through regular commercial channels.”through regular commercial channels.”~~141~~143 The program guarantees individual contracts of up to The program guarantees individual contracts of up to
$6.5 million, and up to $10 million for federal contracts if a federal contracting officer certifies $6.5 million, and up to $10 million for federal contracts if a federal contracting officer certifies
that such a guarantee is necessary. The $6.5 million limit is periodically adjusted for inflation.that such a guarantee is necessary. The $6.5 million limit is periodically adjusted for inflation.~~142~~144
The SBA’s guarantee currently ranges from 80% to 90% of the surety’s loss if a default occurs. The SBA’s guarantee currently ranges from 80% to 90% of the surety’s loss if a default occurs.
In In ~~FY2019~~FY2020, the SBA guaranteed , the SBA guaranteed ~~9,905~~10,577 bid and final surety bonds (a payment bond, performance bid and final surety bonds (a payment bond, performance
bond, or both a payment and performance bond) with a total contract value of nearly $bond, or both a payment and performance bond) with a total contract value of nearly $~~6.5~~7.2
billion.billion.~~143~~145
A surety bond is a three-party instrument between a surety (who agrees to be responsible for the A surety bond is a three-party instrument between a surety (who agrees to be responsible for the
debt or obligation of another), a contractor, and a project owner. The agreement binds the debt or obligation of another), a contractor, and a project owner. The agreement binds the
contractor to comply with the contract’s terms and conditions. If the contractor is unable to contractor to comply with the contract’s terms and conditions. If the contractor is unable to
successfully perform the contract, the surety assumes the contractor’s responsibilities and ensures successfully perform the contract, the surety assumes the contractor’s responsibilities and ensures
that the project is completed. Surety bonds encourage project owners to contract with small that the project is completed. Surety bonds encourage project owners to contract with small
businesses that may not have the credit history or prior experience of larger businesses and may businesses that may not have the credit history or prior experience of larger businesses and may
be at greater risk of failing to comply with the contract’s terms and conditions. be at greater risk of failing to comply with the contract’s terms and conditions.
Surety bonds are important to small businesses interested in competing for federal contracts Surety bonds are important to small businesses interested in competing for federal contracts
because the federal government requires prime contractors—prior to the award of a federal because the federal government requires prime contractors—prior to the award of a federal
contract exceeding $150,000 for the construction, alteration, or repair of any building or public contract exceeding $150,000 for the construction, alteration, or repair of any building or public
work of the United States—to furnish a performance bond issued by a surety satisfactory to the work of the United States—to furnish a performance bond issued by a surety satisfactory to the
contracting officer in an amount that the officer considers adequate to protect the government. contracting officer in an amount that the officer considers adequate to protect the government.
Current Issues, Debates, and Lessons Learned
Congress included enhancements for small business contracting in both ARRA (increased funding Congress included enhancements for small business contracting in both ARRA (increased funding
and higher maximum bond amounts for the SBA Surety Bond program) and the Small Business and higher maximum bond amounts for the SBA Surety Bond program) and the Small Business
~~Jobs Act of 2010 (new restrictions on the consolidation or bundling of contracts that make it more~~
~~difficult for small businesses to be awarded the contract). The CARES Act authorizes federal~~

~~139~~ 141 For additional information and analysis concerning the SBA’s Surety Bond Program, see CRS Report R42037, For additional information and analysis concerning the SBA’s Surety Bond Program, see CRS Report R42037, SBA
Surety Bond Guarantee Program, by Robert Jay Dilger. , by Robert Jay Dilger.
~~140~~142 P.L. 91-609, the Housing and Urban Development Act of 1970; and U.S. Congress, Senate Committee on Banking, P.L. 91-609, the Housing and Urban Development Act of 1970; and U.S. Congress, Senate Committee on Banking,
Housing, and Urban Affairs, Housing, and Urban Affairs, Small Business Legislation - 1974, hearing on S. 3137 and S. 3138, 93rd Cong., 2nd sess., , hearing on S. 3137 and S. 3138, 93rd Cong., 2nd sess.,
March 13, 1974 (Washington, DC: GPO, 1974), p. 19. March 13, 1974 (Washington, DC: GPO, 1974), p. 19.
~~141~~143 SBA, “FY2016 Congressional Budget Justification and FY2014 Annual Performance Report,” p. 44, at SBA, “FY2016 Congressional Budget Justification and FY2014 Annual Performance Report,” p. 44, at
https://www.sba.gov/sites/default/files/1-FY%202016%20CBJ%20FY%202014%20APR.PDF. An ancillary bond, https://www.sba.gov/sites/default/files/1-FY%202016%20CBJ%20FY%202014%20APR.PDF. An ancillary bond,
which ensures that requirements integral to the contract, but not directly performance related, are performed, is eligible which ensures that requirements integral to the contract, but not directly performance related, are performed, is eligible
if it is incidental and essential to a contract for which SBA has guaranteed a final bond. A reclamation bond is eligible if it is incidental and essential to a contract for which SBA has guaranteed a final bond. A reclamation bond is eligible
if it is issued to reclaim an abandoned mine site and for a project undertaken for a specific period of time. if it is issued to reclaim an abandoned mine site and for a project undertaken for a specific period of time.
~~142~~144 P.L. 112-239, the National Defense Authorization Act for Fiscal Year 2013, increased the program’s guarantee limit P.L. 112-239, the National Defense Authorization Act for Fiscal Year 2013, increased the program’s guarantee limit
from $2 million to $6.5 million, and up to $10 million for a federal contract if certified. The act also includes a from $2 million to $6.5 million, and up to $10 million for a federal contract if certified. The act also includes a
provision to increase the $6.5 million limit periodically for inflation “by striking ‘does not exceed’ and all that follows provision to increase the $6.5 million limit periodically for inflation “by striking ‘does not exceed’ and all that follows
through the period at the end, and inserting ‘does not exceed $6,500,000,’ as adjusted for inflation in accordance with through the period at the end, and inserting ‘does not exceed $6,500,000,’ as adjusted for inflation in accordance with
Section 1908 of title 41, United States Code.” That section of the Section 1908 of title 41, United States Code.” That section of the U.S. Code provides for an inflation adjustment on provides for an inflation adjustment on
October 1 of each year evenly divisible by five. October 1 of each year evenly divisible by five.
~~143 SBA, Office of Congressional and Legislative Affairs, correspondence with the author, January 14, 2020~~145 SBA, FY2020 Program Performance: SBA Surety Bond Guarantee Program, at https://content.govdelivery.com/accounts/USSBA/bulletins/2a5a0e6. .
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Jobs Act of 2010 (new restrictions on the consolidation or bundling of contracts that make it more difficult for small businesses to be awarded the contract). The CARES Act authorizes federal agencies to modify a contract’s terms and conditions to reimburse contractors—at the minimum agencies to modify a contract’s terms and conditions to reimburse contractors—at the minimum
billing rate not to exceed an average of 40 hours per week—for any paid leave (including sick billing rate not to exceed an average of 40 hours per week—for any paid leave (including sick
leave) the contractor provides to keep its employees or subcontractors in a ready state through leave) the contractor provides to keep its employees or subcontractors in a ready state through
September 30, 2020. Eligible contractors are those whose employees or subcontractors cannot September 30, 2020. Eligible contractors are those whose employees or subcontractors cannot
perform work on a federally approved site due to facility closures or other restrictions because of perform work on a federally approved site due to facility closures or other restrictions because of
COVID-19 and cannot telework because their job duties cannot be performed remotely. COVID-19 and cannot telework because their job duties cannot be performed remotely.
Concluding Observations
In response to the Great Recession, Congress took a number of actions to enhance small In response to the Great Recession, Congress took a number of actions to enhance small
businesses’ access to capital, management and training programs, and contracting opportunities. businesses’ access to capital, management and training programs, and contracting opportunities.
The goal then, as it is now, was to provide small businesses with the resources necessary to The goal then, as it is now, was to provide small businesses with the resources necessary to
survive the economic downturn and retain or create jobs. Some of the CARES Act’s provisions survive the economic downturn and retain or create jobs. Some of the CARES Act’s provisions
(e.g., fee waivers, increased loan limits, and increased guarantee percentages) were used in (e.g., fee waivers, increased loan limits, and increased guarantee percentages) were used in
legislation passed during the 111th Congress to address the severe economic slowdown during and legislation passed during the 111th Congress to address the severe economic slowdown during and
immediately following the Great Recession (2007-2009). The main difference between that immediately following the Great Recession (2007-2009). The main difference between that
legislation and the CARES Act is that the CARES Act includes loan deferrals, loan forgiveness, legislation and the CARES Act is that the CARES Act includes loan deferrals, loan forgiveness,
and greatly expanded eligibility, including, for the first time, specified types of nonprofit and greatly expanded eligibility, including, for the first time, specified types of nonprofit
organizations. organizations.
The CARES Act’s inclusion of loan deferral and forgiveness is, at least partly, due to the unique The CARES Act’s inclusion of loan deferral and forgiveness is, at least partly, due to the unique
economic dislocations and reduction in consumer spending resulting from individuals and economic dislocations and reduction in consumer spending resulting from individuals and
households engaging in physical distancing to avoid COVID-19 infection. households engaging in physical distancing to avoid COVID-19 infection.
As mentioned, because COVID-19’s adverse economic impact is so widespread, including As mentioned, because COVID-19’s adverse economic impact is so widespread, including
productivity losses, supply chain disruptions, labor dislocation, and financial pressure on productivity losses, supply chain disruptions, labor dislocation, and financial pressure on
businesses and households, there has been relatively little concern expressed about federal fiscal businesses and households, there has been relatively little concern expressed about federal fiscal
restraint during the current pandemic. The debate has been primarily over which specific policies restraint during the current pandemic. The debate has been primarily over which specific policies
would have the greatest impact and which types of small businesses and small business owners would have the greatest impact and which types of small businesses and small business owners
should be helped the most. should be helped the most.
Among the lessons learned from the 111th Congress is the potential benefits that can be derived Among the lessons learned from the 111th Congress is the potential benefits that can be derived
from providing additional funding for the SBA’s Office of Inspector General and the Government from providing additional funding for the SBA’s Office of Inspector General and the Government
Accountability Office. GAO and the SBA’s OIG can provide Congress information that could Accountability Office. GAO and the SBA’s OIG can provide Congress information that could
prove useful as Congress engages in congressional oversight of the SBA’s administration of the prove useful as Congress engages in congressional oversight of the SBA’s administration of the
CARES Act, provide an early warning if unforeseen administrative problems should arise, and, CARES Act, provide an early warning if unforeseen administrative problems should arise, and,
through investigations and audits, serve as a deterrent to fraud. The CARES Act addressed this through investigations and audits, serve as a deterrent to fraud. The CARES Act addressed this
issue by providing the SBA’s OIG $25 million for its investigative functions. Also, P.L. 116-260, issue by providing the SBA’s OIG $25 million for its investigative functions. Also, P.L. 116-260,
the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, Title the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, Title
III of the Consolidated Appropriations Act of 2021), provided the SBA OIG an additional $20 III of the Consolidated Appropriations Act of 2021), provided the SBA OIG an additional $20
million to prevent waste, fraud, and abuse in the awarding of EIDL Targeted advance payment million to prevent waste, fraud, and abuse in the awarding of EIDL Targeted advance payment
grants. The act also provides the SBA $50 million for PPP auditing and fraud mitigation efforts. grants. The act also provides the SBA $50 million for PPP auditing and fraud mitigation efforts.
Requiring the SBA to report regularly on its implementation of the CARES Act Requiring the SBA to report regularly on its implementation of the CARES Act and succeeding legislation could also could also
promote transparency and assist Congress in performing its oversight responsibilities. In addition, promote transparency and assist Congress in performing its oversight responsibilities. In addition,
requiring output and outcome performance measures and requiring the SBA to report this requiring output and outcome performance measures and requiring the SBA to report this
information directly to both Congress and the public by posting that information on the SBA’s information directly to both Congress and the public by posting that information on the SBA’s
website could enhance both congressional oversight and public confidence in the SBA’s efforts to website could enhance both congressional oversight and public confidence in the SBA’s efforts to
assist small businesses. assist small businesses.
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Appendix. Major Provisions of the CARES Act, the
Paycheck Protection Program and Health Care
Enhancement Act, the Paycheck Protection Program
Flexibility Act, the Heroes Act, the Continuing
Small Business Recovery and Paycheck Protection
Program Act, and the (updated) Heroes Act
The Coronavirus Aid, Relief, and Economic Security Act (CARES
Act; P.L. 116-136)
 established a Paycheck Protection Program (PPP) to provide “covered loans”  established a Paycheck Protection Program (PPP) to provide “covered loans”
with a 100% SBA loan guarantee, a maximum term of 10 years, and an interest with a 100% SBA loan guarantee, a maximum term of 10 years, and an interest
rate not to exceed 4% to assist small businesses and other organizations adversely rate not to exceed 4% to assist small businesses and other organizations adversely
affected by the Coronavirus Disease 2019 (COVID-19). The SBA announced that affected by the Coronavirus Disease 2019 (COVID-19). The SBA announced that
PPP loans will have a two-year term at a 1% interest rate; PPP loans will have a two-year term at a 1% interest rate;
 defines a covered loan as a loan made to an eligible recipient from February 15,  defines a covered loan as a loan made to an eligible recipient from February 15,
2020, through June 30, 2020; 2020, through June 30, 2020;
 waives the up-front loan guarantee fee and annual servicing fee, the no credit  waives the up-front loan guarantee fee and annual servicing fee, the no credit
elsewhere requirement, and the requirements for collateral and a personal elsewhere requirement, and the requirements for collateral and a personal
guarantee for a covered loan; guarantee for a covered loan;
 expands eligibility for a covered loan to include 7(a) eligible businesses and any  expands eligibility for a covered loan to include 7(a) eligible businesses and any
business, 501(c)(3) nonprofit organization, 501(c)(19) veteran’s organization, or business, 501(c)(3) nonprofit organization, 501(c)(19) veteran’s organization, or
tribal business not currently eligible that has not more than 500 employees or, if tribal business not currently eligible that has not more than 500 employees or, if
applicable, the SBA’s size standard in number of employees for the industry in applicable, the SBA’s size standard in number of employees for the industry in
which they operate. Sole proprietors, independent contractors, and eligible self-which they operate. Sole proprietors, independent contractors, and eligible self-
employed individuals are also eligible to receive a covered loan;employed individuals are also eligible to receive a covered loan;~~144~~146
 allows borrowers to refinance Economic Injury Disaster Loans (EIDLs) made on  allows borrowers to refinance Economic Injury Disaster Loans (EIDLs) made on
or after January 31, 2020, as part of a covered loan; or after January 31, 2020, as part of a covered loan;
 increases the maximum loan amount for a covered loan to the lesser of (1) 2.5  increases the maximum loan amount for a covered loan to the lesser of (1) 2.5
times the average total monthly payments by the applicant for payroll costs times the average total monthly payments by the applicant for payroll costs
incurred during the one-year period before the date on which the loan is made incurred during the one-year period before the date on which the loan is made
plus the outstanding balance of any EIDL made on or after January 31, 2020, that plus the outstanding balance of any EIDL made on or after January 31, 2020, that
is refinanced as part of a covered loan, or (2) $10 million; is refinanced as part of a covered loan, or (2) $10 million;
 specifies that covered loans are nonrecourse (meaning that the SBA cannot  specifies that covered loans are nonrecourse (meaning that the SBA cannot
pursue collections actions against the recipient(s) in the case of nonpayment) pursue collections actions against the recipient(s) in the case of nonpayment)

~~144~~146 For purposes of determining not more than 500 employees, the term employee includes individuals employed on a For purposes of determining not more than 500 employees, the term employee includes individuals employed on a
full-time, part-time, or other basis. Also, special eligibility considerations are provided for certain businesses and full-time, part-time, or other basis. Also, special eligibility considerations are provided for certain businesses and
organizations. For example, businesses operating in NAICS Sector 72 (Accommodation and Food Services industry) organizations. For example, businesses operating in NAICS Sector 72 (Accommodation and Food Services industry)
that employ not more than 500 employees per physical location are also eligible for a covered loan. Affiliation rules are that employ not more than 500 employees per physical location are also eligible for a covered loan. Affiliation rules are
also waived for: (1) NAICS Sector 72 businesses, (2) franchises, and (3) SBIC-owned businesses. In other words, these also waived for: (1) NAICS Sector 72 businesses, (2) franchises, and (3) SBIC-owned businesses. In other words, these
businesses would not be denied a covered loan solely because they employ more than 500 employees across multiple businesses would not be denied a covered loan solely because they employ more than 500 employees across multiple
businesses under common ownership. businesses under common ownership.
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except to the extent that the covered loan proceeds are used for nonauthorized except to the extent that the covered loan proceeds are used for nonauthorized
purposes; purposes;
 allows covered loans to be used for payroll costs, costs related to the continuation  allows covered loans to be used for payroll costs, costs related to the continuation
of group health care benefits during periods of paid sick, medical, or family of group health care benefits during periods of paid sick, medical, or family
leave, and insurance premiums, employee salaries, commissions, or similar leave, and insurance premiums, employee salaries, commissions, or similar
compensations, mortgage payments, rent, utilities, and interest on any other debt compensations, mortgage payments, rent, utilities, and interest on any other debt
obligations that were incurred before the covered period; obligations that were incurred before the covered period;
 expands lender delegated loan approval authority for making covered loans to all  expands lender delegated loan approval authority for making covered loans to all
7(a) lenders to expedite PPP loan processing; 7(a) lenders to expedite PPP loan processing;
 requires lenders, when evaluating borrower eligibility for a covered loan, to  requires lenders, when evaluating borrower eligibility for a covered loan, to
consider whether the borrower was in operation on February 15, 2020, had consider whether the borrower was in operation on February 15, 2020, had
employees for whom the borrower paid salaries and payroll taxes, and paid employees for whom the borrower paid salaries and payroll taxes, and paid
independent contractors; independent contractors;
 requires borrowers to, among other acknowledgements,  requires borrowers to, among other acknowledgements,
 make a good faith certification that the covered loan is needed because of the  make a good faith certification that the covered loan is needed because of the
uncertainty of current economic conditions and to support ongoing uncertainty of current economic conditions and to support ongoing
operations, and operations, and
 acknowledge that the funds will be used to retain workers, maintain payroll,  acknowledge that the funds will be used to retain workers, maintain payroll,
or make mortgage payments, lease payments, and utility payments; or make mortgage payments, lease payments, and utility payments;
 requires lenders to provide “impacted borrowers” adversely affected by COVID-  requires lenders to provide “impacted borrowers” adversely affected by COVID-
19 “complete payment deferment relief” 19 “complete payment deferment relief”~~145~~147 on a covered PPP loan for not less on a covered PPP loan for not less
than six months and not more than one year if the borrower was in operation on than six months and not more than one year if the borrower was in operation on
February 15, 2020, and has an application for a covered loan approved or February 15, 2020, and has an application for a covered loan approved or
pending approval on or after the date of enactment. The SBA announced that pending approval on or after the date of enactment. The SBA announced that
covered loan payments will be deferred for six months. However, interest will covered loan payments will be deferred for six months. However, interest will
continue to accrue on these loans during the six-month deferment;continue to accrue on these loans during the six-month deferment;~~146~~148
 presumes that each eligible recipient that applies for a PPP loan is an impacted  presumes that each eligible recipient that applies for a PPP loan is an impacted
borrower and authorizes the SBA Administrator to purchase covered loans sold borrower and authorizes the SBA Administrator to purchase covered loans sold
on the secondary market so that affected borrowers may receive a deferral for not on the secondary market so that affected borrowers may receive a deferral for not
more than one year. The SBA has announced that the deferment relief on covered more than one year. The SBA has announced that the deferment relief on covered
loans will be for six months; loans will be for six months;
 provides for the forgiveness of covered loan amounts equal to the amount the  provides for the forgiveness of covered loan amounts equal to the amount the
borrower spent during an 8-week period after the loan’s origination date on borrower spent during an 8-week period after the loan’s origination date on
payroll costs, interest payment on any mortgage incurred prior to February 15, payroll costs, interest payment on any mortgage incurred prior to February 15,
2020, payment of rent on any lease in force prior to February 15, 2020, and 2020, payment of rent on any lease in force prior to February 15, 2020, and
payment on any utility for which service began before February 15, 2020. The payment on any utility for which service began before February 15, 2020. The
amount of loan forgiveness cannot exceed the covered loan’s principal amount. amount of loan forgiveness cannot exceed the covered loan’s principal amount.
The forgiveness is reduced proportionally by formulas related to the borrower’s The forgiveness is reduced proportionally by formulas related to the borrower’s
retention of full-time equivalent employees compared to the borrower’s choice of retention of full-time equivalent employees compared to the borrower’s choice of
either (1) the period beginning on February 15, 2019, and ending on June 30, either (1) the period beginning on February 15, 2019, and ending on June 30,
2019, or (2) January 1, 2020, and February 29, 2020; and by the amount of any 2019, or (2) January 1, 2020, and February 29, 2020; and by the amount of any
reduction in pay of any employee beyond 25% of their salary or wages during the reduction in pay of any employee beyond 25% of their salary or wages during the

~~145~~147 According to the bill text, “complete deferment relief” includes payment of principal, interest, and fees. According to the bill text, “complete deferment relief” includes payment of principal, interest, and fees.
~~146~~148 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program,” 85 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program,” 85 Federal Register 20813, 20813,
April 15, 2020. April 15, 2020.
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most recent full quarter before the covered period. most recent full quarter before the covered period.~~147~~149 Borrowers that re-hire Borrowers that re-hire
workers previously laid off will not be penalized for having a reduced payroll at workers previously laid off will not be penalized for having a reduced payroll at
the beginning of the period. Cancelled debt resulting from loan forgiveness the beginning of the period. Cancelled debt resulting from loan forgiveness
would not be included in the borrower’s taxable federal income; would not be included in the borrower’s taxable federal income;
 The SBA has announced that due to likely high subscription, at least 75% of the  The SBA has announced that due to likely high subscription, at least 75% of the
forgiven loan amount must have been used for payroll; forgiven loan amount must have been used for payroll;~~148~~150
 requires the SBA to pay the principal, interest, and any associated fees that are  requires the SBA to pay the principal, interest, and any associated fees that are
owed on an existing 7(a), 504/CDC, or Microloan that is in a regular servicing owed on an existing 7(a), 504/CDC, or Microloan that is in a regular servicing
status for a six-month period starting on the next payment due. Loans that are status for a six-month period starting on the next payment due. Loans that are
already on deferment will receive six months of payment by the SBA beginning already on deferment will receive six months of payment by the SBA beginning
with the first payment after the deferral period. Loans made up until six months with the first payment after the deferral period. Loans made up until six months
after enactment will also receive a full six months of SBA loan payments; after enactment will also receive a full six months of SBA loan payments;
 requires federal banking agencies or the National Credit Union Administration  requires federal banking agencies or the National Credit Union Administration
Board applying capital requirements under their respective risk-based capital Board applying capital requirements under their respective risk-based capital
requirements to provide a covered loan with a 0%-risk weight; requirements to provide a covered loan with a 0%-risk weight;
 increases the SBA’s lending authorization under Section 7(a) of the Small  increases the SBA’s lending authorization under Section 7(a) of the Small
Business Act from $30 billion to $349 billion during the covered period; Business Act from $30 billion to $349 billion during the covered period;
 increases the SBAExpress loan limit from $350,000 to $1 million (reverts to  increases the SBAExpress loan limit from $350,000 to $1 million (reverts to
$350,000 on January 1, 2021); $350,000 on January 1, 2021);
 permanently eliminates the zero subsidy requirement to waive SBAExpress loan  permanently eliminates the zero subsidy requirement to waive SBAExpress loan
fees for veterans; fees for veterans;
 appropriates $349 billion for loan guarantees and subsidies (remaining available  appropriates $349 billion for loan guarantees and subsidies (remaining available
through FY2021), $675 million for the SBA’s salaries and expenses account, $25 through FY2021), $675 million for the SBA’s salaries and expenses account, $25
million for the SBA’s Office of Inspector General (OIG), $562 million for million for the SBA’s Office of Inspector General (OIG), $562 million for
disaster loans, $265 million for entrepreneurial development programs ($192 disaster loans, $265 million for entrepreneurial development programs ($192
million for SBDCs, $48 million for WBCs, and $25 million for SBA resource million for SBDCs, $48 million for WBCs, and $25 million for SBA resource
partners to provide online information and training), $17 billion for subsidies for partners to provide online information and training), $17 billion for subsidies for
certain loan payments, and $10 million for the Department of Commerce’s certain loan payments, and $10 million for the Department of Commerce’s
Minority Business Development Agency; Minority Business Development Agency;
 allows the period of use of FY2018 and FY2019 grant awards made under the  allows the period of use of FY2018 and FY2019 grant awards made under the
State Trade Expansion Program (STEP) through FY2021; State Trade Expansion Program (STEP) through FY2021;
 reimburses (up to the grant amount received) STEP award recipients for financial  reimburses (up to the grant amount received) STEP award recipients for financial
losses relating to a foreign trade mission or a trade show exhibition that was losses relating to a foreign trade mission or a trade show exhibition that was
cancelled solely due to a public health emergency declared due to COVID-19; cancelled solely due to a public health emergency declared due to COVID-19;
 waives SBDC and WBC matching requirements;  waives SBDC and WBC matching requirements;
 requires federal agencies to continue to pay small business contractors and revise  requires federal agencies to continue to pay small business contractors and revise
delivery schedules, holding small contractors harmless for being unable to delivery schedules, holding small contractors harmless for being unable to
perform a contract due to COVID-19 caused interruptions until September 2021; perform a contract due to COVID-19 caused interruptions until September 2021;
 requires federal agencies to promptly pay small business prime contractors and  requires federal agencies to promptly pay small business prime contractors and
requires prime contractors to promptly pay small business subcontractors within requires prime contractors to promptly pay small business subcontractors within
15 days, notwithstanding any other provision of law or regulation, for the 15 days, notwithstanding any other provision of law or regulation, for the

~~147~~149 For the purposes of the reduction formula, reductions in employees with wages or salary at an annualized rate of pay For the purposes of the reduction formula, reductions in employees with wages or salary at an annualized rate of pay
more than $100,000 are not taken into account. Businesses may also receive forgiveness amounts for additional wages more than $100,000 are not taken into account. Businesses may also receive forgiveness amounts for additional wages
paid to tipped employees. paid to tipped employees.
~~148~~150 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program,” 85 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program,” 85 Federal Register 20813- 20813-
20814, April 15, 2020. 20814, April 15, 2020.
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duration of the President invoking the Defense Production Act in response to duration of the President invoking the Defense Production Act in response to
COVID-19; and COVID-19; and
 provides SBA Emergency Injury Disaster Loan (EIDL) enhancements during the  provides SBA Emergency Injury Disaster Loan (EIDL) enhancements during the
covered period of January 31, 2020, through December 31, 2020, including covered period of January 31, 2020, through December 31, 2020, including
 expanding eligibility beyond currently eligible small businesses, private  expanding eligibility beyond currently eligible small businesses, private
nonprofit organizations, and small agricultural cooperatives, to include nonprofit organizations, and small agricultural cooperatives, to include
startups, cooperatives, and eligible ESOPs (employee stock ownership plans) startups, cooperatives, and eligible ESOPs (employee stock ownership plans)
with not more than 500 employees, sole proprietors, and independent with not more than 500 employees, sole proprietors, and independent
contractors; contractors;
 authorizing the SBA Administrator, in response to economic injuries caused  authorizing the SBA Administrator, in response to economic injuries caused
by COVID-19, to by COVID-19, to
 waive the no credit available elsewhere requirement,  waive the no credit available elsewhere requirement,
 approve an applicant based solely on their credit score,  approve an applicant based solely on their credit score,
 not require applicants to submit a tax return or tax return transcript for  not require applicants to submit a tax return or tax return transcript for
approval, approval,
 waive any rules related to the personal guarantee on advances and loans  waive any rules related to the personal guarantee on advances and loans
of not more than $200,000, of not more than $200,000,
 waive the requirement that the applicant needs to be in business for the  waive the requirement that the applicant needs to be in business for the
one-year period before the disaster declaration, except that no waiver one-year period before the disaster declaration, except that no waiver
may be made for a business that was not in operation on January 31, may be made for a business that was not in operation on January 31,
2020; 2020;
 authorizing the SBA Administrator, through December 31, 2020, to provide  authorizing the SBA Administrator, through December 31, 2020, to provide
up to $10,000 as an advance payment in the amount requested within three up to $10,000 as an advance payment in the amount requested within three
days after receiving an EIDL application from an eligible entity. Applicants days after receiving an EIDL application from an eligible entity. Applicants
are not required to repay the advance payment, even if subsequently denied are not required to repay the advance payment, even if subsequently denied
an EIDL loan. The funds may be used for any eligible EIDL expense, an EIDL loan. The funds may be used for any eligible EIDL expense,
including, among other expenses, providing paid sick leave to employees including, among other expenses, providing paid sick leave to employees
unable to work due to COVID-19, maintaining payroll to retain employees, unable to work due to COVID-19, maintaining payroll to retain employees,
and meeting increased costs to obtain materials due to supply chain and meeting increased costs to obtain materials due to supply chain
disruptions. The SBA limited EIDL-advance payments to $1,000 per disruptions. The SBA limited EIDL-advance payments to $1,000 per
employee, up to a maximum of $10,000; and employee, up to a maximum of $10,000; and
 appropriating an additional $10 billion for EIDL assistance.  appropriating an additional $10 billion for EIDL assistance.
The Paycheck Protection Program and Health Care Enhancement
Act (P.L. 116-139)
 increases the SBA’s lending authorization under Section 7(a) of the Small  increases the SBA’s lending authorization under Section 7(a) of the Small
Business Act from $349 billion during the covered period to $659 billion; Business Act from $349 billion during the covered period to $659 billion;
 requires that no less than $30 billion of this authorization amount be set aside for  requires that no less than $30 billion of this authorization amount be set aside for
loans issued by insured depository institutions and credit unions with loans issued by insured depository institutions and credit unions with
consolidated assets of $10 billion to $50 billion; consolidated assets of $10 billion to $50 billion;
 requires that no less than $30 billion of this authorization amount be set aside for  requires that no less than $30 billion of this authorization amount be set aside for
loans issued by community financial institutions (including community loans issued by community financial institutions (including community
development financial institutions (CDFIs), minority depository institutions, development financial institutions (CDFIs), minority depository institutions,
SBA-certified development companies, and SBA microloan intermediaries), and SBA-certified development companies, and SBA microloan intermediaries), and
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insured depository institutions and credit unions with consolidated assets less insured depository institutions and credit unions with consolidated assets less
than $10 billion; than $10 billion;
 increases the PPP appropriation amount from $349 billion to $670.335 billion;  increases the PPP appropriation amount from $349 billion to $670.335 billion;
 appropriates an additional $50 billion for EIDL loans;  appropriates an additional $50 billion for EIDL loans;
 appropriates an additional $10 billion for Emergency EIDL grants;  appropriates an additional $10 billion for Emergency EIDL grants;
 appropriates an additional $2.1 billion for the SBA’s salaries and expenses  appropriates an additional $2.1 billion for the SBA’s salaries and expenses
account (to remain available until September 30, 2021); and account (to remain available until September 30, 2021); and
 provides agricultural enterprises eligibility for Emergency EIDL grants and EIDL  provides agricultural enterprises eligibility for Emergency EIDL grants and EIDL
loans during the covered period (January 31, 2020 through December 31, 2020). loans during the covered period (January 31, 2020 through December 31, 2020).
The Paycheck Protection Program Flexibility Act (P.L. 116-142)
 extends the PPP loan forgiveness covered period from 8 weeks after the loan’s  extends the PPP loan forgiveness covered period from 8 weeks after the loan’s
origination date to the earlier of 24 weeks after the loan’s origination date or origination date to the earlier of 24 weeks after the loan’s origination date or
December 31, 2020; December 31, 2020;
 provides borrowers that received a PPP loan prior to the enactment date (June 5,  provides borrowers that received a PPP loan prior to the enactment date (June 5,
2020) the option to use the CARES Act’s loan forgiveness covered period of 2020) the option to use the CARES Act’s loan forgiveness covered period of
eight weeks after the loan’s origination date; eight weeks after the loan’s origination date;
 replaces the 75%/25% rule on the use of PPP loan proceeds for loan forgiveness  replaces the 75%/25% rule on the use of PPP loan proceeds for loan forgiveness
purposes with the requirement that at least 60% of the loan proceeds be used for purposes with the requirement that at least 60% of the loan proceeds be used for
payroll costs and up to 40% be used for covered mortgage interest, rent, and payroll costs and up to 40% be used for covered mortgage interest, rent, and
utility payments;utility payments;~~149~~151
 provides borrowers a “safe harbor” from the loan forgiveness rehiring  provides borrowers a “safe harbor” from the loan forgiveness rehiring
requirement if the borrower is unable to rehire an individual who was an requirement if the borrower is unable to rehire an individual who was an
employee of the recipient on or before February 15, 2020, or if the borrower can employee of the recipient on or before February 15, 2020, or if the borrower can
demonstrate an inability to hire similarly qualified employees on or before demonstrate an inability to hire similarly qualified employees on or before
December 31, 2020; December 31, 2020;
 establishes a minimum PPP loan maturity of five years for loans made on or after  establishes a minimum PPP loan maturity of five years for loans made on or after
the date of enactment; the date of enactment;
 extends the PPP loan deferral period from six months (under SBA regulations) to  extends the PPP loan deferral period from six months (under SBA regulations) to
the date that the SBA remits the borrower’s loan forgiveness amount to the the date that the SBA remits the borrower’s loan forgiveness amount to the
lender or, if the borrower does not apply for loan forgiveness, 10 months after the lender or, if the borrower does not apply for loan forgiveness, 10 months after the
end of the borrower’s loan forgiveness covered period; and end of the borrower’s loan forgiveness covered period; and
 eliminates the exception in the CARES Act preventing taxpayers who receive  eliminates the exception in the CARES Act preventing taxpayers who receive
PPP loan forgiveness from delaying the payment of employer payroll taxes. PPP loan forgiveness from delaying the payment of employer payroll taxes.~~150~~152
The Heroes Act (H.R. 6800)
H.R. 6800, would, among other provisions, H.R. 6800, would, among other provisions,
 expand the PPP loan covered period from June 30, 2020, to December 31, 2020;  expand the PPP loan covered period from June 30, 2020, to December 31, 2020;

~~149~~151 If a borrower uses less than 60% of the PPP loan amount for payroll costs during the forgiveness covered If a borrower uses less than 60% of the PPP loan amount for payroll costs during the forgiveness covered
period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60% of the loan period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60% of the loan
forgiveness amount having been used for payroll costs. forgiveness amount having been used for payroll costs.
~~150~~152 See FAQs 3 and 4 in IRS, “Deferral of Employment Tax Deposits and Payments Through December 31, 2020,” at See FAQs 3 and 4 in IRS, “Deferral of Employment Tax Deposits and Payments Through December 31, 2020,” at
https://www.irs.gov/newsroom/deferral-of-employment-tax-deposits-and-payments-through-december-31-2020. https://www.irs.gov/newsroom/deferral-of-employment-tax-deposits-and-payments-through-december-31-2020.
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 extend PPP eligibility to all 501(c) nonprofit organizations of all sizes;  extend PPP eligibility to all 501(c) nonprofit organizations of all sizes;
 establish a minimum PPP loan maturity of five years;  establish a minimum PPP loan maturity of five years;
 require, as of the date of enactment, that 25% of existing PPP funds be issued to  require, as of the date of enactment, that 25% of existing PPP funds be issued to
small businesses with 10 or fewer employees; 25% of existing funds be issued to small businesses with 10 or fewer employees; 25% of existing funds be issued to
nonprofit organizations, with at least half of this amount going to nonprofit nonprofit organizations, with at least half of this amount going to nonprofit
organizations with not more than 500 employees; and the lesser of 25% of organizations with not more than 500 employees; and the lesser of 25% of
existing PPP funds or $10 billion be issued to community financial institutions, existing PPP funds or $10 billion be issued to community financial institutions,
such as Community Development Financial Institutions (CDFIs), SBA microloan such as Community Development Financial Institutions (CDFIs), SBA microloan
intermediaries, and SBA-certified development companies; intermediaries, and SBA-certified development companies;
 establish technical assistance grants for small community financial institutions  establish technical assistance grants for small community financial institutions
with assets of less than $10 billion; with assets of less than $10 billion;
 bifurcate the SBA’s lending authority for the 7(a) and PPP programs;  bifurcate the SBA’s lending authority for the 7(a) and PPP programs;
 increase the SBA’s 7(a) loan authorization amount from $30 billion to $75 billion  increase the SBA’s 7(a) loan authorization amount from $30 billion to $75 billion
for FY2020; for FY2020;
 provide SCORE and veterans business outreach centers eligibility for $10 million  provide SCORE and veterans business outreach centers eligibility for $10 million
each from the CARES Act’s $265 million entrepreneurial development resource each from the CARES Act’s $265 million entrepreneurial development resource
partners grant program; partners grant program;
 amend the PPP loan forgiveness by extending the 8-week period to the earlier of  amend the PPP loan forgiveness by extending the 8-week period to the earlier of
24 weeks or December 31, 2020, mandate loan forgiveness data collection and 24 weeks or December 31, 2020, mandate loan forgiveness data collection and
reporting, and eliminate the 75%/25% rule on the use of loan proceeds; reporting, and eliminate the 75%/25% rule on the use of loan proceeds;
 provide borrowers a “safe harbor” from the loan forgiveness rehiring requirement  provide borrowers a “safe harbor” from the loan forgiveness rehiring requirement
if the borrower is unable to rehire an individual who was an employee of the if the borrower is unable to rehire an individual who was an employee of the
recipient on or before February 15, 2020, or if the borrower can demonstrate an recipient on or before February 15, 2020, or if the borrower can demonstrate an
inability to hire similarly qualified employees on or before December 31, 2020; inability to hire similarly qualified employees on or before December 31, 2020;
 allow certain previously incarcerated individuals to be approved for PPP and  allow certain previously incarcerated individuals to be approved for PPP and
SBA disaster loans; SBA disaster loans;
 temporarily increase, for FY2020, the 7(a) loan program guaranty from up to  temporarily increase, for FY2020, the 7(a) loan program guaranty from up to
75% for loans with an outstanding loan balance exceeding $150,000, and 85% 75% for loans with an outstanding loan balance exceeding $150,000, and 85%
for loans with an outstanding loan balance of $150,000 or less, to 90% of the for loans with an outstanding loan balance of $150,000 or less, to 90% of the
outstanding loan balance; outstanding loan balance;
 temporarily increase, through December 31, 2020, the SBAExpress loan guaranty  temporarily increase, through December 31, 2020, the SBAExpress loan guaranty
from not more than 50% of the outstanding loan balance to not more than 90% of from not more than 50% of the outstanding loan balance to not more than 90% of
the outstanding loan balance on loans up to $350,000, and not more than 75% of the outstanding loan balance on loans up to $350,000, and not more than 75% of
the outstanding loan balance on loans greater than $350,000; the outstanding loan balance on loans greater than $350,000;
 temporarily reduce, for FY2020, 7(a) and 504/CDC fees to the maximum extent  temporarily reduce, for FY2020, 7(a) and 504/CDC fees to the maximum extent
possible given available appropriations; temporarily increase, for FY2020, the possible given available appropriations; temporarily increase, for FY2020, the
maximum 7(a) loan amount from $5 million to $10 million and the maximum maximum 7(a) loan amount from $5 million to $10 million and the maximum
504/CDC loan amount from $5.5 million to $10 million; and permanently 504/CDC loan amount from $5.5 million to $10 million; and permanently
increase the 504/CDC maximum loan amount for small manufacturers from $5.5 increase the 504/CDC maximum loan amount for small manufacturers from $5.5
million to $10 million; million to $10 million;
 eliminate the exception in the CARES Act preventing taxpayers who receive PPP  eliminate the exception in the CARES Act preventing taxpayers who receive PPP
loan forgiveness from delaying the payment of employer payroll taxes; loan forgiveness from delaying the payment of employer payroll taxes;
 authorize, for each of FY2021-FY2025, $80 million for Microloan technical  authorize, for each of FY2021-FY2025, $80 million for Microloan technical
assistance grants and $110 million for Microloan; and authorize to be assistance grants and $110 million for Microloan; and authorize to be
appropriated during FY2020, to remain available until expended, $50 million for appropriated during FY2020, to remain available until expended, $50 million for
Microloan technical assistance grants and $7 million for Microloans; Microloan technical assistance grants and $7 million for Microloans;
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 appropriate $500 million for fee reductions and guaranty and maximum loan  appropriate $500 million for fee reductions and guaranty and maximum loan
amount increases; and amount increases; and
 appropriate $10 billion for Emergency EIDL grants.  appropriate $10 billion for Emergency EIDL grants.
The Continuing Small Business Recovery and Paycheck Protection
Program Act (S. 4321)
S. 4321 would, among other provisions, S. 4321 would, among other provisions,
 extend the PPP loan covered period from August 8, 2020, to December 31, 2020,  extend the PPP loan covered period from August 8, 2020, to December 31, 2020,
and reduce the maximum PPP loan amount from $10 million to $2 million; and reduce the maximum PPP loan amount from $10 million to $2 million;
 expand PPP forgivable expenses to include covered operations expenditures (e.g.,  expand PPP forgivable expenses to include covered operations expenditures (e.g.,
software, cloud computing, and other human resources and accounting needs), software, cloud computing, and other human resources and accounting needs),
property damages due to public disturbances that occurred during 2020 (not property damages due to public disturbances that occurred during 2020 (not
covered by insurance or other compensation), covered supplier costs essential to covered by insurance or other compensation), covered supplier costs essential to
the recipient’s current operations, and covered worker protection expenditures to the recipient’s current operations, and covered worker protection expenditures to
comply with federal health and safety guidelines related to COVID-19; comply with federal health and safety guidelines related to COVID-19;
 allow borrowers to select a preferred 8-week period after the loan’s origination  allow borrowers to select a preferred 8-week period after the loan’s origination
date through December 31, 2020, for determining loan forgiveness; date through December 31, 2020, for determining loan forgiveness;
 create simplified loan forgiveness application processes for loans of $150,000 or  create simplified loan forgiveness application processes for loans of $150,000 or
less and for loans of $150,000 to $2 million. The SBA would retain the right to less and for loans of $150,000 to $2 million. The SBA would retain the right to
review and audit these loans for fraud. Reporting of demographic information review and audit these loans for fraud. Reporting of demographic information
would be optional; would be optional;
 expand eligibility to include certain 501(c)(6) organizations, including Chambers  expand eligibility to include certain 501(c)(6) organizations, including Chambers
of Commerce and Destination Marketing Organizations, that have 300 or fewer of Commerce and Destination Marketing Organizations, that have 300 or fewer
employees, do not receive more than 10% of their receipts from lobbying, and employees, do not receive more than 10% of their receipts from lobbying, and
whose lobbying activities do not comprise more than 10% of their total activities. whose lobbying activities do not comprise more than 10% of their total activities.
Recipients cannot use any loan proceeds for lobbying activities; Recipients cannot use any loan proceeds for lobbying activities;
 allow second PPP “draw” loans through December 31, 2020, for PPP borrowers  allow second PPP “draw” loans through December 31, 2020, for PPP borrowers
that meet the SBA’s revenue standard, if applicable, have not more than 300 that meet the SBA’s revenue standard, if applicable, have not more than 300
employees, and can demonstrate at least a 50% reduction in gross receipts in the employees, and can demonstrate at least a 50% reduction in gross receipts in the
first or second quarter of 2020 relative to the same 2019 quarter. Several types of first or second quarter of 2020 relative to the same 2019 quarter. Several types of
PPP eligible entities, such as publicly traded companies, would be ineligible for a PPP eligible entities, such as publicly traded companies, would be ineligible for a
second loan. The maximum loan size would equal 2.5 times average monthly second loan. The maximum loan size would equal 2.5 times average monthly
payroll costs, up to $2 million (not more than $10 million in the aggregate). Full payroll costs, up to $2 million (not more than $10 million in the aggregate). Full
loan forgiveness would be based on a 60/40 cost allocation between payroll and loan forgiveness would be based on a 60/40 cost allocation between payroll and
eligible nonpayroll costs; eligible nonpayroll costs;
 establish a specific loan calculation for farmers and ranchers who operate as a  establish a specific loan calculation for farmers and ranchers who operate as a
sole proprietor, independent contractor, or self-employed individual and allow sole proprietor, independent contractor, or self-employed individual and allow
Farm Credit System Institutions to make PPP loans; Farm Credit System Institutions to make PPP loans;
 increase the PPP authorization amount from $659 billion to $749 billion, rescind  increase the PPP authorization amount from $659 billion to $749 billion, rescind
$100 billion from the SBA’s business loan program account, and appropriate an $100 billion from the SBA’s business loan program account, and appropriate an
additional $190 billion for the cost of PPP and PPP second draw loans. In additional $190 billion for the cost of PPP and PPP second draw loans. In
funding, $25 billion would be set-aside for entities employing 10 or fewer funding, $25 billion would be set-aside for entities employing 10 or fewer
employees and $10 billion would be set-aside for community lenders; employees and $10 billion would be set-aside for community lenders;
 appropriate $57.7 billion to support up to $100 billion in lending for a new 7(a)  appropriate $57.7 billion to support up to $100 billion in lending for a new 7(a)
Recovery Sector Loan program for seasonal businesses and businesses located in Recovery Sector Loan program for seasonal businesses and businesses located in
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low-income census tracts that meet specified size standards (e.g., one of the low-income census tracts that meet specified size standards (e.g., one of the
requirements is that seasonal businesses have no more than 250 employees and requirements is that seasonal businesses have no more than 250 employees and
nonseasonable businesses have no more than 500 employees) and can nonseasonable businesses have no more than 500 employees) and can
demonstrate at least a 50% reduction in gross revenue in the first or second demonstrate at least a 50% reduction in gross revenue in the first or second
quarter of 2020 relative to the same 2019 quarter. Loans would be up to twice the quarter of 2020 relative to the same 2019 quarter. Loans would be up to twice the
borrower’s annual revenue, capped at $10 million, have a maturity of up to 20 borrower’s annual revenue, capped at $10 million, have a maturity of up to 20
years, and a subsidized interest rate charged to the borrower of 1%. The SBA years, and a subsidized interest rate charged to the borrower of 1%. The SBA
would provide lenders a 100% loan guarantee, the credit elsewhere requirement would provide lenders a 100% loan guarantee, the credit elsewhere requirement
and SBA fees would be waived, and principal and interest payments would be and SBA fees would be waived, and principal and interest payments would be
deferred for the first two years of the loan. The SBA would be authorized to grant deferred for the first two years of the loan. The SBA would be authorized to grant
an additional two years of deferment. Loan proceeds could be used for working an additional two years of deferment. Loan proceeds could be used for working
capital, acquisition of fixed assets, and refinancing existing indebtedness. The capital, acquisition of fixed assets, and refinancing existing indebtedness. The
loans would be available through December 31, 2020. loans would be available through December 31, 2020.
 appropriate $10 billion for a new Small Business Growth and Domestic  appropriate $10 billion for a new Small Business Growth and Domestic
Production Investment Facility under the SBA’s Small Business Investment Production Investment Facility under the SBA’s Small Business Investment
Company (SBIC) program to provide funds to firms that invest in businesses Company (SBIC) program to provide funds to firms that invest in businesses
which meet the revenue loss requirements for PPP, are a manufacturing business, which meet the revenue loss requirements for PPP, are a manufacturing business,
or are located in a small business low-income census tract, as defined in this act. or are located in a small business low-income census tract, as defined in this act.
At least 50% of the investments by the participating investment company must be At least 50% of the investments by the participating investment company must be
in eligible small businesses. The program’s goals are to “improve the recovery of in eligible small businesses. The program’s goals are to “improve the recovery of
eligible small business concerns from the COVID-19 pandemic, increase eligible small business concerns from the COVID-19 pandemic, increase
resiliency in the manufacturing supply chain of eligible small business concerns, resiliency in the manufacturing supply chain of eligible small business concerns,
and increase the economic development of small business low-income census and increase the economic development of small business low-income census
tracts.” The SBA would purchase bonds that include equity features from a tracts.” The SBA would purchase bonds that include equity features from a
participating SBIC with a term of at least 15 years and an interest rate of up to participating SBIC with a term of at least 15 years and an interest rate of up to
2%. The SBA would be authorized to directly commit or commit to purchase 2%. The SBA would be authorized to directly commit or commit to purchase
bonds from an SBIC of an amount up to the lesser of twice the SBIC’s regulatory bonds from an SBIC of an amount up to the lesser of twice the SBIC’s regulatory
capital or $200 million. The SBA would receive a share of any profits and the capital or $200 million. The SBA would receive a share of any profits and the
SBA’s share would be deposited into a fund and made available for additional SBA’s share would be deposited into a fund and made available for additional
commitments. commitments.
The (updated) Heroes Act (H.R. 925)
The (updated) Heroes Act (H.R. 925) would, among other provisions, The (updated) Heroes Act (H.R. 925) would, among other provisions,
 allow PPP borrowers that have less than 200 employees and can document  allow PPP borrowers that have less than 200 employees and can document
quarterly revenue losses of at least 25% to receive a second PPP loan of up to $2 quarterly revenue losses of at least 25% to receive a second PPP loan of up to $2
million; million;
 expand the list of allowable uses of proceeds and loan forgiveness to include  expand the list of allowable uses of proceeds and loan forgiveness to include
personal protective equipment, supplier costs, and costs related to property personal protective equipment, supplier costs, and costs related to property
damage from public disturbances; damage from public disturbances;
 exclude publicly traded entities from being eligible for PPP loans;  exclude publicly traded entities from being eligible for PPP loans;
 exclude businesses that are 51% or more foreign owned, controlled, and managed  exclude businesses that are 51% or more foreign owned, controlled, and managed
from receiving a PPP loan; from receiving a PPP loan;
 clarify that prior to enactment the current “no credit elsewhere test” remains in  clarify that prior to enactment the current “no credit elsewhere test” remains in
place for PPP loans, but that going forward the 7(a) credit elsewhere test would place for PPP loans, but that going forward the 7(a) credit elsewhere test would
apply for PPP loans greater than $350,000; and apply for PPP loans greater than $350,000; and
 prevent the SBA from imposing an EIDL loan cap below the program’s statutory  prevent the SBA from imposing an EIDL loan cap below the program’s statutory
limit of $2 million and allow current EIDL borrowers to modify their loans to limit of $2 million and allow current EIDL borrowers to modify their loans to
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seek additional funds up to the $2 million maximum loan size. Due to high seek additional funds up to the $2 million maximum loan size. Due to high
demand, the SBA currently caps COVID-19-related EIDL at $150,000. demand, the SBA currently caps COVID-19-related EIDL at $150,000.
In addition, the bill would appropriate In addition, the bill would appropriate
 $50 billion for Emergency EIDL Advance Payment grants, including $40 billion  $50 billion for Emergency EIDL Advance Payment grants, including $40 billion
for a new Lifeline Grant program targeting small businesses with not more than for a new Lifeline Grant program targeting small businesses with not more than
50 employees and that have suffered specified economic loss (related to 50 employees and that have suffered specified economic loss (related to
reductions in gross receipts) of not less than 30%; reductions in gross receipts) of not less than 30%;
 $8 billion to provide 12 months of payment, interest debt, and associated fee  $8 billion to provide 12 months of payment, interest debt, and associated fee
relief for SBA physical disaster loans in a regular servicing status and EIDL loans relief for SBA physical disaster loans in a regular servicing status and EIDL loans
approved prior to February 15, 2020, and in a regular servicing status; approved prior to February 15, 2020, and in a regular servicing status;
 $1 billion for a new Micro-SBIC program to provide financing to micro-SBICs  $1 billion for a new Micro-SBIC program to provide financing to micro-SBICs
of up to 50% of private capital raised, not to exceed $25 million or, in the case of of up to 50% of private capital raised, not to exceed $25 million or, in the case of
a micro-SBIC owned by persons who also own a SBIC licensed under section a micro-SBIC owned by persons who also own a SBIC licensed under section
301, up to 100% of private capital raised, not to exceed $50 million; 301, up to 100% of private capital raised, not to exceed $50 million;
 $1 billion to increase 7(a) loan guarantees from 75% and 85%, depending on the  $1 billion to increase 7(a) loan guarantees from 75% and 85%, depending on the
amount borrowed, to 90% for all 7(a) loans during FY2021, increase the amount borrowed, to 90% for all 7(a) loans during FY2021, increase the
SBAExpress loan guarantee from 50% to 75% for SBAExpress loans of SBAExpress loan guarantee from 50% to 75% for SBAExpress loans of
$350,000 or less during FY2021, and reduce fees to the maximum extent possible $350,000 or less during FY2021, and reduce fees to the maximum extent possible
on 7(a) and 504/CDC loans during FY2021; on 7(a) and 504/CDC loans during FY2021;
 $57 million for Microloan program enhancements, including $50 million for  $57 million for Microloan program enhancements, including $50 million for
Microloan technical assistance grants and $7 million in loan credit subsidies to Microloan technical assistance grants and $7 million in loan credit subsidies to
support up to $72 million in additional Microloan lending; support up to $72 million in additional Microloan lending;
 $15 billion for a one-year, state and local government small business local relief  $15 billion for a one-year, state and local government small business local relief
grant program within the Department of the Treasury. The program would grant program within the Department of the Treasury. The program would
provide states, localities, and Indian Tribes grants to create a small business provide states, localities, and Indian Tribes grants to create a small business
emergency fund. The fund would support loans and other assistance to nonprofit emergency fund. The fund would support loans and other assistance to nonprofit
organizations and businesses with 20 or fewer employees (50 or fewer employees organizations and businesses with 20 or fewer employees (50 or fewer employees
if located in a low-income community) that have experienced a loss of revenue if located in a low-income community) that have experienced a loss of revenue
due to COVID-19; and due to COVID-19; and
 $10 billion for a SBA grant program for independent live venue operators,  $10 billion for a SBA grant program for independent live venue operators,
producers, promoters, or talent representatives to address the economic effects of producers, promoters, or talent representatives to address the economic effects of
COVID-19 on certain live venues. An initial grant of up to $12 million dollars, COVID-19 on certain live venues. An initial grant of up to $12 million dollars,
and a supplemental grant that is equal to 50% of the initial grant, would be and a supplemental grant that is equal to 50% of the initial grant, would be
available to cover specified expenses, such as payroll costs, rent, utilities, and available to cover specified expenses, such as payroll costs, rent, utilities, and
personal protective equipment. personal protective equipment.

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Author Information

Robert Jay Dilger Robert Jay Dilger
Sean Lowry Sean Lowry
Senior Specialist in American National Government Analyst in Public Finance Senior Specialist in American National Government Analyst in Public Finance

Bruce R. Lindsay Bruce R. Lindsay

Specialist in American National Government Specialist in American National Government

Disclaimer
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R46284 R46284 · VERSION 4344 · UPDATED
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