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

Changes from October 1, 2021 to May 31, 2022

This page shows textual changes in the document between the two versions indicated in the dates above. Textual matter removed in the later version is indicated with ~~red strikethrough~~ and textual matter added in the later version is indicated with blue.

COVID-19 Relief Assistance to Small
~~October 1, 2021~~May 31, 2022
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

become especially acute in the wake of the Coronavirus Disease 2019 (COVID-19) become especially acute in the wake of the Coronavirus Disease 2019 (COVID-19) pandemic’s pandemic’s
Bruce R. Lindsay
widespread adverse economic impact on the national economy. widespread adverse economic impact on the national economy.
Specialist in American Specialist in American
National Government National Government
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

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

 P.L. 116-123,  P.L. 116-123, the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020,
provided the SBA an additional $20 million provided the SBA an additional $20 million for SBA disaster assistance administrative expenses and made for SBA disaster assistance administrative expenses and made
economic injury from the coronavirus an eligible expense for SBA’s Economic Injury Disaster Loans economic injury from the coronavirus an eligible expense for SBA’s Economic Injury Disaster Loans
(EIDL). (EIDL).
 P.L. 116-136,  P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), among other 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) to provide forgivable loans to small businesses, small 501(c)(3) Paycheck Protection Program (PPP) to provide forgivable loans to small businesses, small 501(c)(3)
nonprofit organizations, and small 501(c)(19) veterans organizations adversely affected by COVID-19. The nonprofit organizations, and small 501(c)(19) veterans organizations adversely affected by COVID-19. The
loans were originally available through June 30, 2020, and had a two-year term at 1% interest. loans were originally available through June 30, 2020, and had a two-year term at 1% interest.
 P.L. 116-139,  P.L. 116-139, the Paycheck Protection Program and Health Care Enhancement Act (Enhancement Act), 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,  P.L. 116-142, the Paycheck Protection Program Flexibility Act, among other provisions, extended the PPP 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,  P.L. 116-147, to extend the authority for commitments for the paycheck protection program, extended the 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 commitmentscommitments and $30 billion for 7(a) loan commitments . .
 P.L. 116-260,  P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N,
Title III of the Consolidated Appropriations Act of 2021), among other provisions, extended the PPP Title III of the Consolidated Appropriations Act of 2021), among other provisions, extended the PPP
through March 31, 2021, increased the program’s authorization amount from $659 billion to $806.45 through March 31, 2021, increased the program’s authorization amount from $659 billion to $806.45
billion, and authorized second-draw PPP loans of up to $2 million. billion, and authorized second-draw PPP loans of up to $2 million.
 P.L. 117-2, the American Rescue Plan Act of 2021, among other provisions, increased the PPP  P.L. 117-2, the American Rescue Plan Act of 2021, among other provisions, increased the PPP
authorization amount to $813.7 billion and provided $53.6 billion for SBA program enhancements, authorization amount to $813.7 billion and provided $53.6 billion for SBA program enhancements,
including $28.6 billion for a restaurant revitalization grant program. including $28.6 billion for a restaurant revitalization grant program.
 P.L. 117-6, the PPP Extension Act of 2021, extended the acceptance of PPP applications through May 31,  P.L. 117-6, the PPP Extension Act of 2021, extended the acceptance of PPP applications through May 31,
2021, and authorized the SBA to process any pending applications submitted on or before that date through 2021, and authorized the SBA to process any pending applications submitted on or before that date through
June 30, 2021. June 30, 2021.
Some of the small business relief provisions enacted during the 116th and 117th Congresses are similar to provisions enacted Some of the small business relief provisions enacted during the 116th and 117th Congresses are similar to provisions enacted
during the 111th Congress to assist small businesses during and immediately following the Great Recession. However, the during the 111th Congress to assist small businesses during and immediately following the Great Recession. However, the
more recent legislation is much broader in scope and cost than the earlier legislation and includes loan deferrals, loan more recent legislation is much broader in scope and cost than the earlier legislation and includes loan deferrals, loan
forgiveness, and greatly expanded eligibility, including, for the first time, specified types of nonprofit organizations.forgiveness, and greatly expanded eligibility, including, for the first time, specified types of nonprofit organizations.
One lesson learned from the actions taken during the 111th Congress is the potential benefits of providing additional funding One lesson learned from the actions taken during the 111th Congress is the potential benefits of providing additional funding
for the SBA’s Office of Inspector General (OIG) and the Government Accountability Office (GAO) to assist Congress in its for the SBA’s Office of Inspector General (OIG) and the Government Accountability Office (GAO) to assist Congress in its
oversight of these programs. Their audits and program reviews can provide an early warning if unforeseen administrative oversight of these programs. Their audits and program reviews can provide an early warning if unforeseen administrative
problems should arise and serve as a deterrent to fraud. problems should arise and serve as a deterrent to fraud.
Congressional Research Service Congressional Research Service

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

Introduction
The The ~~Smal~~ Small Business Administration (SBA) administers several types of programs to support Business Administration (SBA) administers several types of programs to support ~~smal~~
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  loan guaranty and venture capital programs to enhance ~~smal~~ small business access to business access to
capital; capital;
  ~~smal~~ small business management and technical assistance training programs to assist business management and technical assistance training programs to assist
business formation and expansion; and business formation and expansion; and
 contracting programs to increase  contracting programs to increase ~~smal~~ small business opportunities in federal 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
~~smal~~ small businesses are viewed as a means to stimulate economic activity and create jobs. businesses are viewed as a means to stimulate economic activity and create jobs.
Congressional interest, however, has become Congressional interest, however, has become ~~especial y~~especially acute in the wake of the Coronavirus 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 This report begins with an overview of legislation considered during the 116th and 117th considered during the 116th and 117th
Congresses to assist Congresses to assist ~~smal~~ small businesses adversely affected by the COVID-19 pandemic. It then businesses adversely affected by the COVID-19 pandemic. It then
provides an overview of SBA disaster loans and discusses various issues related to providing provides an overview of SBA disaster loans and discusses various issues related to providing
disaster assistance to disaster assistance to ~~smal~~ small businesses adversely affected by COVID-19. It then presents an 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 overview of SBA access to capital programs (including the 7(a) loan guarantee, 504/CDC loan
guarantee, and Microloan programs), SBA management and technical training programs (guarantee, and Microloan programs), SBA management and technical training programs (~~Smal~~
Small Business Development Centers [SBDCs], Women Business Centers [WBCs], SCORE, and Business Development Centers [SBDCs], Women Business Centers [WBCs], SCORE, and
Microloan technical assistance), and SBA contracting programs. This is followed by a discussion Microloan technical assistance), and SBA contracting programs. This is followed by a discussion
of legislationof legislation enacted during the 111th Congress to assist enacted during the 111th Congress to assist ~~smal~~ small businesses during and immediately businesses during and immediately
following the Great Recession (2007-2009). following the Great Recession (2007-2009).
As discussed below, some of the provisions included in legislation enacted during the 116th and As discussed below, some of the provisions included in legislation enacted during the 116th and
117th Congresses to assist 117th Congresses to assist ~~smal~~ small businesses adversely affected by the COVID-19 pandemic were businesses adversely affected by the COVID-19 pandemic were
included in legislationincluded in legislation enacted during the 111th Congress to assist enacted during the 111th Congress to assist ~~smal~~ small businesses during and businesses during and
immediately following the Great Recession, including SBAimmediately following the Great Recession, including SBA fee waivers and increased loan limits. fee waivers and increased loan limits.
However, the legislationHowever, the legislation enacted during the 116th and 117th Congresses is much larger in scope enacted during the 116th and 117th Congresses is much larger in scope
and cost than the legislation enacted during the 111th Congress and includes loan deferrals, loan and cost than the legislation enacted during the 111th Congress and includes loan deferrals, loan
forgiveness, and greatly expanded eligibility,forgiveness, and greatly expanded eligibility, including, for the first time, specified types of including, for the first time, specified types of
nonprofit organizations. nonprofit organizations.
Legislative and Administrative 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 2020, was the first act to include provisions targeting SBA assistance to ~~smal~~ small businesses businesses
adversely affected by COVID-19. The act provided the SBA an additional $20 adversely affected by COVID-19. The act provided the SBA an additional $20 ~~mil ion~~ million for SBA 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 eligiblethe coronavirus an eligible EIDL expense. EIDL expense.
At that time, the SBA had $1.1 At that time, the SBA had $1.1 ~~bil ion~~billion in disaster loan credit subsidies available, enough to in disaster loan credit subsidies available, enough to
support between $7 support between $7 ~~bil ion~~billion and $8 and $8 ~~bil ion~~ billion in disaster loans. Anticipating high demand, the SBA in disaster loans. Anticipating high demand, the SBA
~~initial y~~ initially reduced the maximum COVID-19 EIDL loan amount from the statutory imposed $2 reduced the maximum COVID-19 EIDL loan amount from the statutory imposed $2
~~mil ion~~ million lending cap to $500,000. Due to unprecedented demand, on May 3, 2020, the SBA lending cap to $500,000. Due to unprecedented demand, on May 3, 2020, the SBA
lowered the maximum COVID-19 EIDL loan amount to six-months of economic injury up to lowered the maximum COVID-19 EIDL loan amount to six-months of economic injury up to
$150,000.1$150,000.1
P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted on P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted on
March 27, 2020, made numerous changes to SBA programs, including the creation of the March 27, 2020, 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 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
availableavailable ~~to smal~~ to small businesses, businesses, ~~smal~~ small 501(c)(3) nonprofit organizations, and 501(c)(3) nonprofit organizations, and ~~smal~~ small 501(c)(19) 501(c)(19)
veterans organizations—and are eligibleveterans organizations—and are eligible for loan forgiveness. The SBA for loan forgiveness. The SBA initially announced that the loans 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 $349 504/CDC, and Microloan programs. The act also appropriated $349 ~~bil ion~~billion for PPP loan for PPP loan
guarantees and subsidies (to remain availableguarantees and subsidies (to remain available through FY2021), $10 through FY2021), $10 ~~bil ion~~billion for Emergency EIDL for Emergency EIDL
Advance Payment grants, $675 Advance Payment grants, $675 ~~mil ion~~million for the SBA’s salaries and expenses account, $562 for the SBA’s salaries and expenses account, $562 ~~mil ion~~
million for disaster loans, $25 for disaster loans, $25 ~~mil ion~~million for the SBA’s Office of Inspector General (OIG), $265 for the SBA’s Office of Inspector General (OIG), $265 ~~mil ion~~million for for
entrepreneurial development programs ($192 entrepreneurial development programs ($192 ~~mil ion for smal~~ million for small business development centers business development centers
(SBDCs), $48 (SBDCs), $48 ~~mil ion~~ million for women’s business centers (WBCs), and $25 for women’s business centers (WBCs), and $25 ~~mil ion~~million for SBA for SBA resource resource
partners to provide online information and training), and $17 partners to provide online information and training), and $17 ~~bil ion~~ billion for six months of debt relief 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 A summary of the CARES Act’s major ~~smal~~ small business-related provisions is presented in the business-related provisions is presented in the
Appendix.
On March 30, 2020, the SBA updated its website to On March 30, 2020, the SBA updated its website to ~~al ow~~allow COVID-19-related EIDL applicants an COVID-19-related EIDL applicants an
option to request an Emergency EIDL Advance Payment grant.2 option to request an Emergency EIDL Advance Payment grant.2
The SBA started accepting PPP loan applications on April 3, 2020.3 Because the SBA neared its The SBA started accepting PPP loan applications on April 3, 2020.3 Because the SBA neared its
$349 $349 ~~bil ion~~ billion authorization limitauthorization limit for Section 7(a) lending, which at that time included the PPP, the for Section 7(a) lending, which at that time included the PPP, the
SBA stopped accepting new PPP loan applications on AprilSBA stopped accepting new PPP loan applications on April 15, 2020.4 A total of 1,661,367 PPP 15, 2020.4 A total of 1,661,367 PPP

1 Additionally, on April 3, 2020, the Small Business1 Additionally, on April 3, 2020, the Small Business Administration (SBA) loweredAdministration (SBA) lowered the COVID-19 Economic Injury 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. Disaster Loan (EIDL) lending cap from $500,000 to $15,000. On April 11, 2020, the SBA restored the cap to $500,000.
SeeSee SBA,SBA, Office of Inspector General (OIG), Office of Inspector General (OIG), Inspection of ~~Sm all Business Adm inistration~~Small Business Administration’s Initial Disaster Assistance
Response to the Coronavirus ~~Pandem ic~~Pandemic, Report Number 21-02, October 28, 2020, pp. 9, 10, at https://www.sba.gov/, Report Number 21-02, October 28, 2020, pp. 9, 10, at https://www.sba.gov/
document/reportdocument/report -21-02-inspection-small-business-administrations-initial-disaster-assistance-response-coronavirus--21-02-inspection-small-business-administrations-initial-disaster-assistance-response-coronavirus-
pandemic. pandemic.
2 EIDL applicants that applied for a COVID-19-related EIDL prior to March 30, 2020, were required 2 EIDL applicants that applied for a COVID-19-related EIDL prior to March 30, 2020, were required to reapply for an to reapply for an
Emergency EIDL Advance Payment grant. Emergency EIDL Advance Payment grant.
3 The SBA ~~3 T he SBA~~ accepted Paycheck Protection Program (PPP) loan applications from independent contractors and selfaccepted Paycheck Protection Program (PPP) loan applications from independent contractors and self --
employed starting on April 10, 2020. employed starting on April 10, 2020.
4 SBA, 4 SBA, “Statement by Secretary Mnuchin and Administrator Carranza on the Paycheck Protection Program and “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/about-sba/sba-newsroom/press-Economic Injury Disaster Loan Program,” April 15, 2020, at https://www.sba.gov/about-sba/sba-newsroom/press-
releases-media-advisories/statementreleases-media-advisories/statement -secretary-mnuchin-and-administrator-carranza-paycheck-protection-program-and--secretary-mnuchin-and-administrator-carranza-paycheck-protection-program-and-
economic (hereinafter SBA, “economic (hereinafter SBA, “ Statement by Secretary Mnuchin and Administrator Carranza on the Paycheck Statement by Secretary Mnuchin and Administrator Carranza on the Paycheck ~~Protecti on~~Protection
Program and Economic Injury Disaster Loan Program”). Program and Economic Injury Disaster Loan Program”).
P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act (CARES P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)Act) authorized $349 billion for authorized $349 billion for
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loans were approved by 4,975 lenders, totaling $342,277,999,103. Most of the loans (74%) were 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 for less than $150,000. The average loan amount was $206,022.5
The SBA The SBA also stopped accepting COVID-19-related EIDL and Emergency EIDL Advance also stopped accepting COVID-19-related EIDL and Emergency EIDL Advance
Payment grant applications on April 15, 2020, because the SBA was approaching its disaster loan Payment grant applications on April 15, 2020, because the SBA was approaching its disaster loan
assistance credit subsidy limit.6 COVID-19-related EIDL and Emergency EIDL Advance 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. 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 limitloan authorization limit from $349 from $349 ~~bil ion~~ billion to $659 to $659 ~~bil ion~~ billion and appropriated $321.335 and appropriated $321.335 ~~bil ion~~billion to to
support that level of lending. The act also appropriated $50 support that level of lending. The act also appropriated $50 ~~bil ion~~ billion for EIDL (to support $367.1 for EIDL (to support $367.1
~~bil ion~~ billion in loan authority), $10 in loan authority), $10 ~~bil ion~~billion for Emergency EIDL advance payments (grants), and $2.1 for Emergency EIDL advance payments (grants), and $2.1
~~bil ion~~ billion for SBA salaries and expenses.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 COVID-on a limited basis on May 4 to accommodate agricultural businesses that were provided COVID-
19-related EIDL eligibility19-related EIDL eligibility by the Enhancement Act. The SBA also processed applications from by the Enhancement Act. The SBA also processed applications from
agricultural businesses that had submitted an EIDL application prior to the legislativeagricultural businesses that had submitted an EIDL application prior to the legislative change. change.
Those agricultural businesses did not need to reapply. Those agricultural businesses did not need to reapply. Al All other EIDL loan applications that were 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.7 The SBA resumed the acceptance of new EIDL and processed on a first-in, first-out basis.7 The SBA resumed the acceptance of new EIDL and
Emergency EIDL Advance Payment applications from Emergency EIDL Advance Payment applications from al all borrowers on June 15, 2020.8 borrowers on June 15, 2020.8
A summary of the Enhancement Act’s major A summary of the Enhancement Act’s major ~~smal~~ small business-related provisions is presented in the business-related provisions is presented in the
Appendix.
Numerous proposals to amend the PPP were introduced throughout the spring, summer, and Numerous proposals to amend the PPP were introduced throughout the spring, summer, and ~~fal~~
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  S. 4321, the Continuing ~~Smal~~ Small Business Recovery and Paycheck Protection 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 bil s’ major smal business-related provisions is presented in the Appendix.~~

general businessgeneral business loans authorized under Section 7(a) of the Small Businessloans authorized under Section 7(a) of the Small Business Act. Act. ~~T his~~This authorization limit applied to the authorization limit applied to the
7(a) lending programs as well7(a) lending programs as well as to the PPP. as to the PPP.
5 SBA, 5 SBA, “Paycheck Protection Program (PPP) Report through April 16, 2020, at 12 PM EST“Paycheck Protection Program (PPP) Report through April 16, 2020, at 12 PM EST ,” at https://content.sba.gov/,” at https://content.sba.gov/
sites/default/files/2020-05/PPP%20Deck%20copy.pdf. sites/default/files/2020-05/PPP%20Deck%20copy.pdf.
6 SBA,6 SBA, “Statement by Secretary Mnuchin and Administrator Carranza on the Paycheck Protection Program and “Statement by Secretary Mnuchin and Administrator Carranza on the Paycheck Protection Program and
Economic Injury Disaster Loan Program.” Economic Injury Disaster Loan Program.”
7 SBA,7 SBA, “Economic Injury Disaster Loan Emergency Advance,” May 4, 2020, at https://www.sba.gov/funding-“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. programs/loans/coronavirus-relief-options/economic-injury-disaster-loan-emergency-advance.
8 SBA,8 SBA, “SBA’s“SBA’s Economic Injury Disaster Loans and Advance Program Reopened to All EligibleEconomic Injury Disaster Loans and Advance Program Reopened to All Eligible ~~Sm all Businesses~~ Small Businesses and and
Non-Profits Impacted by COVID-19 Pandemic,” JuneNon-Profits Impacted by COVID-19 Pandemic,” June 15, 2020, at https://www.sba.gov/about15, 2020, at https://www.sba.gov/about -sba/sba-newsroom/-sba/sba-newsroom/
press-releases-media-advisories/sbas-economic-injury-disaster-loans-and-advance-program-reopened-all-eligible-press-releases-media-advisories/sbas-economic-injury-disaster-loans-and-advance-program-reopened-all-eligible-
small-businesses-and?utm_medium=email&utm_source=govdelivery. small-businesses-and?utm_medium=email&utm_source=govdelivery.
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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
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;9 utility payments;9
 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 requirement if the borrower is unable to rehire an individual who was an 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 similarlydemonstrate an inability to hire similarly qualified employees on or before December 31, 2020;  ~~qualified employees on or before~~
~~December 31, 2020;~~
~~ provided borrowers another “safe harbor” from the loan forgiveness rehiring~~
~~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~~
~~business activity as before February 15, 2020, due to compliance with~~
~~requirements established or guidance issued between March 1, 2020, and~~
~~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~~
~~Health Administration, related to the maintenance of standards for sanitation,~~
~~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~~
~~government directives based on these requirements or guidance);10~~
 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 As required by the CARES Act, the SBA stopped accepting new PPP loan applications at stopped accepting new PPP loan applications at
~~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 cont inue 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 T reasury, “Business Loan Program T emporary Changes; Paycheck Protection Program – Revisions to Loan~~
~~Forgiveness and Loan Review Procedures Interim Final Rules,” 85 Federal Register 38309, June 26, 2020.~~
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~~link to page 9~~ ~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

midnight on June 30, 2020. 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 separate amounts authorized for other loans under Section 7(a) of the ~~Smal~~ Small Business Act, and for 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 2020, to August 8, 2020, and authorized $659 ~~bil ion~~ billion for PPP loan commitments and $30 for PPP loan commitments and $30 ~~bil ion~~billion
for 7(a) loan commitments. The Senate passed the for 7(a) loan commitments. The Senate passed the ~~bil~~ bill by voice vote on June 30, 2020, and the 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 Payment grant applications because the program had reached its authorization limit of $20 ~~bil ion~~
billion in grants.in grants.1110 The SBA approved 5,781,390 Emergency EIDL Advance Payment grant 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, “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. Congressional Research Service 4 link to page 9 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options applications.11 ~~The SBA approved 5,781,390 Emergency EIDL Advance Payment grant~~
~~applications.12~~ As of February 15, 2021, the SBA had approved 3,734,701 COVID-19-related As of February 15, 2021, the SBA had approved 3,734,701 COVID-19-related
EIDL loans, totalingEIDL loans, totaling over $203 over $203 ~~bil ion.13~~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 As of August 8, 2020, the SBA had approved, after ~~cancel ations~~cancellations, 5,212,128 PPP loans, totaling , 5,212,128 PPP loans, totaling
over $525 over $525 ~~bil ion (se~~ebillion (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 SBAthan the amount the SBA has approved in has approved in al all of its loan programs, including disaster loans, during of its loan programs, including disaster loans, during
the last 29 years (from October 1, 1991, through December 31, 2019; $509.9 the last 29 years (from October 1, 1991, through December 31, 2019; $509.9 ~~bil ion).14~~billion).13
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 (after ~~cancel ations~~cancellations) )
Source: ~~Smal~~ Small Business AdministrationBusiness Administration (SBA), “Additional Program Information: approvals as of August 8, 2020,” (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: ~~Cancel ations~~Cancellations include duplicative include duplicative loans, loans not closed for any reason,loans, loans not closed for any reason, and loans that have been paid off. 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%);

~~11 SBA, “SBA provided $20 billion to Small Businesses and Non-Profits T hrough 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.~~
 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,  extended the PPP loan covered period from August 8, 2020, to March 31, 2021;  expanded 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 As of April 24, 2020, the SBA had approved nearly 1.2 million Emergency EIDL grants, totaling $4.8 billionAs of April 24, 2020, the SBA had approved nearly 1.2 million Emergency EIDL grants, totaling $4.8 billion . See . See
SBA,SBA, “COVID-19 EIDL Advance Reports, April 24, 2020,” at https://www.sba.gov/document/report-covid-19-eidl-“COVID-19 EIDL Advance Reports, April 24, 2020,” at https://www.sba.gov/document/report-covid-19-eidl-
advance-reportadvance-report -04-24-20. -04-24-20.
12 11 SBA, SBA, “ “Disaster Assistance Update EIDL Advance JulyDisaster Assistance Update EIDL Advance July 15, 2020 (figures as of July15, 2020 (figures as of July 14, 2020),” at 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.
~~13 SBA, “ SBA~~ 12 SBA, “SBA Disaster Assistance Update Nationwide EIDL Loans/COVID-19, February 16, 2021 (figures as of Disaster Assistance Update Nationwide EIDL Loans/COVID-19, February 16, 2021 (figures as of
February 15, 2021),” at https://www.sba.gov/document/report-covid-19-eidl-loans-report-2021. February 15, 2021),” at https://www.sba.gov/document/report-covid-19-eidl-loans-report-2021.
1413 SBA, SBA, “WDS Lending Data File,”“WDS Lending Data File,” October 18, 2019; and SBA,October 18, 2019; and SBA, “Small Business“Small Business Administration loan program Administration loan program
performance: performance: ~~T able~~Table 2 - Gross 2 - Gross Approval Amount by Program, December 31, 2019,” at https://www.sba.gov/document/Approval Amount by Program, December 31, 2019,” at https://www.sba.gov/document/
reportreport ~~-small-business-administration-loan-program-performance.~~
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~~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 fal . P.L. 116-260, the Economic Aid to Hard-Hit Smal 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 al owable 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~~
-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 5 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options 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;
  ~~al ows~~allowed borrowers to select a PPP loan forgiveness covered period of either 8 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~~created a simplified loan forgiveness application process for loans of $150,000 or 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 amountloan amount spent on payroll costs, and the total loan amount~~. The borrower must~~
~~also attest that they complied with al PPP loan requirements. Borrowers must~~
~~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~~
~~review and audit these loans for fraud. Reporting of demographic information is~~
~~optional;~~;15
  ~~al ows~~allowed PPP borrowers PPP borrowers ~~that have~~with fewer than 300 employees, fewer than 300 employees, that have or have or ~~wil~~ will use the 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 of 2019 to receive a second-draw PPP loan of up to $2 ~~mil ion;~~
~~ increases~~million;  increased the PPP loan authorization level the PPP loan authorization level from $659 from $659 ~~bil ion~~ billion to $806.45 to $806.45 ~~bil ion,~~
~~appropriates~~billion, appropriated an additional $284.45 an additional $284.45 ~~bil ion~~ billion for the PPP, and for the PPP, and ~~rescinds~~rescinded $146.5 $146.5
~~bil ion~~ billion from the SBA’s business loans program account (appropriated funds that from the SBA’s business loans program account (appropriated funds that
were not spent prior to enactment);were not spent prior to enactment);
  ~~sets~~set aside funds for new and aside funds for new and ~~smal er smal~~ smaller small businesses, for borrowers in low- and businesses, for borrowers in low- and
moderate-income communities, and for community and moderate-income communities, and for community and ~~smal er lenders. These~~
~~set asides include $15 bil ion across first and second draw PPP loans for lending~~
~~by community financial institutions; $15 bil ion across first and second draw PPP~~
~~loans for lending by insured depository institutions, credit unions, and farm credit~~
~~system institutions with consolidated assets of less than $10 bil ion; $35 bil ion~~
~~for new first draw PPP borrowers; and $15 bil ion and $25 bil ion for first draw~~
~~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-~~
~~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.~~
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~~ 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~~
~~approve and disburse the funds from three to 21 days, and repeals the~~
~~requirement that borrowers deduct the amount of their EIDL advance payment~~
~~from their PPP loan forgiveness amount if the advance payment was refinanced~~
~~into their PPP loan;~~
~~ appropriates $20 bil ion for an~~smaller lenders;16  extended the covered period for Emergency EIDL advance payments (grants) from December 31, 2020, to December 31, 2021 and repealed the requirement that borrowers deduct the amount of their EIDL advance payment from their PPP loan forgiveness amount if the advance payment was refinanced into their PPP loan;  appropriated $20 billion for an EIDL Targeted advance payment (grant) program;17  increased the 7(a) loan guarantee program’s authorization limit from $30 billion to $75 billion in FY2021, and appropriated $1.918 billion for 7(a) loan guarantee 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% for all 7(a) loans; (2) increasing the SBAExpress loan amount from $350,000 to 15 The borrower was also required to attest that they complied with all PPP loan requirements, retain relevant employment records for four years, and other relevant records for three years. The SBA retained the right to audit these loans for fraud. Reporting of demographic information was optional. 16 These set asides included $15 billion across first and second draw PPP loans for lending by community financial institutions; $15 billion across first and second draw PPP loans for lending by insured depository institutions, credit unions, and farm credit 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 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-income neighborhoods. 17 The EIDL Targeted advance payment (grant) program provided ~~EIDL Targeted advance payment (grant) program~~
~~that provides~~ a $10,000 advance payment to borrowers located in low-income a $10,000 advance payment to borrowers located in low-income
communities that communities that ~~have~~had suffered a revenue loss greater than 30% over specified suffered a revenue loss greater than 30% over specified
time periods and time periods and ~~have~~had no more than 300 employees no more than 300 employees~~; applicants~~. Applicants that meet these that meet these
requirements and received an Emergency EIDL advance payment previously requirements and received an Emergency EIDL advance payment previously ~~are~~
~~eligible~~ were eligible to receive an amount equal to the difference of what the borrower to receive an amount equal to the difference of what the borrower
received and $10,000. The SBA received and $10,000. The SBA iswas required to provide first priority in awarding required to provide first priority in awarding
the grants to eligiblethe grants to eligible borrowers located in low-income communities that received 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
second priority to eligiblesecond priority to eligible first-time applicants located in low-income communities. Congressional Research Service 6 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options $1 million on January 1, 2021 (reverted~~first-time applicants located in low-income~~
~~communities;~~
~~ increases the 7(a) loan guarantee program’s authorization limit from $30 bil ion~~
~~to $75 bil ion in FY2021, and appropriates $1.918 bil ion for 7(a) loan guarantee~~
~~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%~~
~~for al 7(a) loans; (2) increasing the SBAExpress loan amount from $350,000 to~~
~~$1 mil ion on January 1, 2021 (reverts~~ permanently to $500,000 on October 1, 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 (75% for loans of $350,000 or less (~~reverts~~reverted permanently to 50% for permanently to 50% for al
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 bil ion~~appropriated $3.5 billion to resume the first six months of payments of principal, 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$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 wil 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~~
~~economical y hard-hit industries wil receive an additional five monthly~~
~~payments.16 Also, loans approved from February 1, 2021, through September 30,~~
~~2021, wil receive six monthly payments beginning with the first payment due;~~
~~ appropriates $15 bil ion~~ ;  appropriated $15 billion for a new Shuttered Venue Operators Grant program to for a new Shuttered Venue Operators Grant program to
provide grants to eligible provide grants to eligible live venue operators or promoters, theatrical producers, live venue operators or promoters, theatrical producers,
live performing arts organization operators, museum operators, motion picture live performing arts organization operators, museum operators, motion picture
theatre operators, or talent representatives who demonstrate a 25% reduction in theatre operators, or talent representatives who demonstrate a 25% reduction in

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

~~revenue over specified time periods.17 The SBA can award an initial grant to~~
~~eligible individuals or entities of up to $10 mil ion based on a specified formula~~
~~and a supplemental grant equal to half of the initial grant, also based on a~~
~~specified formula. Funding must be used for specified purposes, such as payroll,~~
~~rent, utilities, and personal protective equipment; and~~
~~ appropriates $57 mil ion~~ revenue over specified time periods;18 and  appropriated $57 million for Microloan program enhancements, including $50 for Microloan program enhancements, including $50
~~mil ion~~ million for Microloan technical assistance grants and $7 for Microloan technical assistance grants and $7 ~~mil ion~~million in loan credit in loan credit
subsidies to support up to $64 subsidies to support up to $64 ~~mil ion~~million in additional in additional Microloan lending. Microloan lending.
Legislative and Administrative Efforts to Assist
Small Businesses During the 117th Congress
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.1819 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. the PPP loan portal on January 11, 2021, on a restricted basis. ~~Initial y~~Initially, only community financial , only community financial
institutions were institutions were ~~al owed~~allowed to submit PPP loan applications (first-draw loans were accepted starting to submit PPP loan applications (first-draw loans were accepted starting
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 promote PPP loan access for minority, underserved, veteran and women-owned ~~smal~~
small businesses.businesses.1920 Community financial institutions are Community financial institutions are ~~general y~~generally recognized as more likely to serve recognized as more likely to serve
these populations than are other lending institutions. these populations than are other lending institutions.
The SBA The SBA reopened the PPP loan portal to PPP-eligible lenders with $1 reopened the PPP loan portal to PPP-eligible lenders with $1 ~~bil ion~~ billion or less in assets on or less in assets on
January 15, 2021, and to January 15, 2021, and to al all PPP-eligible lenders on January 19, 2021.21 18 For additional information and analysis concerning the Shuttered Venue Operators Grant Program, see CRS Report R46689, SBA Shuttered Venue Operators Grant Program (SVOG), by Robert Jay Dilger and Sean Lowry. 19 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. 20 SBA, “Guidance on Accessing Capital for Minority, Underserved, Veteran and Women-Owned Business ~~PPP-eligible lenders on January 19, 2021.20~~
~~In addition, in an effort to enhance PPP access for smal er entities, the SBA announced on~~
~~February 22, 2021, that it would restrict PPP loan applications to businesses and nonprofit~~
~~organizations with fewer than 20 employees for 14 days, starting on February 24, 2021.21 The~~
~~SBA also announced several regulatory changes, effective the first week in March 2021, to~~
~~“advance equity goals,” including revising the formula that determines the loan amount for sole~~
~~proprietors, independent contractors, and self-employed individuals to enable them to receive~~
~~more financial support;22 establishing a $1 bil ion set aside for sole proprietors, independent~~

~~17 For additional information and analysis concerning the Shuttered Venue Operators Grant Program, see CRS Report~~
~~R46689, SBA Shuttered Venue Operators Grant Program (SVOG) , by Robert Jay Dilger and Sean Lowry.~~
~~18 T hese rules were subsequently printed in the Federal Register on January 14, 2021. See SBA and Department of the~~
~~T reasury, “Business Loan Program T emporary 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 T emporary Changes; Paycheck Protection Program Second Draw Loans,” 86 Federal Register 3712-3723,~~
~~January 14, 2021.~~
~~19 SBA, “Guidance on Accessing Capital for Minority, Underserved, Veteran and Women-Owned Business~~ Concerns,” Concerns,”
January 6, 2021, at https://www.sba.gov/sites/default/files/2021-01/January 6, 2021, at https://www.sba.gov/sites/default/files/2021-01/
Guidance%20on%20Accessing%20Capital%20for%20Minority%20Underserved%20Veteran%20and%20Women%20Guidance%20on%20Accessing%20Capital%20for%20Minority%20Underserved%20Veteran%20and%20Women%20
Owned%20Business%20Concerns%20.pdf?utm_medium=email&utm_source=govdelivery;Owned%20Business%20Concerns%20.pdf?utm_medium=email&utm_source=govdelivery; and SBA,and SBA, “ “SBA and SBA and
~~T reasury~~Treasury Announce PPP Re-Opening; Issue New Announce PPP Re-Opening; Issue New Guidance,”Guidance,” January 8, 2021. January 8, 2021.
~~20 SBA, “ SBA~~ 21 SBA, “SBA Re-Opening Paycheck Protection Program to Small Lenders on Friday, January 15 and All Lenders on Re-Opening Paycheck Protection Program to Small Lenders on Friday, January 15 and All Lenders on
~~T uesday~~Tuesday, January 19,” at https://www.sba.gov/article/2021/jan/13/sba-re-opening-paycheck-protection-program-small-, 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.
~~21 SBA, “Biden Administration takes steps to promote equitable access to SBA Relief,” February 22, 2021, at~~
~~https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources.~~
~~22 Previously, “PPP rules defined payroll costs for individuals who file an IRS Form 1040, Schedule C as payroll costs~~
~~(if employees exist) plus net profits, which is net earnings from self-employment.” Effective March 4, 2021, these~~
~~Congressional Research Service~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

Congressional Research Service 7 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options In addition, in an effort to enhance PPP access for smaller entities, the SBA announced on February 22, 2021, that it would restrict PPP loan applications to businesses and nonprofit organizations with fewer than 20 employees for 14 days, starting on February 24, 2021.22 The SBA also announced several regulatory changes, effective the first week in March 2021, to “advance equity goals,” including revising the formula that determines the loan amount for sole proprietors, independent contractors, and self-employed individuals to enable them to receive more financial support;23 establishing a $1 billion set aside for sole proprietors, independent contractors, and self-employed individuals that do not have employees and are located in low- contractors, and self-employed individuals that do not have employees and are located in low-
and moderate-income areas; and making it clear that legal U.S. residents who are not citizens are and moderate-income areas; and making it clear that legal U.S. residents who are not citizens are
eligibleeligible and if they use an Individual Taxpayer Identification Number (ITIN) to pay their taxes and if they use an Individual Taxpayer Identification Number (ITIN) to pay their taxes
they may use their ITIN as an identifier when applying for a PPP loan.they may use their ITIN as an identifier when applying for a PPP loan.2324
In a related development, on January 20, 2021, the Biden Administration In a related development, on January 20, 2021, the Biden Administration requested an additional requested an additional
$50 $50 ~~bil ion~~ billion for SBA program enhancements in its “American Rescue Plan,” including $25 for SBA program enhancements in its “American Rescue Plan,” including $25 ~~bil ion~~billion
for a Restaurant Revitalizationfor a Restaurant Revitalization grant program.grant program.2425 During congressional consideration of the During congressional consideration of the
proposal, Congress increased the Restaurant Revitalization grant program’s funding to $28.6 proposal, Congress increased the Restaurant Revitalization grant program’s funding to $28.6
~~bil ion~~ billion and accepted the Administration’s other and accepted the Administration’s other ~~smal~~ small business proposals. business proposals.
~~Specifical y~~Specifically, P.L. 117-2, the American Rescue Plan Act of 2021, provided an additional $53.6 , P.L. 117-2, the American Rescue Plan Act of 2021, provided an additional $53.6
~~bil ion~~ billion for SBA program enhancements, including for SBA program enhancements, including
 $28.6  $28.6 ~~bil ion~~ billion for the Restaurant Revitalization grant program to provide grants of for the Restaurant Revitalization grant program to provide grants of
up to $10 up to $10 ~~mil ion~~ million per entity (up to $5 per entity (up to $5 ~~mil ion~~ million per physical location, limited to 20 per physical location, limited to 20
locations) to restaurants and other food and beverage-related establishments that locations) to restaurants and other food and beverage-related establishments that
have experienced COVID-19-related revenue loss; have experienced COVID-19-related revenue loss;
 $15  $15 ~~bil ion~~ billion for the Targeted Economic Injury Disaster Loan Advance payment for the Targeted Economic Injury Disaster Loan Advance payment
program; program;
 $7.25  $7.25 ~~bil ion~~ billion for the PPP; for the PPP;
 $1.25  $1.25 ~~bil ion~~ billion for the Shuttered Venue Operators Grant Program; for the Shuttered Venue Operators Grant Program;
~~ $840 mil ion for administrative costs to prevent, prepare and respond to the~~
~~COVID-19 pandemic, including expenses related to PPP, SVOG, and grants to~~
~~restaurants;~~
~~ $460 mil ion for the disaster loan program ($70 mil ion for credit subsidies and~~
~~$390 mil ion for administrative costs);~~
~~ $100 mil ion for a community navigator pilot grant program to improve smal~~
~~business access to COVID-19-related assistance programs;~~
~~ $75 mil ion for outreach, education, and improving the SBA website; and~~
~~ $25 mil ion for SBA’s Office of Inspector General for oversight, to remain~~
~~available until expended.25~~

~~individuals~~ 22 SBA, “Biden Administration takes steps to promote equitable access to SBA Relief,” February 22, 2021, at https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources. 23 Previously, “PPP rules defined payroll costs for individuals who file an IRS Form 1040, Schedule C as payroll costs (if employees exist) plus net profits, which is net earnings from self-employment.” Effective March 4, 2021, these individuals (the self-employed, sole proprietors, and independent contractors) “(the self-employed, sole proprietors, and independent contractors) “ may elect to calculate the owner may elect to calculate the owner
compensation share of its payroll costs—that is, the share of its payroll costs that compensation share of its payroll costs—that is, the share of its payroll costs that ~~represen ts~~represents compensation of the compensation of the
owner—basedowner—based on either (i) net profit or (ii) gross income.” Seeon either (i) net profit or (ii) gross income.” See SBA,SBA, “ “Business Loan Program Business Loan Program ~~T emporary~~Temporary Changes; Changes;
Paycheck Protection Program – Revisions to Loan Amount Calculation and Eligibility,” 86Paycheck Protection Program – Revisions to Loan Amount Calculation and Eligibility,” 86 Federal Register 13149- 13149-
13156, March 8, 2021. 13156, March 8, 2021.
~~23 T he SBA~~ 24 The SBA also eliminated “an exclusionary restriction on PPP access for small businessalso eliminated “an exclusionary restriction on PPP access for small business ~~owners~~ owners with prior nonwith prior non -fraud -fraud
felony convictions, consistent with a bipartisan congressional proposal” and “federal student loan debtfelony convictions, consistent with a bipartisan congressional proposal” and “federal student loan debt delinquency and delinquency and
default as disqualifiersdefault as disqualifiers to participating in the PPP.” See SBA,to participating in the PPP.” See SBA, ~~“ SBA~~ “SBA Prioritizes Smallest of SmallPrioritizes Smallest of Small ~~Businesses~~ Businesses in the in the
Paycheck Protection Program,” February 22, 2021, at https://www.sba.gov/article/2021/feb/22/sba-prioritizes-smallestPaycheck Protection Program,” February 22, 2021, at https://www.sba.gov/article/2021/feb/22/sba-prioritizes-smallest --
small-businesses-paycheck-protection-program; and small-businesses-paycheck-protection-program; and ~~T he~~The (Biden) White House, “ (Biden) White House, “ Fact SheetFact Sheet : Biden-Harris : Biden-Harris
Administration Increases Lending to SmallAdministration Increases Lending to Small ~~Businesses~~ Businesses in Need,in Need, Announces ChangesAnnounces Changes to PPP to Further Promote to PPP to Further Promote
EquitableEquitable ~~Access~~ Access to Relief,” Februaryto Relief,” February 22, 2021, at https://www.whitehouse.gov/briefing-room/statements-releases/22, 2021, at https://www.whitehouse.gov/briefing-room/statements-releases/
2021/02/22/fact-sheet-biden-harris-administration-increases-lending-to-small-businesses-in-need-announces-changes-2021/02/22/fact-sheet-biden-harris-administration-increases-lending-to-small-businesses-in-need-announces-changes-
to-ppp-to-further-promote-equitable-access-to-relief/. to-ppp-to-further-promote-equitable-access-to-relief/.
~~24 T he~~25 The (Biden) White House, “President Biden Announces American Rescue (Biden) White House, “President Biden Announces American Rescue Plan,” January 20, 2021, at Plan,” January 20, 2021, at
https://www.whitehouse.gov/briefing-room/legislation/2021/01/20/presidenthttps://www.whitehouse.gov/briefing-room/legislation/2021/01/20/president -biden-announces-american-rescue-plan/. -biden-announces-american-rescue-plan/.
~~25 U.S. House of Representatives, Committee on Small Business, “Committee Approves $50 Billion in Small Business~~
Congressional Research Service Congressional Research Service
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link to page 14 link to page 14 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options

 $840 million for administrative costs to prevent, prepare and respond to the COVID-19 pandemic, including expenses related to PPP, SVOG, and grants to restaurants;  $460 million for the disaster loan program ($70 million for credit subsidies and $390 million for administrative costs);  $100 million for a community navigator pilot grant program to improve small business access to COVID-19-related assistance programs;  $75 million for outreach, education, and improving the SBA website; and  $25 million for SBA’s Office of Inspector General for oversight, to remain available until expended.26 On March 24, 2021, the SBA announced that, as of April 6, 2021, the maximum COVID- On March 24, 2021, the SBA announced that, as of April 6, 2021, the maximum COVID-
19 EIDL would be increased to 24 months of economic injury up to $500,000 from 6 19 EIDL would be increased to 24 months of economic injury up to $500,000 from 6
months of economic injury up to $150,000. The SBA indicated that it would contact months of economic injury up to $150,000. The SBA indicated that it would contact
existing EIDL borrowers via email to provide details about how they can request an existing EIDL borrowers via email to provide details about how they can request an
increase.increase.26
27 In addition, P.L. 117-6, the PPP Extension Act of 2021, signed into law on March 30, 2021, In addition, P.L. 117-6, the PPP Extension Act of 2021, signed into law on March 30, 2021,
extended the acceptance of PPP applications through May 31, 2021, and authorized the SBA to extended the acceptance of PPP applications through May 31, 2021, and authorized the SBA to
process any pending applications submitted on or before that date through June 30, 2021. process any pending applications submitted on or before that date through June 30, 2021.
On May 4, 2021, the SBA On May 4, 2021, the SBA informed lenders that due to budgetary limitations it was limiting new informed lenders that due to budgetary limitations it was limiting new
PPP loan applications to community financial institutions and would continue to process PPP loan applications to community financial institutions and would continue to process
applications that had already been submitted.applications that had already been submitted.27
28 As of May 31, 2021, the date on which the SBA stopped accepting new PPP loan applications, the As of May 31, 2021, the date on which the SBA stopped accepting new PPP loan applications, the
SBA had approved more than 11.8 SBA had approved more than 11.8 ~~mil ion~~million PPP loans totaling over $799.8 PPP loans totaling over $799.8 ~~bil ion~~billion, including more , including more
than 6.6 than 6.6 ~~mil ion~~ million PPP loans totaling over $277.7 PPP loans totaling over $277.7 ~~bil ion~~billion during 2021 ( during 2021 (seesee Table 2).28
~~Table 2. Paycheck Protection Program Loan Approvals, After Cancellations, Through~~
~~May 31, 2021~~
~~Average Loan~~
~~Number~~ 29 26 U.S. House of Representatives, Committee on Small Business, “Committee Approves $50 Billion in Small Business Aid for COVID Relief Package,” February 10, 2021, at https://smallbusiness.house.gov/news/documentsingle.aspx?DocumentID=3559. 27 SBA, “SBA to Increase Lending Limit for COVID-19 Economic Injury Disaster Loans,” March 24, 2021, at https://www.sba.gov/article/2021/mar/24/sba-increase-lending-limit-covid-19-economic-injury-disaster-loans. 28 National Association of Government Guaranteed Lenders (NAGGL), “Recent PPP Updates,” May 4, 2021, at https://www.naggl.org/. 29 As of September 12, 2021, the SBA had disbursed 11,496,362 PPP loans, totaling $792,753,837,209; received 6,739,872 loan forgiveness applications, totaling $549,758,188,084; and disbursed 6,739,872 loan forgiveness applications, totaling $530,432,477,927. See SBA, “PPP Data,” at https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program/ppp-data. Congressional Research Service 9 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options Table 2. Paycheck Protection Program Loan Approvals, After Cancellations, Through May 31, 2021 Average Loan Number of Loans
Net Amount
Amount
Characteristic
Approved
Approved
Approved
2021 Approvals 2021 Approvals
6,681,929 6,681,929
$277,700,108,079 $277,700,108,079
$41,560 $41,560
2020 Approvals 2020 Approvals
5,141,665 5,141,665
$522,132,758,441 $522,132,758,441
$101,549 $101,549
Total Approvals Total Approvals
11,823,594 11,823,594
$799,832,866,520 $799,832,866,520
$67,647 $67,647
(after (after ~~cancel ations~~cancellations) )
Source: ~~Smal~~ Small Business AdministrationBusiness Administration (SBA), “Paycheck Protection Program(SBA), “Paycheck Protection Program (PPP) Data: Approvals through (PPP) Data: Approvals through
May 31, 2021,” at https://www.sba.gov/document/report-paycheck-protection-program-weekly-reports-2021. May 31, 2021,” at https://www.sba.gov/document/report-paycheck-protection-program-weekly-reports-2021.
Note: ~~Cancel ations~~Cancellations include duplicative loans, loans not closed for any reason, include duplicative loans, loans not closed for any reason, and loans that have been paid off. and loans that have been paid off.
On September 9, 2021, the SBA announced that it was increasing the EIDL borrowing limit to $2 On September 9, 2021, the SBA announced that it was increasing the EIDL borrowing limit to $2
~~mil ion~~ million from $500,000 (effective October 8, 2021), offering 24 months of loan deferment after from $500,000 (effective October 8, 2021), offering 24 months of loan deferment after
loan originationloan origination (later extended to 30 months), and allowing~~, and al owing~~ EIDL funds to be used to prepay commercial debt ( EIDL funds to be used to prepay commercial debt (~~typical y~~typically used used
to prepay loans with a higher interest rate) and make payments on federal business debt.to prepay loans with a higher interest rate) and make payments on federal business debt.29

~~Aid for COVID Relief Package,” February 10, 2021, at https://smallbusiness.house.gov/news/documentsingle.aspx?~~
~~DocumentID=3559.~~
~~26 SBA, “SBA to Increase Lending Limit for COVID-19 Economic Injury Disaster Loans,” March 24, 2021, at~~
~~https://www.sba.gov/article/2021/mar/24/sba-increase-lending-limit-covid-19-economic-injury-disaster-loans.~~
~~27 National Association of Government Guaranteed Lenders (NAGGL), “ Recent PPP Updates,” May 4, 2021, at~~
~~https://www.naggl.org/.~~
~~28 As of September 12, 2021, the SBA had disbursed 11,496,362 PPP loans, totaling $792,753,837,209; received~~
~~6,739,872 loan forgiveness applications, totaling $549,758,188,084; and disbursed 6,7 39,872 loan forgiveness~~
~~applications, totaling $530,432,477,927. See SBA, “PPP Data,” at https://www.sba.gov/funding-programs/loans/covid-~~
~~19-relief-options/paycheck-protection-program/ppp-data.~~
~~29 SBA, “SBA Administrator Guzman Enhances COVID Economic Injury Disaster Loan Program to Aid Small~~
~~Businesses Facing~~ 30 As of January 1, 2022, the SBA had stopped accepting applications for new COVID-19 EIDL loans or advances. As of May 6, 2022, the SBA’s COVID-19 EIDL funds were exhausted and the SBA was no longer accepting COVID-19 EIDL loan increase requests or requests for reconsideration. The SBA closed the COVID-19 EIDL application portal on May 16, 2022. As of April 27, 2022, the SBA had approved over 3.9 million EIDL loans totaling over $378.4 billion; 601,058 Targeted EIDL Advance payment (grants) totaling over $5.2 billion; 453,417 Supplemental Targeted EIDL Advance payment (grants) totaling over $2.2 billion.31 Disaster Loans Overview 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 the ultimate borrower, and (2) they are not limited to small businesses.32 SBA disaster loans for physical damage are available to individuals, businesses of all sizes, and nonprofit organizations in declared disaster areas.33 SBA disaster loans for economic injury 30 SBA, “SBA Administrator Guzman Enhances COVID Economic Injury Disaster Loan Program to Aid Small Businesses Facing Challenges from Delta Variant,” September 9, 2021, at Challenges from Delta Variant,” September 9, 2021, at
https://www.sba.gov/article/2021/sep/09/sba-administrator-guzman-enhances-covid-economic-injury-disaster-loan-https://www.sba.gov/article/2021/sep/09/sba-administrator-guzman-enhances-covid-economic-injury-disaster-loan-
program-aid-small-businessesprogram-aid-small-businesses.
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

~~Disaster Loans~~
~~Overview~~
~~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~~
~~the ultimate borrower, and (2) they are not limited to smal businesses.30~~
~~SBA disaster loans for physical damage are available to individuals, businesses of al sizes, and~~
~~nonprofit organizations in declared disaster areas.31 SBA disaster loans for economic injury~~
~~(EIDL) are available to eligible smal businesses, smal agricultural cooperatives, smal~~
; and SBA, “SBA Administrator Guzman Announces Key Policy Change: Existing COVID Economic Injury Disaster Loan Program Borrowers to Receive an Additional Deferment,” March 15, 2022, at https://www.sba.gov/article/2022/mar/15/sba-administrator-guzman-announces-key-policy-change-existing-covid-economic-injury-disaster-loan. 31 SBA, “Disaster Assistance Update Nationwide COVID EIDL, Targeted EIDL Advances, Supplemental Targeted Advances, April 28, 2022 (figures as of April 27, 2022),” at https://www.sba.gov/document/report-covid-19-eidl-reports-2022. 32 13 C.F.R. §123.200. 33 13 C.F.R. §123.105 and 13 C.F.R. §123.203. Congressional Research Service 10 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 businesses engaged in aquaculture, and most private, nonprofit organizations in declared disaster
areas. Prior to COVID-19, about 80% of the SBA’s direct disaster loans were provided to areas. Prior to COVID-19, about 80% of the SBA’s direct disaster loans were provided to
individualsindividuals and households (renters and property owners) to repair and replace homes and and households (renters and property owners) to repair and replace homes and
personal property. The SBA disbursed $401 personal property. The SBA disbursed $401 ~~mil ion~~million in disaster loans in FY2016, $889 in disaster loans in FY2016, $889 ~~mil ion~~ million in in
FY2017, $3.59 FY2017, $3.59 ~~bil ion~~ billion in FY2018, $1.5 in FY2018, $1.5 ~~bil ion~~ billion in FY2019, in FY2019, ~~and~~ $178.5 $178.5 ~~bil ion~~ billion in FY2020 in FY2020
(primarily to businesses for COVID-19-related assistance)(primarily to businesses for COVID-19-related assistance)~~.32~~
, and $73.8 billion in FY2021 (primarily to businesses for COVID-19-related assistance).34 Types of Disaster Loans
The SBA Disaster Loan Program includes home disaster loans, business physical disaster loans, The SBA Disaster Loan Program includes home disaster loans, business physical disaster loans,
and EIDLs.and EIDLs.3335 This report focuses on the EIDL program because it This report focuses on the EIDL program because it ~~is currently being~~was used to used to
address the adverse economic impact of COVID-19 on address the adverse economic impact of COVID-19 on ~~smal~~ small businesses and other EIDL-eligible businesses and other EIDL-eligible
organizations. 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 eligibleeconomic injury from the coronavirus an eligible EIDL expense. The act also provided the SBA EIDL expense. The act also provided the SBA
an additionalan additional ~~$20 mil ion~~ $20 million for disaster loan administrative expenses. for disaster loan administrative expenses.
For a discussion of For a discussion of ~~al SBA~~ all SBA disaster loans, see CRS Report R41309, 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 EIDLs provide up to $2 ~~mil ion~~ million for working capital (including fixed debts, payroll, accounts for working capital (including fixed debts, payroll, accounts
payable and other payable and other ~~bil s~~bills that cannot be paid because of the disaster’s impact) to help that cannot be paid because of the disaster’s impact) to help ~~smal~~
small businesses, businesses, ~~smal~~ small agricultural cooperatives, agricultural cooperatives, ~~smal~~ small businesses engaged in aquaculture, and most businesses engaged in aquaculture, and most

~~30 13 C.F.R. §123.200.~~
~~31 13 C.F.R. §123.105 and 13 C.F.R. §123.203.~~
~~32 SBA,~~ private, nonprofit organizations meet their financial obligations and operating expenses that cannot be met as a direct result of the disaster.36 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 six months of economic injury up to $150,000. On April 6, 2021, the SBA increased the maximum COVID-19 EIDL to 24 months of economic injury up to $500,000.37 On September 9, 2021, the SBA announced that it was increasing the EIDL borrowing limit to $2 million from $500,000 (effective October 8, 2021). 34 SBA, Office of Legislative and Congressional Affairs, “WDS Report Amount Fiscal Year 2019, Office of Legislative and Congressional Affairs, “WDS Report Amount Fiscal Year 2019, ~~T able~~Table 1.4 1.4
DisbursementsDisbursements by Program,” October 18, 2019; by Program,” October 18, 2019; ~~and SBA,~~ SBA, “Agency Financial Report, Fiscal Year 2020,” p. 82, at “Agency Financial Report, Fiscal Year 2020,” p. 82, at
https://www.sba.gov/document/reporthttps://www.sba.gov/document/report ~~-agency-financial-report.~~
~~33 T he SBA~~ -agency-financial-report; and SBA, “Agency Financial Report, Fiscal Year 2021,” p. 76, at https://www.sba.gov/document/report-agency-financial-report. 35 The SBA also offers military reservist economic injury disaster loans. also offers military reservist economic injury disaster loans. ~~T hese~~These loans are available when economic loans are available when economic
injury is incurred as a direct result of a businessinjury is incurred as a direct result of a business owner or an essential employee being calledowner or an essential employee being called to active duty. to active duty. ~~T hese~~These loans loans
are generally not associated with disasters.are generally not associated with disasters. ~~See CRS~~ See CRS Report R42695, Report R42695, SBA Veterans Assistance ~~Program s~~ Programs: An Analysis
of ~~Contem porary~~Contemporary Issues, by Robert Jay Dilger, by Robert Jay Dilger and Seanand Sean ~~Lowry.~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

~~private, nonprofit organizations meet their financial obligations and operating expenses that~~
~~cannot be met as a direct result of the disaster.34~~
~~As mentioned, due to unprecedented demand, in March 2020, the SBA lowered the maximum~~
~~COVID-19 EIDL amount from $2 mil ion to $500,000, and, on May 3, 2020, reduced it to six~~
~~months of economic injury up to $150,000. On April 6, 2021, the SBA increased the maximum~~
~~COVID-19 EIDL to 24 months of economic injury up to $500,000.35 On September 9, 2021, the~~
~~SBA announced that it was increasing the EIDL borrowing limit to $2 mil ion from $500,000~~
~~(effective October 8, 2021).~~ Lowry. 36 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”). 37 SBA, “SBA to Increase Lending Limit for COVID-19 Economic Injury Disaster Loans,” March 24, 2021, at https://www.sba.gov/article/2021/mar/24/sba-increase-lending-limit-covid-19-economic-injury-disaster-loans. Congressional Research Service 11 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options
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  businesses that do not meet the SBA’s ~~smal~~ small business eligibilitybusiness eligibility criteria, criteria,
including the SBA’s size standards; including the SBA’s size standards;
 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  businesses determined by the SBA to have credit available elsewhere.elsewhere.3638
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 major source of employment, the SBA may waive the $2 ~~mil ion~~ million statutory limit.statutory limit.3739 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.3840
Applicants must have a credit history acceptable to the SBA, the ability Applicants must have a credit history acceptable to the SBA, the ability to repay the loan, and to repay the loan, and
present collateral for present collateral for al all EIDL loans over $25,000 if available. The SBAEIDL loans over $25,000 if available. The SBA ~~collateralizes~~ collateralizes real estate real estate
or other assets when available, but it or other assets when available, but it ~~wil~~ will not deny a loan for lack of collateral.not deny a loan for lack of collateral.3941
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 eligibleannum. EIDL applicants are not eligible if the SBAif the SBA determines that the applicant has credit available elsewhere. 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.42 There are no prepayment penalties. SBA EIDL assistance is not automatically~~determines that the applicant has credit~~
~~available elsewhere.~~

~~34 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”).~~
~~35 SBA, “SBA to Increase Lending Limit for COVID-19 Economic Injury Disaster Loans,” March 24, 2021, at~~
~~https://www.sba.gov/article/2021/mar/24/sba-increase-lending-limit-covid-19-economic-injury-disaster-loans.~~
~~36 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”).~~
~~37 SBA, “Fact Sheet.”~~
~~38 For the full list of ineligible uses of EIDL loan proceeds, see SBA, “Disaster Assistance Program SOP ,” pp. 75-76.~~
~~39 SBA, “Fact Sheet.”~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

~~EIDL loans can have maturities up to 30 years. The SBA determines an appropriate instal ment~~
~~payment based on each borrower’s financial condition, which, in turn, determines the loan term.40~~
~~There are no prepayment penalties.~~
~~SBA EIDL assistance is not automatical y~~ available. It must be requested in one of two ways: (1) 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 ~~Act41~~Act43 or (2) a state or or (2) a state or
governor can submit a request for SBA EIDL from the SBA Administrator under the governor can submit a request for SBA EIDL from the SBA Administrator under the ~~Smal~~
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
~~Smal~~ Small Business Act because it did not meet the legal definition for a disaster. As mentioned, to 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
38 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”). 39 SBA, “Fact Sheet.” 40 For the full list of ineligible uses of EIDL loan proceeds, see SBA, “Disaster Assistance Program SOP,” pp. 75-76. 41 SBA, “Fact Sheet.” 42 SBA, “Fact Sheet.” 43 P.L. 93-288, as amended. Tribal nations are also authorized to request and receive major disaster assistance. Congressional Research Service 12 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options Section 7(b)(2)(D) of the Small ~~Section 7(b)(2)(D) of the Smal~~ Business Act, making economic injury from the coronavirus an Business Act, making economic injury from the coronavirus an
~~eligible~~ eligible expense under the SBA’s Economic Injury Disaster Loan program. expense under the SBA’s Economic Injury Disaster Loan program.
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 response to states seeking SBA disaster assistance for ~~smal~~ small businesses.businesses.4244 The SBA changed its The SBA changed its
requirement that a state or territory “provide documentation certifying that at least five requirement that a state or territory “provide documentation certifying that at least five ~~smal~~
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.”4345 Under new criteria, states and territories Under new criteria, states and territories ~~now~~
~~“are~~ were “only required to certify that at least five only required to certify that at least five ~~smal~~ small businesses within the state/territory have 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.”4446 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
and Application Processing Prior to the CARES Act’s enactment, the SBA had about $1.1 Prior to the CARES Act’s enactment, the SBA had about $1.1 ~~bil ion~~ billion in disaster loan credit in disaster loan credit
subsidy availablesubsidy available to support about $7 to support about $7 ~~bil ion to $8 bil ion~~ billion to $8 billion in disaster loans. Loan credit subsidy is 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.~~45 The~~

~~40 SBA, “Fact Sheet.”~~
~~41 P.L. 93-288, as amended. T ribal nations are also authorized to request and receive major disaster assistance.~~
~~42 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. T here are, however, indications that the President considers CO VID-19 a~~
~~major disaster. See the White House,~~ ~~Letter from President Donald J. Trum p on Em ergency Determ ination Under the~~
~~Stafford Act, March 13, 2020, at https://www.whitehouse.gov/briefings-statements/letter-president -donald-j-trump-~~
~~emergency-determination-stafford-act/.~~
~~43 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 (hereinafter cited~~
~~as SBA, SBA Updates Criteria on States for Requesting Disaster Assistance).~~
~~44 SBA, SBA Updates Criteria on States for Requesting Disaster Assistance.~~
~~45 “T he Federal Credit Reform Act of 1990 (FCRA) requires agencies to estimate the cost to the government of~~
~~extending or guaranteeing credit. T his 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 Estim ate Credit~~
~~Subsidy Costs Is More Appropriate for Budget Estim ates Than a Fair Value Approach~~ ~~, GAO-16-41, January 29, 2016,~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

47 The loan credit subsidy amount is about one-seventh of the cost of each disaster loan.loan credit subsidy amount is about one-seventh of the cost of each disaster loan.4648 The credit The credit
subsidy amount is used to protect the government against the risk of estimated subsidy amount is used to protect the government against the risk of estimated ~~shortfal s~~shortfalls in loan in loan
repayments. There was some concern that the SBA’s funding for disaster loan credit subsidies repayments. There was some concern that the SBA’s funding for disaster loan credit subsidies
would would ~~have proven to~~ be insufficient to meet the demand for disaster loans now that EIDL be insufficient to meet the demand for disaster loans now that EIDL
~~eligibility has~~eligibility had been extended to economic injuries related to COVID-19. been extended to economic injuries related to COVID-19.
The CARES Act addressed this issue by providing an additional The CARES Act addressed this issue by providing an additional ~~$562 mil ion~~ $562 million to support disaster to support disaster
loans and $10 loans and $10 ~~bil ion~~ billion to support the Emergency EIDL grant program. As mentioned, the Paycheck 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 Protection Program and Health Care Enhancement Act (P.L. 116-139) appropriated an additional
~~$50 bil ion~~ $50 billion for EIDL and $10 for EIDL and $10 ~~bil ion~~ billion for Emergency EIDL grants. P.L. 116-260, the Economic for Emergency EIDL grants. P.L. 116-260, the Economic
Aid to Hard-Hit Aid to Hard-Hit ~~Smal~~ Small Businesses, Nonprofits, and Venues Act (Division N, Title III of the Businesses, Nonprofits, and Venues Act (Division N, Title III of the
Consolidated Appropriations Act of 2021), appropriated an additional $20 Consolidated Appropriations Act of 2021), appropriated an additional $20 ~~bil ion for the EIDL~~
~~Targeted advance payment (grant) program. P.L. 117-2, the American Rescue Plan Act of 2021,~~
~~appropriated an additional $15 bil ion for the Targeted Economic Injury Disaster Loan Advance~~
~~payment program and $460 mil ion for the disaster loan program ($70 mil ion for credit subsidies~~
~~and $390 mil ion for administrative costs).~~
~~Surge Issues and Loan Processing Times~~
~~Historical y, the majority (80%) of SBA disaster loans have been for individuals and households.~~
~~The significant number of businesses that wil likely apply for EIDL assistance because of the~~
~~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~~
~~demand, Title II of P.L. 116-123 provided the SBA with an additional $20 mil ion, to remain~~
~~available until expended, for SBA Disaster Loan Program administrative expenses.~~
~~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 2017.47 Although~~
~~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~~
~~EIDL applications in response to COVID-19 could be significantly higher because COVID-19~~
~~affects a much larger number of smal 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~~
~~compromise loan processing times.~~
~~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,~~
~~potential y, collapse. Consequently, Congress may examine options that could expedite loan~~
~~processing, such as increased staffing and surge capabilities, waiving application requirements,~~
~~and the use of expedited loans or bridge loans.~~

~~p. i, at https://www.gao.gov/products/GAO-16-41.~~
~~46 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 Perform ance Report”).~~
~~47 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.~~
~~Congressional Research Service~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

~~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 Smal Business Disaster Response and Loan~~
~~Improvements Act of 2008.48 The act created several programs to improve the disaster loan~~
~~processing.49 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~~
~~$150,000.50~~
~~ 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.51~~
~~ Private Disaster Assistance Program (PDAP) to make guaranteed loans available~~
~~to homeowners and eligible EIDL applicants in an amount up to $2 mil ion.52~~
~~The SBA, however, had difficulty implementing these programs. In his statement before the~~
~~House Committee on Smal Business, then-acting (and now the current) SBA Inspector General,~~
~~Hannibal “Mike” Ware, stated the following:~~
~~In the wake of disasters like Hurricane Sandy, congressional representatives expressed~~
~~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~~
~~implement statutory provisions of the Immediate Disaster Assistance Program (IDAP),~~
~~Economic Injury Disaster Assistance Program (EDAP), and the Private Disaster Assistance~~
~~Programs (PDAP), collectively known as the “Guaranteed Disaster Assistance Programs”~~
~~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~~
~~lenders. These provisions remain unimplemented.53~~
~~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:~~
~~[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~~
~~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~~
~~their lack of expertise in the home loan sector. Lenders were also concerned that loan~~
~~guarantees would be denied due to improper eligibility determinations.~~

~~48 P.L. 110-234, the Small Business Disaster Response and Loan Improvements Act of 2008 (T itle 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 (T itle XII, subtitle B of the Food, Conservation, and Energy Act of 2008) (hereinafter cited as P.L. 110-234).~~
~~49 SBA, “Immediate, Expedited, and Private Disaster Assistance Loan Programs,” 80 Federal Register 63715-63717,~~
~~October 21, 2015.~~
~~50 P.L. 110-234, Sec. 12085.~~
~~51 P.L. 110-234, Sec. 12084.~~
~~52 P.L. 110-234, Sec. 12083.~~
~~53 T estimony 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.~~
~~Congressional Research Service~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

~~Because these programs had limited use, Congress included a provision in P.L. 115-141, the~~
~~Consolidated Appropriations Act, 2018, which permanently cancel ed $2.6 mil ion in unobligated~~
~~balances available for the IDAP and the EDALP.~~
~~The CARES Act addressed loan processing issues~~billion for the EIDL 44 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 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-emergency-determination-stafford-act/. 45 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 (hereinafter cited as SBA, SBA Updates Criteria on States for Requesting Disaster Assistance). 46 SBA, SBA Updates Criteria on States for Requesting Disaster Assistance. 47 “The Federal Credit Reform Act of 1990 (FCRA) requires agencies to estimate the cost to the government of 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. 48 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 13 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options Targeted advance payment (grant) program. P.L. 117-2, the American Rescue Plan Act of 2021, appropriated an additional $15 billion for the Targeted Economic Injury Disaster Loan Advance payment program and $460 million for the disaster loan program ($70 million for credit subsidies and $390 million for administrative costs). Also, in anticipation of increased demand for EIDL loans, the CARES Act addressed anticipated delays in EIDL application loan processing by authorizing the SBA Administrator, in ~~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 Under present law and regulations, the first SBA EIDL payment is ~~normal y~~normally due five months after 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.”5449 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).
~~Additional y,~~ Additionally, on March 12, 2021, the SBA extended the deferment period for on March 12, 2021, the SBA extended the deferment period for al all COVID-19-COVID-19-
related EIDL and other disaster loans until 2022. related EIDL and other disaster loans until 2022. ~~Specifical y, al~~ Specifically, all disaster loans made in calendar disaster loans made in calendar
year 2020 year 2020 ~~wil~~ will have a first payment due extended from 12 months to 24 months from the date of have a first payment due extended from 12 months to 24 months from the date of
the note, and the note, and al all disaster loans made in calendar year 2021 disaster loans made in calendar year 2021 ~~wil~~ will have a first payment due extended have a first payment due extended
from 12 months to 18 months from the date of the note.from 12 months to 18 months from the date of the note.55
50 As mentioned, on September 9, 2021, the SBA announced that EIDL loan payments would be As mentioned, on September 9, 2021, the SBA announced that EIDL loan payments would be
deferred for 24 months after loan origination to help deferred for 24 months after loan origination to help ~~smal~~ small businesses “get through the pandemic businesses “get through the pandemic
~~without having to worry about making ends meet.”56~~
~~The CARES Act authorized the SBA to provide complete payment deferment relief, for not less~~
~~than six months and not more than one year, for Paycheck Protection Program (PPP) borrowers if~~
~~the borrower was in operation on February 15, 2020, and had an application for a covered loan~~
~~approved or pending approval on or after the date of enactment. The SBA subsequently deferred~~
~~PPP loan payments for six months. However, interest continued to accrue on these loans during~~
~~the six-month deferment.57~~

~~54 SBA, “~~ without having to worry about making ends meet.”51 Also, on March 15, 2022, the SBA extended the deferral period for all COVID-19 EIDL loans approved in calendar years 2020-2022 to 30 months from the date of the note (interest continues to accrue).52 49 SBA, “Carranza Implements Automatic Deferment on Existing SBA Disaster Loans Carranza Implements Automatic Deferment on Existing SBA Disaster Loans ~~T hrough~~Through End of 2020 End of 2020 ,” March ,” March
23, 2020, at https://www.sba.gov/about23, 2020, at https://www.sba.gov/about -sba/sba-newsroom/press-releases-media-advisories/carranza-implements--sba/sba-newsroom/press-releases-media-advisories/carranza-implements-
automatic-defermentautomatic-deferment -existing-sba-disaster-loans-through-end-2020. -existing-sba-disaster-loans-through-end-2020.
55 50 SBA, SBA, “SBA“SBA Extends Deferment Period for all COVID-19Extends Deferment Period for all COVID-19 EIDL and Other Disaster Loans until 2022,” March 12, EIDL and Other Disaster Loans until 2022,” March 12,
2021. 2021.
5651 SBA, SBA, “SBA“SBA Administrator Guzman Enhances COVIDAdministrator Guzman Enhances COVID Economic Injury Disaster Loan Program to Aid Small Economic Injury Disaster Loan Program to Aid Small
BusinessesBusinesses ~~Facing~~ Facing Challenges from Delta Variant,” September 9, 2021, at Challenges from Delta Variant,” September 9, 2021, at
https://www.sba.gov/article/2021/sep/09/sba-administrator-guzman-enhances-covid-economic-injury-disaster-loan-https://www.sba.gov/article/2021/sep/09/sba-administrator-guzman-enhances-covid-economic-injury-disaster-loan-
program-aid-small-businesses. program-aid-small-businesses.
~~57 SBA, “Business Loan Program T emporary Changes; Paycheck Protection Program,” 85 Federal Register 20813,~~
~~Congressional Research Service~~
16 52 SBA, “SBA Administrator Guzman Announces Key Policy Change: Existing COVID Economic Injury Disaster Loan Program Borrowers to Receive an Additional Deferment,” March 15, 2022, at https://www.sba.gov/article/2022/mar/15/sba-administrator-guzman-announces-key-policy-change-existing-covid-economic-injury-disaster-loan. Congressional Research Service 14

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

The CARES Act also authorized the SBA to provide complete payment deferment relief, for not less than six months and not more than one year, for Paycheck Protection Program (PPP) borrowers if the borrower was in operation on February 15, 2020, and had an application for a covered loan approved or pending approval on or after the date of enactment. The SBA subsequently deferred PPP loan payments for six months. Interest continued to accrue on these loans during the six-month deferment.53 PPP loans can also be forgiven, in whole or in part, under specified conditions related to the PPP loans can also be forgiven, in whole or in part, under specified conditions related to the
borrower’s retention of employees and wages. Federal loan forgiveness is rare, but has been used borrower’s retention of employees and wages. Federal loan forgiveness is rare, but has been used
in the past to help businesses that were having difficulty repaying their loans. For example, loan in the past to help businesses that were having difficulty repaying their loans. For example, loan
forgiveness was granted after Hurricane Betsy, when President Lyndon B. Johnson signed the forgiveness was granted after Hurricane Betsy, when President Lyndon B. Johnson signed the
Southeast Hurricane Disaster Relief Act of 1965.Southeast Hurricane Disaster Relief Act of 1965.5854 Section 3 of the act authorized the SBA Section 3 of the act authorized the SBA
Administrator to grant disaster loan forgiveness or issue waivers for property lost or damaged in Administrator to grant 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 Florida, Louisiana, and 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$1,800 over ~~a period not to exceed three years; and (2) may lend to a privately~~ a period not to exceed three years; and (2) may lend to a privately owned owned
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
otherwiseotherwise ~~available~~ available from privatefrom private sources,sources, ~~and may~~ and may waive interest paymentswaive interest payments ~~and~~ and defer 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.5955
Disaster Grants
~~Historical y~~Historically, businesses that suffer uninsured loss as a result of a major disaster declaration are , businesses that suffer uninsured loss as a result of a major disaster declaration are
not eligiblenot eligible for Federal Emergency Management Agency (FEMA) for Federal Emergency Management Agency (FEMA) disaster grant assistance, and grant 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 eligibleloans and grants to eligible businesses to help them recover from disasters as businesses to help them recover from disasters as ~~wel~~ well as grants as grants
intended to attract new businesses to the disaster-stricken area.intended to attract new businesses to the disaster-stricken area. In a few cases, CDBG has also In a few cases, CDBG has also
been used to compensate businesses and workers for lost wages or been used to compensate businesses and workers for lost wages or revenues. However, ~~revenues.~~
~~Although the President issued the first major disaster declaration to New York for COVID-19,60~~
CDBG disaster assistance is not available for CDBG disaster assistance is not available for al all major disasters. States can use CDBG funding to 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,6156 but existing (or future) CDBG monies but existing (or future) CDBG monies ~~general y~~generally must be reprogrammed in must be reprogrammed in
consultation with HUD to respond to the emergency.consultation with HUD to respond to the emergency.6257 For these reasons, CDBG is For these reasons, CDBG is ~~general y~~generally used used
for long-term recovery needs rather than providing immediate, direct for long-term recovery needs rather than providing immediate, direct disaster assistance. 53 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program,” 85 Federal Register 20813, April 15, 2020. 54 P.L. 89-339, 79 Stat. 1301. 55 P.L. 89-339, 79 Stat. 1301. 56 For example, the City of Seattle is currently administering $10,000 grants to small businesses using CDBG funds to respond to COVID-19. 57 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 ~~disaster assistance.~~
~~Thus, advocates of providing disaster grants to smal businesses general y focus on FEMA or the~~
~~SBA. Advocates of enlisting FEMA to administer the program argue that FEMA already has grant~~
~~processing operations in place, making it relatively easier to expand the operations to include~~
~~smal businesses disaster grants rather than establishing new grant-making operations within~~
~~SBA. They also argue that having FEMA administer the smal business disaster grant program~~
~~may limit duplication of administrative functions between FEMA and SBA. It would also provide~~

~~April 15, 2020.~~
~~58 P.L. 89-339, 79 Stat. 1301.~~
~~59 P.L. 89-339, 79 Stat. 1301.~~
~~60 Federal Emergency Management Agency, New York Covid-19 Pandemic (DR-4480), March 3, 2020, at~~
~~https://www.fema.gov/disaster/4480.~~
~~61 For example, the City of Seattle is currently administering $10,000 grants to small businesses using CDBG funds to~~
~~respond to COVID-19.~~
~~62 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 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.
Congressional Research Service Congressional Research Service
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COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options

~~access to FEMA’s Disaster Relief Fund (DRF) which, as of July 31, 2020, had roughly $74~~
~~bil ion for disaster assistance activities.63~~
~~In contrast, advocates of using the SBA to administer the program argue that it already has a~~
~~framework in place to evaluate business disaster needs and disaster loan eligibility.~~
~~Another concern about providing grants to businesses is whether businesses provided SBA EIDL~~
~~wil 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 al ow 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 al 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.~~
~~The~~ Thus, prior to COVID-19, advocates of providing disaster grants to small businesses generally focused on FEMA or the SBA. Advocates of enlisting FEMA to administer the program argued that FEMA already has grant processing operations in place, making it relatively easier to expand the operations to include small businesses disaster grants rather than establishing new grant-making operations within the SBA. They also argued that having FEMA administer the small business disaster grant program may limit duplication of administrative functions between FEMA and the SBA. It would also provide access to FEMA’s Disaster Relief Fund (DRF) which, as of July 31, 2020, had roughly $74 billion for disaster assistance activities.58 In contrast, advocates of using the SBA to administer the program argued that it already has a framework in place to evaluate business disaster needs and disaster loan eligibility. Congress decided to use the SBA, not FEMA, to provide disaster grants to assist small businesses affected by COVID-19. For example, the CARES Act authorized the SBA Administrator to provide up to $10,000 as an advance CARES Act authorized 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 payment in the amount requested within three days after receiving an EIDL application from an
~~eligible~~ eligible entity. Applicants were not required to repay the advance payment, referred to in the entity. Applicants were 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 CARES Act as an Emergency EIDL grant, even if subsequently denied an EIDL loan. Due to
anticipated demand, the SBA limitedanticipated demand, the SBA limited Emergency EIDL grants to $1,000 per employee, up to a Emergency EIDL grants to $1,000 per employee, up to a
maximum of $10,000. maximum of $10,000.
The CARES Act The CARES Act ~~addressed waste, fraud, and abuse by providing~~also provided the SBA’s OIG $25 the SBA’s OIG $25 ~~mil ion~~ million for 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.
As mentioned, the Paycheck Protection Program and Health Care Enhancement Act (P.L. 116- As mentioned, the Paycheck Protection Program and Health Care Enhancement Act (P.L. 116-
139) appropriated an additional $10 139) appropriated an additional $10 ~~bil ion~~ billion for Emergency EIDL grants. P.L. 116-260, the for Emergency EIDL grants. P.L. 116-260, the
Economic Aid to Hard-Hit Economic Aid to Hard-Hit ~~Smal~~ Small Businesses, Nonprofits, and Venues Act (Division N, Title III of Businesses, Nonprofits, and Venues Act (Division N, Title III of
the Consolidated Appropriations Act of 2021), appropriated an additional $20 the Consolidated Appropriations Act of 2021), appropriated an additional $20 ~~bil ion~~ billion for the for the
EIDL Targeted advance payment (grant) program. SBA’s OIG is to receive $20 EIDL Targeted advance payment (grant) program. SBA’s OIG is to receive $20 ~~mil ion~~ million of that of that
amount “to prevent waste, fraud, and abuse” in the awarding of the grants. Also, P.L. 117-2, the amount “to prevent waste, fraud, and abuse” in the awarding of the grants. Also, P.L. 117-2, the
American Rescue Plan Act of 2021, appropriated an additional $15 American Rescue Plan Act of 2021, appropriated an additional $15 ~~bil ion~~ billion for the Targeted for the Targeted
Economic Injury Disaster Loan Advance payment program. Economic Injury Disaster Loan Advance payment program.

63 SBA EIDL Interest Rates SBA EIDL interest rates for COVD-19 are 3.75% for businesses and 2.75% for nonprofit organizations.59 58 Federal Emergency Management Agency, Federal Emergency Management Agency, Disaster Relief Fund: Monthly Report, August, August 7, 2020, at 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 CRSsee CRS Report R45484, Report R45484, The Disaster Relief Fund: Overview and Issues, by William L. Painter. , by William L. Painter.
Also, on AugustAlso, on August 8, 2020, President 8, 2020, President ~~T rump~~Trump issued a memorandum directing “ issued a memorandum directing “ up to $44 billion from the Disaster Relief up to $44 billion from the Disaster Relief
FundFund at the statutorily mandated 75 percent Federal cost share be made available for lost wagesat the statutorily mandated 75 percent Federal cost share be made available for lost wages assistance to eligible 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
willwill be be set asideset aside to support ongoing disaster response and recovery efforts and potential 2020 major disaster costs.” See to support ongoing disaster response and recovery efforts and potential 2020 major disaster costs.” See
President Donald President Donald ~~T rump, “~~ Trump, “Memorandum on Authorizing the Other Needs Assistance Program for Major Disaster Memorandum on Authorizing the Other Needs Assistance Program for Major Disaster
Declarations Related to Coronavirus DiseaseDeclarations Related to Coronavirus Disease ~~2019~~ 2019,” August 8, 2020, at https://www.whitehouse.gov/presidential-,” 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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~~SBA EIDL Interest Rates~~
~~SBA EIDL interest rates for COVD-19 are 3.75% for businesses and 2.75% for nonprofit~~
~~organizations.64~~59 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. Congressional Research Service 16 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options
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
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.”6560 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 Notwithstanding the provisions of the constitution of any State orState or the laws of any State 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 maximumthe maximum legal rate of interest on any financing made on a deferred basis pursuant to legal rate of interest on any financing made on a deferred basis pursuant to
this subsection shall not exceedthis subsection shall not exceed a rate prescribed by the Administration, and the rate of a rate prescribed by the Administration, and the rate of
interest for the Administration’s share of any direct or immediate participation loan interest for the Administration’s share of any direct or immediate participation loan ~~shal~~
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
assistassist ~~any handicapped individual as provided in paragraph (10) of this subsection,~~ any handicapped individual as provided in paragraph (10) of this subsection, the 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 lower interest rates than ~~smal~~ small businesses. Alternatively, Congress could change the formula businesses. Alternatively, Congress could change the formula
under the under the ~~Smal~~ Small Business Act if it considered the language ambiguous, or it could designate an Business Act if it considered the language ambiguous, or it could designate an
interest rate (including a zero interest rate) for interest rate (including a zero interest rate) for al all SBA EIDL for the duration of COVID-19. SBA EIDL for the duration of COVID-19.
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.~~66 The SBA~~

~~64 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.~~
~~65 Only businesses~~ 61 The SBA 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.62 Instead of making 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 60 Only businesses and nonprofit organizations that cannot get credit elsewhere are eligibleand nonprofit organizations that cannot get credit elsewhere are eligible for SBAfor SBA EIDL. EIDL.
6661 Prior to October 1, 1985, the SBA provided direct business Prior to October 1, 1985, the SBA provided direct business loans to qualifiedloans to qualified ~~small~~ small businesses.businesses. From October 1, From October 1,
1985, to September 30, 1994, SBA direct business1985, to September 30, 1994, SBA direct business loan eligibility wasloan eligibility was limited to qualifiedlimited to qualified small businessessmall businesses ~~owned~~ owned by by
individualsindividuals with low incomes or located in areas of high unemployment, owned by Vietnam-era or disabledwith low incomes or located in areas of high unemployment, owned by Vietnam-era or disabled veterans, veterans,
ownedowned by the handicapped or certain organizations employing them, and certified under the minority small business 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.capital ownership development program. Microloan program intermediaries were also eligible. On October 1, 1994, On October 1, 1994,
SBASBA direct loan eligibilitydirect loan eligibility ~~was~~ was limited to Microloan program intermediaries and small businesseslimited to Microloan program intermediaries and small businesses ~~owned~~ owned by the by the
handicapped. Fundinghandicapped. Funding to support direct loans to the handicapped through the Handicapped Assistance (renamed the to support direct loans to the handicapped through the Handicapped Assistance (renamed the
DisabledDisabled Assistance) Loan program endedAssistance) Loan program ended in 1996. in 1996. ~~T he~~The last loan under the Disabled last loan under the Disabled Assistance Loan program was Assistance Loan program was
issuedissued in FY1998. See U.S.in FY1998. See U.S. Congress, HouseCongress, House Committee on Small Business,Committee on Small Business, ~~Sum m ary~~ Summary of Activities, 105rd Cong., 2nd , 105rd Cong., 2nd
sess.,sess., January 2, 1999, H.Rept. 105-849 (Washington, DC: GPO, 1999), p. 8. January 2, 1999, H.Rept. 105-849 (Washington, DC: GPO, 1999), p. 8.
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~~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.67 Instead of making~~
~~direct loans, the SBA guarantees loans issued by approved lenders to encourage those lenders to~~
~~provide loans to smal businesses “that might not otherwise obtain financing on reasonable terms~~
~~and conditions.”68~~62 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, 1994), p. 20. Congressional Research Service 17 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options and conditions.”63 With few exceptions, to qualify for SBA assistance, an organization must be With few exceptions, to qualify for SBA assistance, an organization must be
both a for-profit business and both a for-profit business and ~~smal .69~~small.64
What Is a “Small Business”?
To participate in any of the SBA loan guaranty programs, a business must meet the To participate in any of the SBA loan guaranty programs, a business must meet the ~~Smal~~
Small Business Act’s definition of Business Act’s definition of small business. This is a business that . This is a business that
 is organized for profit;  is organized for profit;
 has a place of business in the United States;  has a place of business in the United States;
 operates primarily within the United States or makes a significant contribution to  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, the U.S. economy through payment of taxes or use of American products,
materials, or labor; materials, or labor;
 is independently owned and operated;  is independently owned and operated;
 is not dominant in its field on a national basis; is not dominant in its field on a national basis;7065 and and
 does not exceed size standards established, and updated  does not exceed size standards established, and updated ~~periodical y~~periodically, by the , by the
SBA. SBA.7166
The business may be a sole proprietorship, partnership, corporation, or any other legal form. The business may be a sole proprietorship, partnership, corporation, or any other legal form.
What Is “Small”?7267
The SBA uses two measures to determine if a business is The SBA uses two measures to determine if a business is ~~smal~~ small: SBA-derived industry specific : 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 businesses participating in the SBA’s 7(a) loan guaranty program are deemed ~~smal~~ small if they either 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 or do not have more than $15 ~~mil ion~~ million in tangible net worth and not more than $5 in tangible net worth and not more than $5 ~~mil ion~~million in 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

~~67 U.S. Congress, Senate Committee on Small Business,~~ ~~Hearing on the Proposed Fiscal Year 1995 Budget for the~~
~~Sm all Business Adm inistration, 103rd Cong., 2nd sess., February 22, 1994, S.Hrg. 103-583 (Washington, DC: GPO,~~
~~1994), p. 20.~~
~~68 SBA,~~ 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.68 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) 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 63 SBA, Fiscal Year 2010 Congressional Budget Justification,, p. 30, at https://www.sba.gov/sites/default/files/p. 30, at https://www.sba.gov/sites/default/files/
Congressional_Budget_Justification_2010.pdf. Congressional_Budget_Justification_2010.pdf.
~~69 T he SBA~~ 64 The SBA provides financial assistance to nonprofit organizations to provide training to small businessprovides financial assistance to nonprofit organizations to provide training to small business ~~owners~~ owners and to and to
provide loans to small businessesprovide loans to small businesses through the SBAthrough the SBA Microloan program. Also, nonprofit child care centers are eligible Microloan program. Also, nonprofit child care centers are eligible
to participate in SBA’s Microloan program. to participate in SBA’s Microloan program.
7065 13 C.F.R. §121.105. 13 C.F.R. §121.105.
7166 P.L. 111-240, the Small Business P.L. 111-240, the Small Business ~~Jobs~~ Jobs Act of 2010, requires the SBAAct of 2010, requires the SBA to conduct a detailedto conduct a detailed review of not less than review of not less than
one-third of the SBA’sone-third of the SBA’s industry sizeindustry size standards every 18 standards every 18 ~~mont hs~~months beginning on the new law’s beginning on the new law’s date of enactment date of enactment
(September 27, 2010) and ensure that each size standard is reviewed(September 27, 2010) and ensure that each size standard is reviewed at least once every five years.at least once every five years.
72 67 For additional information and analysis, see CRS For additional information and analysis, see CRS Report R40860, Report R40860, Small Business Size Standards: A Historical
Analysis of ~~Contem porary~~Contemporary Issues, by Robert Jay Dilger. 68 13 C.F.R. §121.201 and P.L. 111-240, the Small Business Act of 2010, §1116. Alternative Size Standards. Congressional Research Service 18 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options determine if manufacturing and mining companies are small and average annual receipts for most ~~Issues, by Robert Jay Dilger.~~
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~~years before the date of the application. Al of the company’s subsidiaries, parent companies, and~~
~~affiliates are considered in determining if it meets the size standard.73~~
~~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)~~
~~number of employees, (3) asset size, or (4) for refineries, a combination of number of employees~~
~~and barrel per day refining capacity. Historical y, the SBA has used the number of employees to~~
~~determine if manufacturing and mining companies are smal 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.”7469 The SBA also considers the The SBA also considers the
abilityability ~~of smal~~ of small businesses to compete for federal contracting opportunities and, when necessary, businesses to compete for federal contracting opportunities and, when necessary,
several secondary factors “as they are relevant to the industries and the interests of several secondary factors “as they are relevant to the industries and the interests of ~~smal~~
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 trends, and impacts of size standard revisions on ~~smal~~ small businesses.”businesses.”75
70 SBA Loan Guarantee Programs
Overview
The SBA provides loan guarantees for The SBA provides loan guarantees for ~~smal~~ small businesses that cannot obtain credit elsewherebusinesses that cannot obtain credit elsewhere on reasonable terms and conditions. Its . Its
largest loan guaranty programs are the 7(a) loan guaranty largest loan guaranty programs are the 7(a) loan guaranty ~~program,~~program and the 504/CDC loan guaranty the 504/CDC loan guaranty
~~program, and the Microloan program.~~
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%.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~~
~~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~~
~~(such as insurance companies, real estate investment firms, firms involved in financial~~
~~speculation or pyramid sales, and businesses involved in il egal activities) is contained in 13~~
~~C.F.R. §120.110.76 With one exception, nonprofit and charitable organizations are also~~
~~ineligible.77~~
~~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~~
~~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~~ 71 Most of the SBA’s lending programs, including the 7(a) and 504/CDC loan guaranty programs, charge fees to help offset program costs, including costs related to loan defaults. In most instances, limits on these fees are set in statute.72 In addition, lenders are authorized to collect fees from borrowers to offset their administrative expenses. 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. 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 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.73 69 SBA, ~~guaranteed~~

~~73 13 C.F.R. §121.201 and P.L. 111-240, the Small Business Act of 2010, §1116. Alternative Size Standards.~~
~~74 SBA,~~ Office of Government Contracting and BusinessOffice of Government Contracting and Business Development, “SBA SizeDevelopment, “SBA Size ~~Standards~~ Standards Methodology,” April Methodology,” April
2019, p. 29, at https://www.sba.gov/document/support2019, p. 29, at https://www.sba.gov/document/support —size-standards-methodology-white-paper (hereinafter cited as —size-standards-methodology-white-paper (hereinafter cited as
SBA,SBA, “SBA Size“SBA Size ~~Standards~~ Standards Methodology”). Methodology”).
7570 SBA, SBA, ~~“SBA Size Standards Methodology,” p. 1.~~
~~76 T itle 13 of the Code of Federal Regulations can be viewed at https://www.gpo.gov/fdsys/browse/~~
~~collectionCfr.action?selectedYearFrom=2016&go=Go.~~
~~77 P.L. 105-135, the Small Business~~ “SBA Size Standards Methodology,” p. 1. 71 In the event of a default, the 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 offset. Most types of businesses are eligible for loan guarantees. A list of ineligible businesses (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 C.F.R. §120.110. With one exception, nonprofit and charitable organizations are also ineligible. P.L. 105-135, the Small Business Reauthorization Act of 1997, expanded the SBA’s Microloan program’s eligibility Reauthorization Act of 1997, expanded the SBA’s Microloan program’s eligibility
to include borrowersto include borrowers establishing a nonprofit child care business. establishing a nonprofit child care business.
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72 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 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 guaranteed portion in excess of $1 ~~mil ion~~million can be charged an additional fee not to exceed 0.25% can be charged an additional fee not to exceed 0.25%
~~of the guaranteed amount in excess of $1 mil ion.~~
~~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.78 In addition, lenders are authorized to collect fees~~
~~from borrowers to offset their administrative expenses.~~
~~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.~~
~~In an effort to assist smal 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~~
~~made to smal 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.79~~
~~In an effort to assist smal~~ of the guaranteed amount in excess of $1 million. 73 SBA, “SBA Information Notice: 7(a) Fees Effective on October 1, 2018,” at https://www.sba.gov/document/ Congressional Research Service 19 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options In an effort to assist small businesses adversely affected by COVID-19, the CARES Act businesses adversely affected by COVID-19, the CARES Act
permanently required the SBA to waive the up-front, one-time guaranty fee on permanently required the SBA to waive the up-front, one-time guaranty fee on al all veteran loans veteran loans
under the 7(a) SBAExpress program.under the 7(a) SBAExpress program.8074 In addition, P.L. 116-260, the Economic Aid to Hard-Hit In addition, P.L. 116-260, the Economic Aid to Hard-Hit
~~Smal~~ Small Businesses, Nonprofits, and Venues Act (Division N, Title III of the Consolidated Businesses, Nonprofits, and Venues Act (Division N, Title III of the Consolidated
Appropriations Act of 2021), waived SBA fees in the 7(a) and 504/CDC loan guarantee programs Appropriations Act of 2021), waived SBA fees in the 7(a) and 504/CDC loan guarantee programs
in FY2021. in FY2021.
The 7(a) Loan Guaranty ~~Program81~~Program75
The 7(a) loan guaranty program is named after the section of the The 7(a) loan guaranty program is named after the section of the ~~Smal~~ Small Business Act that Business Act that
authorizes it. The loans are made by SBAauthorizes it. The loans are made by SBA lending partners (mostly banks but also some other lending partners (mostly banks but also some other
financial institutions) and financial institutions) and ~~partial y~~partially guaranteed by the SBA. Borrowers may use 7(a) loan proceeds 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 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 instal fixed assets;~~

~~78 15 U.S.C. §636(a)(23)(a).~~
~~79 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.~~
~~80 T he SBA~~ business.76 Lenders are permitted to charge borrowers “a reasonable fixed interest rate” or, with the SBA’s approval, a variable interest rate.77 In FY2021, the SBA approved 51,853 7(a) loans totaling $36.8 billion.78 In FY2021, there were 1,738 active lending partners providing 7(a) loans.79 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.80 information-notice-5000-180010-7a-fees-effective-october-1-2018. 74 The SBA had waived the up-front, one-time guaranty fee on all veteran loans under the 7(a) SBAExpress program 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,permanent, except during any upcoming fiscal year for which the President’s budget, submitted to Congress, includessubmitted to Congress, includes a a
cost for the 7(a) program, in its entirety, that is above zero. cost for the 7(a) program, in its entirety, that is above zero. ~~T he SBA waived~~ The SBA waived the fee, pursuant the fee, pursuant ~~t o~~to P.L. 114-38, in 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.
8175 For further information and analysis, see CRS For further information and analysis, see CRS Report R41146, Report R41146, Small Business Administration 7(a) Loan Guaranty
Program ~~, by Robert Jay Dilger.~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

~~ purchase inventory, supplies, and raw materials;~~
~~ finance working capital; and~~
~~ refinance certain outstanding debts.82~~
~~Lenders are permitted to charge borrowers fees to recoup specified expenses and are al owed to~~
~~charge borrowers “a reasonable fixed interest rate” or, with the SBA’s approval, a variable~~
~~interest rate.83 The SBA uses a multistep formula to determine the maximum al owable fixed~~
~~interest rate for al 7(a) loans (with the exception of the Export Working Capital Program and~~
~~Community Advantage loans) and periodical y publishes that rate and the maximum al owable~~
~~variable interest rate in the Federal Register.84~~
~~In September 2021, the maximum al owable 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 up to and including $250,000; and 8.25% for loans greater than $250,000.85~~
~~Maximum interest rates al owed 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,~~
~~which is a weighted average of rates that the federal government pays for loans with maturities~~
~~similar to the guaranteed loan. The al owed 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~~
~~years or more).86 The adjustment period can be no more than monthly and cannot change over the~~
~~life of the loan.~~
~~In FY2020, the SBA approved 42,302 7(a) loans, totaling $22.6 bil ion.87 In FY2019, there were~~
~~1,708 active lending partners providing 7(a) loans.~~
~~As mentioned, the CARES Act appropriated $17 bil ion 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.88~~
~~Of this amount, $7.1 bil ion was spent and the remainder was rescinded by P.L. 116-260, the~~
~~Economic Aid to Hard-Hit Smal Businesses, Nonprofits, and Venues Act (Division N, Title III of~~
~~the Consolidated Appropriations Act of 2021).89~~

~~82 13 C.F.R. §120.120.~~
~~83 13 C.F.R. §120.213.~~
~~84 SBA, “Maximum Allowable~~ , by Robert Jay Dilger. 76 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. See 13 C.F.R. §120.120.. 77 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 Community Advantage loans) and periodically publishes that rate and the maximum allowable variable interest rate in the Federal Register. See 13 C.F.R. §120.213; and SBA, “Maximum Allowable 7(a) Fixed Interest Rates,” 837(a) Fixed Interest Rates,” 83 Federal Register 55478, November 6, 2018. For the 55478, November 6, 2018. For the
previously previously ~~used~~ used fixed interest rates formula, see SBA,fixed interest rates formula, see SBA, “ “Business Loan Program Maximum AllowableBusiness Loan Program Maximum Allowable ~~Fixed~~ Fixed Rate,” 74 Rate,” 74
Federal ~~Register~~ Register 50263-50264, September 30, 2009.50263-50264, September 30, 2009. ~~T he~~ The SBA has a separate formula for Community Advantage loan 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.~~
~~85 Colson Services Corp., “SBA Base Rates,” New York, at https://info.bnymellon.com/colson-sba-base-rates.html.~~
~~86 SBA, “SOP 50 10 5(K): Lender and Development Company Loan Programs,” (effective April 1, 2019), p. 153, at~~
charged for reasonableness. 78 SBA, “Small Business Administration loan program performance: Table 2 – Gross Approval Amount by Program and Table 3 – Number of Approved Loans by Program,” effective September 30, 2021, at https://www.sba.gov/https://www.sba.gov/document/report-small-business-administration-loan-program-performance. 79 SBA, FY2023 Congressional Budget Justification FY2021 Annual Performance Report, p. 32, at ~~document/sop-50-10-5-lender-development-company-loan-programs.~~
~~87 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.~~
~~88 Payments for loans in a regular servicing status begin~~ https://www.sba.gov/document/report-congressional-budget-justification-annual-performance-report (hereinafter SBA, FY2023 Congressional Budget Justification FY2021 Annual Performance Report). 80 Payments for loans in a regular servicing status begin on the next payment due. Payments for loans in deferment on the next payment due. Payments for loans in deferment
beginbegin on the next payment due followingon the next payment due following the deferment period. Congressional Research Service 20 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options Of this amount, $7.1 billion was spent and the remainder was rescinded by 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).81 P.L. 116-260 appropriated $3.5 billion to resume SBA’s monthly debt relief ~~the deferment period.~~
~~89 SBA, “SBA Extends Crucial Lifeline to Borrowers Impacted by COVID-19 with Debt Relief,” January 10, 2021, at~~
~~https://www.sba.gov/article/2021/jan/10/sba-extends-crucial-lifeline-borrowers-impacted-covid-19-debt-relief.~~
~~P.L. 116-260 rescinded $146.5 billion in unobligated balances in the SBA’s business loan’s program account, which~~
~~included PPP and debt relief funding.~~
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~~P.L. 116-260 appropriated $3.5 bil ion to resume SBA’s monthly debt relief~~ payments, capped at payments, capped at
$9,000 per month per borrower. The SBA is authorized to provide up to an additional$9,000 per month per borrower. The SBA is authorized to provide up to an additional eight eight
monthly payments, depending on the availabilitymonthly payments, depending on the availability of funds, when the loan was disbursed, the type of funds, when the loan was disbursed, the type
of loan received, and the business’s industry. of loan received, and the business’s industry.
Because the SBA Because the SBA determined that the $3.5 determined that the $3.5 ~~bil ion~~ billion provided was insufficient to make the provided was insufficient to make the
maximum number of monthly payments authorized in P.L. 116-260, the SBA announced that it maximum number of monthly payments authorized in P.L. 116-260, the SBA announced that it
would pay two additional monthly payments on 7(a) and 504/CDC loans that were in repayment would pay two additional monthly payments on 7(a) and 504/CDC loans that were in repayment
before March 27, 2020, starting with the next payment due on or after February 1, 2021. After the before March 27, 2020, starting with the next payment due on or after February 1, 2021. After the
first two monthly payments are provided, businesses with an SBA Community Advantage loan, first two monthly payments are provided, businesses with an SBA Community Advantage loan,
Microloan, or operating in specified Microloan, or operating in specified ~~economical y~~economically hard-hit industries hard-hit industries ~~wil~~ will receive an additional receive an additional
three monthly payments. Loans approved from February 1, 2021, through September 30, 2021, three monthly payments. Loans approved from February 1, 2021, through September 30, 2021,
~~wil~~ will receive three monthly payments beginning with the first payment due.receive three monthly payments beginning with the first payment due.9082
P.L. 116-260 also waived SBA P.L. 116-260 also waived SBA fees for the 7(a) and 504/CDC loan guarantee programs in fees for the 7(a) and 504/CDC loan guarantee programs in
FY2021 and increased the 7(a) program’s current guaranty rate from 85% for loans of $150,000 FY2021 and increased 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 or less and 75% for loans greater than $150,000 (up to a maximum guaranty of $3.75 ~~mil ion—~~
million—75% of $5 75% of $5 ~~mil ion~~million) to 90% through October 1, 2021.) to 90% through October 1, 2021.
The 504/CDC Loan Guaranty ~~Program91~~Program83
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.9284 The The ~~smal~~ small business must contribute at least 10% as equity. business must contribute at least 10% as equity.
To participate in the program, To participate in the program, ~~smal~~ small businesses cannot exceed $15 businesses cannot exceed $15 ~~mil ion~~million in tangible net worth in tangible net worth
and cannot have average net income of more than $5 and cannot have average net income of more than $5 ~~mil ion~~ million for two full fiscal years before the 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 smal manufacturers) or meet an alternative job creation standard if they~~
~~meet any one of 15 community or public policy goals.~~
~~Maximum 504/CDC participation in a single project is $5 mil ion and $5.5 mil ion for~~
~~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.~~
~~Unguaranteed financing may have a shorter term. The maximum fixed interest rate al owed is~~

~~90 SBA,~~ 81 SBA, “SBA Extends Crucial Lifeline to Borrowers Impacted by COVID-19 with Debt Relief,” January 10, 2021, at https://www.sba.gov/article/2021/jan/10/sba-extends-crucial-lifeline-borrowers-impacted-covid-19-debt-relief. P.L. 116-260 rescinded $146.5 billion in unobligated balances in the SBA’s business loan’s program account, which included PPP and debt relief funding. 82 SBA, “Adjustment to Number of Months of Section 1112 Payments in the 7(a), 504 and Microloan Programs Due to “Adjustment to Number of Months of Section 1112 Payments in the 7(a), 504 and Microloan Programs Due to
Insufficiency of Funds,”Insufficiency of Funds,” ~~SBA~~ SBA Procedural Notice, 5000-20095, February 16, 2021, at https://www.sba.gov/document/Procedural Notice, 5000-20095, February 16, 2021, at https://www.sba.gov/document/
procedural-notice-5000-20095-adjustmentprocedural-notice-5000-20095-adjustment -number-months-section-1112-payments-7a-504-microloan-programs-due--number-months-section-1112-payments-7a-504-microloan-programs-due-
insufficiency-funds. insufficiency-funds.
Economically hard-hit industries are defined as Economically hard-hit industries are defined as those assignedthose assigned a North American Industry Classification System a North American Industry Classification System
(NAICS)(NAICS) code beginningcode beginning with 61, 71, 72, 213, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812 (food service 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).and accommodation; arts, entertainment and recreation; education; and laundry and personal care services).
91 83 For further information and analysis, see CRS For further information and analysis, see CRS Report R41184, Report R41184, Small Business Administration 504/CDC Loan
Guaranty Program , by Robert Jay Dilger. , by Robert Jay Dilger.
92 84 A debenture is a bond that is not secured A debenture is a bond that is not secured by a lien on specific collateral. by a lien on specific collateral.
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COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options

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. 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 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 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~~FY2022), ),
 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. (0.~~4517~~2475% for regular 504/CDC loans and 0.% for regular 504/CDC loans and 0.~~4865~~2590% for 504/CDC debt refinance % for 504/CDC debt refinance
loans in loans in ~~FY2021~~FY2022), ),
 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 position to the SBA and the loan was approved after September 30, 1996).and the loan was approved after September 30, 1996).
In addition, CDCs are In addition, CDCs are ~~al owed~~allowed to charge borrowers a processing (or packaging) fee of up to 1.5% 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 In ~~FY2020~~FY2021, the SBA, the SBA approved approved ~~7,119~~9,676 504/CDC loans 504/CDC loans, totaling over $ totaling over $~~5.8 bil ion.93 In FY2019, 212~~
8.2 billion.85 In FY2020, 208 CDCs provided at least one 504/CDC loan.CDCs provided at least one 504/CDC loan.9486
As mentioned, the CARES Act appropriated $17 As mentioned, the CARES Act appropriated $17 ~~bil ion~~ billion to provide six monthly debt relief to provide six monthly debt relief
payments for 7(a), 504/CDC, and Microloan borrowers with loans that were fully disbursed prior payments for 7(a), 504/CDC, and Microloan borrowers with loans that were fully disbursed prior
to September 27, 2020. P.L. 116-260 appropriated $3.5 to September 27, 2020. P.L. 116-260 appropriated $3.5 ~~bil ion~~billion to resume up to eight monthly debt to resume up to eight monthly debt
relief payments, depending on the availabilityrelief payments, depending on the availability of funds, when the loan was disbursed, the type of of funds, when the loan was disbursed, the type of
loan received, and the business’s industry. The SBA announced that the $3.5 loan received, and the business’s industry. The SBA announced that the $3.5 ~~bil ion~~ billion appropriation appropriation
would enable the agency to provide two additional monthly payments on 7(a) and 504/CDC loans would enable the agency to provide two additional monthly payments on 7(a) and 504/CDC loans
that were in repayment before March 27, 2020, starting with the next payment due on or after that were in repayment before March 27, 2020, starting with the next payment due on or after
February 1, 2021. After the first two monthly payments are provided, businesses with an SBA February 1, 2021. After the first two monthly payments are provided, businesses with an SBA
Community Advantage loan, Microloan, or operating in specified Community Advantage loan, Microloan, or operating in specified ~~economical y~~economically hard-hit hard-hit
industries industries ~~wil~~ will receive an additionalreceive an additional three monthly payments. Loans approved from February 1, three monthly payments. Loans approved from February 1,
2021, through September 30, 2021, 2021, through September 30, 2021, ~~wil~~ will receive three monthly payments beginning with the first receive three monthly payments beginning with the first
payment due.payment due.9587
In addition, in an effort to assist In addition, in an effort to assist ~~smal~~ small businesses adversely affected by COVID-19, P.L. 116-260 businesses adversely affected by COVID-19, P.L. 116-260
waived SBAwaived SBA fees in the 7(a) and 504/CDC loan guarantee programs in FY2021. 85 SBA, “SBA Lending Statistics for Major Programs (as of 9/30/2021),” at https://www.sba.gov/document/report-2021-weekly-lending-reports. 86 SBA, FY2022 Congressional Justification and FY2020 Annual Performance Report, p. 40. 87 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 al ow,~~
~~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~~

~~93 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.~~
~~94 SBA, FY2021 Congressional Budget Justification and FY2019 Annual Performance Report, pp. 41, 166.~~
~~95 SBA,~~ “Adjustment to Number of Months of Section 1112 Payments in the 7(a), 504 and Microloan Programs Due to “Adjustment to Number of Months of Section 1112 Payments in the 7(a), 504 and Microloan Programs Due to
Insufficiency of Funds,”Insufficiency of Funds,” ~~SBA~~ SBA Procedural Notice, 5000-20095, February 16, 2021, at https://www.sba.gov/document/Procedural Notice, 5000-20095, February 16, 2021, at https://www.sba.gov/document/
procedural-notice-5000-20095-adjustmentprocedural-notice-5000-20095-adjustment -number-months-section-1112-payments-7a-504-microloan-programs-due--number-months-section-1112-payments-7a-504-microloan-programs-due-
insufficiency-funds. insufficiency-funds.
Congressional Research Service Congressional Research Service
2522 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options The Microloan Program88 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 child care centers. Microloan lenders also provide marketing, management, and technical assistance to Microloan borrowers and potential borrowers. 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 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 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. 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 seven years. 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 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 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 adjusted as necessary (called

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

~~504/CDC program.96 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.97 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.98 Specifical y, each CDC is~~
~~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.~~
~~This limitation may be waived if the SBA determines that the refinance loan is needed for good~~
~~cause.~~
~~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~~
~~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~~
~~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~~
~~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.~~
~~In FY2020, the SBA approved 386 504/CDC refinancing loans totaling $372.6 mil ion.99~~
~~The P.L. 116-260-authorized 504/CDC loan guarantee fee waiver and debt relief payments also~~
~~apply to the 504/CDC refinancing program.~~
~~The Microloan Program100~~
~~The Microloan program provides direct loans to qualified nonprofit intermediary Microloan~~
~~lenders that, in turn, provide “microloans” of up to $50,000 to smal businesses and nonprofit~~
~~child care centers. Microloan lenders also provide marketing, management, and technical~~
~~assistance to Microloan borrowers and potential borrowers.~~

~~96 P.L. 111-5, the American Recovery and Reinvestment Act of 2009 (ARRA). T he specified circumstances include the~~
~~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,~~
~~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~~
~~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 o ne year preceding the date of refinancing; and~~
~~the financing provided will have better terms or rate of interest than the existing indebtedness.~~
~~97 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.~~
~~98 P.L. 114-113, the Consolidated Appropriations Act, 2016. For additional information and analysis, see CRS Report~~
~~R41184, Sm all Business Adm inistration 504/CDC Loan Guaranty Program , by Robert Jay Dilger.~~
~~99 SBA, “Small Business Administration loan program performance,” June 30 , 2021, at~~
~~https://www.sba.gov/document/report -small-business-administration-loan-program-performance.~~
~~100 For further information and analysis, see CRS Report R41057, Small Business Administration Microloan Program ,~~
~~by Robert Jay Dilger.~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

~~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 Smal Business~~
~~Reauthorization Act of 1997. Although the program is open to al smal businesses, it targets new~~
~~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~~
~~areas who general y do not qualify for conventional loans or other, larger SBA guaranteed loans.~~
~~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~~
~~seven years.~~
~~The SBA charges intermediaries an interest rate that is based on the five-year Treasury rate,~~
~~adjusted to the nearest one-eighth percent (cal ed 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~~
~~intermediary maintains a historic portfolio of Microloans averaging $10,000 or less. The Base~~
~~Rate, after adjustment, is cal ed the Intermediary’s Cost of Funds. The Intermediary’s Cost of~~
~~Funds is initial y calculated one year from the date of the note and is reviewed annual y and~~
~~adjusted as necessary (cal ed~~ recasting). The interest rate cannot be less than zero. 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
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 borrower and the intermediary and ~~typical y~~typically range from 6% to 9%. 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 In ~~FY2020, 5,890 smal businesses received a Microloan, totaling $85 mil ion.101~~FY2021, microloan intermediaries provided 4,510 loans to small businesses totaling $74.6 million. The average Microloan amount was $16,557.89 ~~The average~~
~~Microloan was $14,434 and the average interest rate was 6.5%.102~~
As mentioned, the CARES Act appropriated $17 As mentioned, the CARES Act appropriated $17 ~~bil ion~~ billion to provide six monthly debt relief to provide six monthly debt relief
payments for 7(a), 504/CDC, and Microloan borrowers with loans that were fully disbursed prior payments for 7(a), 504/CDC, and Microloan borrowers with loans that were fully disbursed prior
to September 27, 2020. P.L. 116-260 appropriated $3.5 to September 27, 2020. P.L. 116-260 appropriated $3.5 ~~bil ion~~billion to resume up to eight monthly debt to resume up to eight monthly debt
relief payments, depending on the availabilityrelief payments, depending on the availability of funds, when the loan was disbursed, the type of of funds, when the loan was disbursed, the type of
loan received, and the business’s industry. The SBA has announced that the $3.5 loan received, and the business’s industry. The SBA has announced that the $3.5 ~~bil ion~~billion
appropriation appropriation ~~wil~~ will enable the agency to provide two additional monthly payments on 7(a) and enable the agency to provide two additional monthly payments on 7(a) and
504/CDC loans that were in repayment before March 27, 2020, starting with the next payment 504/CDC loans that were in repayment before March 27, 2020, starting with the next payment
due on or after February 1, 2021. After the first two monthly payments are provided, businesses due on or after February 1, 2021. After the first two monthly payments are provided, businesses
with an SBAwith an SBA Community Advantage loan, Microloan, or operating in specified Community Advantage loan, Microloan, or operating in specified ~~economical y~~economically
hard-hit industries hard-hit industries ~~wil~~ will receive an additionalreceive an additional three monthly payments. Loans approved from three monthly payments. Loans approved from
~~February 1, 2021, through September 30, 2021, wil receive three monthly payments beginning~~
~~with the first payment due.103~~

~~101 SBA, “Nationwide Microloan Report, October 1, 2019 through September 30, 2020,” November 18, 2020 .~~
~~102 SBA, “Nationwide Microloan Report, October 1, 2019 through September 30, 2020,” November 18, 2020.~~
~~103 SBA, “Adjustment to Number of Months of Section 1112 Payments in the 7(a), 504 and Microloan Programs Due to~~
~~Insufficiency of Funds,” SBA Procedural Notice, 5000-20095, February 16, 2021, at https://www.sba.gov/document/~~
~~procedural-notice-5000-20095-adjustment -number-months-section-1112-payments-7a-504-microloan-programs-due-~~
~~insufficiency-funds.~~
~~Congressional Research Service~~
27 88 For further information and analysis, see CRS Report R41057, Small Business Administration Microloan Program, by Robert Jay Dilger. 89 SBA, “Nationwide Loan Report, October 1, 2020 through September 30, 2021,” December 13, 2021. Congressional Research Service 23

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

February 1, 2021, through September 30, 2021, will receive three monthly payments beginning with the first payment due.90 SBA Loan Enhancements to Address the Great Recession
Many of the proposals under consideration to address the capital needs of Many of the proposals under consideration to address the capital needs of ~~smal~~ small businesses 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,
~~especial y~~especially physical distancing and the resulting decrease in consumer spending, there is an added physical distancing and the resulting decrease in consumer spending, there is an added
emphasis today on SBAemphasis today on SBA loan deferrals, loan forgiveness, and expanded eligibility,loan deferrals, loan forgiveness, and expanded eligibility, including, for 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 (ARRA), provided the SBA an additional $730 ~~mil ion,~~ million, including $375 including $375 ~~mil ion~~ million to temporarily to temporarily
subsidize the 7(a) and 504/CDC loan guaranty programs’ fees ($299 subsidize the 7(a) and 504/CDC loan guaranty programs’ fees ($299 ~~mil ion~~million) and to temporarily ) and to temporarily
increase the 7(a) program’s maximum loan guaranty percentage to 90% ($76 increase the 7(a) program’s maximum loan guaranty percentage to 90% ($76 ~~mil ion).104~~million).91 ARRA ARRA
also included provisions designed to increase the amount of leverage issued under the SBA’s also included provisions designed to increase the amount of leverage issued under the SBA’s
~~Smal~~ Small Business Investment Company (SBIC venture capital) program.Business Investment Company (SBIC venture capital) program.~~105~~92 SBICs provide loans SBICs provide loans
and equity investments in and equity investments in ~~smal~~ small businesses. businesses.
ARRA’s funding for the fee subsidies and 90% maximum loan guaranty percentage was about to 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 be exhausted in November 2009, when Congress passed the first of six laws ~~to provide additional~~
that provided additional funding to extend the loan subsidies and 90% maximum loan guaranty percentage.funding to extend the loan subsidies and 90% maximum loan guaranty percentage.93 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.94 90 SBA, “Adjustment to Number of Months of Section 1112 Payments in the 7(a), 504 and Microloan Programs Due to Insufficiency of Funds,” SBA Procedural Notice, 5000-20095, February 16, 2021, at https://www.sba.gov/document/procedural-notice-5000-20095-adjustment-number-months-section-1112-payments-7a-504-microloan-programs-due-insufficiency-funds. 91 SBA, “Recovery Act Agency Plan,” May 15, 2009, at https://www.sba.gov/sites/default/files/recovery_act_reports/sba_recovery_act_plan.pdf. 92 For additional information and analysis, see CRS Report R41456, SBA Small Business Investment Company Program, by Robert Jay Dilger. 93
 P.L. 111-118, the Department of Defense Appropriations Act, 2010, provided the P.L. 111-118, the Department of Defense Appropriations Act, 2010, provided the
SBA $125 SBA $125 ~~mil ion~~ million to continue the fee subsidies and 90% maximum loan guaranty to continue the fee subsidies and 90% maximum loan guaranty
percentage through February 28, 2010. 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
~~mil ion~~ million to continue the fee subsidies and 90% maximum loan guaranty 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 P.L. 111-150, an act to extend the ~~Smal~~ Small Business Loan Guarantee Program, and Business Loan Guarantee Program, and
for other purposes, provided the SBA authority to reprogram $40 for other purposes, provided the SBA authority to reprogram $40 ~~mil ion~~million in 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
~~mil ion~~ million to continue the SBA’s fee subsidies and 90% maximum loan guaranty 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 P.L. 111-240, the ~~Smal~~ Small Business Jobs Act of 2010, provided $505 Business Jobs Act of 2010, provided $505 ~~mil ion~~ million (plus (plus
an additionalan additional ~~$5 mil ion~~ $5 million for administrative expenses) to continue the SBA’s fee 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 SBAExtensions Act, 2011, authorized the SBA to use funds provided under the to use funds provided under the ~~Smal~~
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.

~~104 SBA, “Recovery Act Agency Plan,” May 15, 2009, at https://www.sba.gov/sites/default/files/recovery_act_reports/~~
~~sba_recovery_act_plan.pdf.~~
~~105 For additional information and analysis, see CRS Report R41456,~~ ~~SBA Small Business Investment Company~~
~~Program~~ ~~, by Robert Jay Dilger.~~
~~Congressional Research Service~~
28 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 24

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

~~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.106~~
In addition to providing additional In addition to providing additional funding funding ~~for~~to continue the SBA’s fee subsidies, P.L. 111-240, fee subsidies, P.L. 111-240, the Small Business Jobs Act of 2010, among other ~~among other~~
provisions, provisions,
 increased the 7(a) program’s gross loan limit from $2  increased the 7(a) program’s gross loan limit from $2 ~~mil ion to $5 mil ion;~~
million to $5 million;  increased the 504/CDC Program’s loan limits from $1.5  increased the 504/CDC Program’s loan limits from $1.5 ~~mil ion to $5 mil ion~~ million to $5 million for for
“regular” borrowers, from $2 “regular” borrowers, from $2 ~~mil ion to $5 mil ion~~ million to $5 million if the loan proceeds are if the loan proceeds are
directed toward one or more specified public policy goals, and from $4 directed toward one or more specified public policy goals, and from $4 ~~mil ion~~ million to to
$5.5 $5.5 ~~mil ion~~ million for manufacturers; for manufacturers;
 temporarily expanded for two years the eligibility  temporarily expanded for two years the eligibility for low-interest refinancing 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 $350,000 to $1 ~~mil ion~~million (expired on September 26, 2011); (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 first year in the program from $3.5 ~~mil ion~~million to $5 to $5 ~~mil ion~~million; ;
 authorized the U.S. Treasury to make up to $30  authorized the U.S. Treasury to make up to $30 ~~bil ion~~billion of capital investments for of capital investments for
a a ~~Smal~~ Small Business Lending Fund ($4 Business Lending Fund ($4 ~~bil ion~~billion was issued); was issued);~~107~~95
 authorized to be appropriated $1.5  authorized to be appropriated $1.5 ~~bil ion~~ billion for the State for the State ~~Smal~~ Small Business Credit Business Credit
Initiative Program; Initiative Program;~~108~~96
 authorized a three-year Intermediary Lending Pilot Program to  authorized a three-year Intermediary Lending Pilot Program to ~~al ow~~allow the SBA the SBA to to
make direct loans to not more than 20 eligible make direct loans to not more than 20 eligible nonprofit lending intermediaries nonprofit lending intermediaries
each year totaling not more than $20 each year totaling not more than $20 ~~mil ion~~million. The intermediaries, in turn, would . The intermediaries, in turn, would
be be ~~al owed~~allowed to make loans to new or growing to make loans to new or growing ~~smal~~ small businesses, not to exceed 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 to enable more ~~smal~~ small businesses to qualify for assistance;businesses to qualify for assistance;~~109~~97 and and
 provided  provided ~~smal~~ small businesses with about $12 businesses with about $12 ~~bil ion~~billion in tax relief. in tax relief.~~110~~

~~106 SBA, “Jobs Act Supported More T han $12 Billion in SBA Lending to Small Businesses in Just T hree Months,”~~
~~January 3, 2011, at https://www.sba.gov/content/jobs-act-supported-more-12-billion-sba-lending-small-businesses-just-~~
~~three-months.~~
~~107~~98 There were also efforts during the 111th and 112th Congresses to require the SBA to reinstate direct lending to small businesses H.R. 3007 (see H.R. 3854, the Small Business Financing and 95 For additional information and analysis, see CRS For additional information and analysis, see CRS Report R42045, Report R42045, The Small Business Lending Fund, by Robert Jay , by Robert Jay
Dilger. Dilger.
~~108~~96 For additional information and analysis, see CRS For additional information and analysis, see CRS Report R42581, Report R42581, State Small Business Credit Initiative:
~~Im plem entation~~Implementation and Funding Issues, by Robert Jay Dilger. , by Robert Jay Dilger.
~~109~~ 97 P.L. 111-240, the Small Business P.L. 111-240, the Small Business ~~Jobs~~ Jobs Act of 2010, established the following interim alternative size standard for Act of 2010, established the following interim alternative size standard for
both the 7(a) and 504/CDC programs: the businessboth the 7(a) and 504/CDC programs: the business ~~qualifies~~ qualifies as small if it does not have a tangible net worth in excess as small if it does not have a tangible net worth in excess
of $15 million and doesof $15 million and does not have an average net income after federal taxes (not have an average net income after federal taxes (~~exc luding~~ excluding any carry-over losses) in excess any carry-over losses) in excess
of $5 million for two fullof $5 million for two full fiscal years before the date of applicationfiscal years before the date of application . .
~~110~~98 P.L. 111-240 raised the exclusion of gains P.L. 111-240 raised the exclusion of gains on the sale or exchange of qualifiedon the sale or exchange of qualified small businesssmall business stock from the federal 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 qualifiedthe end of 2010; increased the deduction for qualified ~~start~~ start-up expenditures from $5,000 to $10,000 in 2010, and raised -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 resultingreportable transactions based on resulting tax benefits; allowedtax benefits; allowed general businessgeneral business credits of eligiblecredits of eligible small businessessmall businesses for for
2010 to be carried back five years; exempted general business2010 to be carried back five years; exempted general business credits of eligiblecredits of eligible small businessessmall businesses in 2010 from the in 2010 from the
alternative minimum tax; allowed a temporary reduction in the recognition period for builtalternative minimum tax; allowed a temporary reduction in the recognition period for built ~~-in gains tax; increased~~
~~Congressional Research Service~~
29

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

~~There were also efforts during the 111th and 112th Congresses to require the SBA to reinstate~~
~~direct lending to smal businesses.~~
~~During the 111th Congress~~
~~ H.R. 3854, the Smal 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~~
~~authorized a temporary SBA direct lending program.111~~
~~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 Smal Business, would have~~
~~authorized the SBA to provide direct loans to smal businesses that have been in~~
~~operation as a smal 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.~~
 -in gains tax; increased 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 telephones and similar telecommunications equipment from listed property so their cost can be deducted or depreciated like other business property. Congressional Research Service 25 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options Investment Act of 2009, , the Give Credit to Main Street Act of 2011, and H.R. 5835, the Veterans H.R. 5835, the Veterans Access to Capital Act of 2012)~~Access to Capital Act of 2012, introduced on May 18,~~
~~2012, and referred to the House Committee on Smal Business, w ould 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 smal 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 government had to take decisive action to address the capital needs of ~~smal~~ small businesses, primarily 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 Congress considers proposals to assist ~~smal~~ small businesses adversely affected by the COVID-19 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 additional resources to assist ~~smal~~ small businesses in acquiring capital necessary to start, continue, or businesses in acquiring capital necessary to start, continue, or
expand operations with the expectation that in so doing small businesses expand operations with the expectation that in so doing small businesses ~~wil~~ will create jobs. Others 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 regulation, and federal fiscal restraint as the best means to help ~~smal~~ small businesses further economic 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 littlethere has been relatively little concern expressed about federal fiscal restraint during the current 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 impact and which types of ~~smal~~ small businesses and businesses and ~~smal~~ small business owners should be helped the most. 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

~~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~~
~~telephones and similar telecommunications equipment from listed property so their cost can be deducted or depreciated~~
~~like other business property.~~
~~111 H.R. 3854, the Small Business Financing and Investment Act of 2009 (111th Congress), §111. Capital Backstop~~
~~Program.~~
~~Congressional Research Service~~
30

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

~~guaranty percentages, and expanding eligibility~~ guaranty percentages, and expanding eligibility criteria are being considered again. These criteria are being considered again. These
changes had a demonstrated impact on changes had a demonstrated impact on ~~smal~~ small business lending during and immediatelybusiness lending during and immediately following 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...requirements and program risk... . Without adequate training and supervision, the increased 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.”~~112~~99
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:
With With ~~loan volume steadily increasing for the past six quarters, the U.S. Small Business~~
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.~~113~~100
The data demonstrate that ARRA and the The data demonstrate that ARRA and the ~~Smal~~ Small Business Jobs Act of 2010 helped Business Jobs Act of 2010 helped ~~smal~~
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
99 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. 100 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. Congressional Research Service 26 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options (e.g., loan volume, number of small ~~(e.g., loan volume, number of smal~~ businesses served, default rates) as opposed to program businesses served, default rates) as opposed to program
outcomes (e.g., outcomes (e.g., ~~smal~~ small business solvency, job creation, wealth generation) it is difficult to knowbusiness solvency, job creation, wealth generation) it is difficult to know
how effective these programs were in assisting how effective these programs were in assisting ~~smal~~ small businesses or if other approaches might businesses or if other approaches might
have produced better (or different) results. have produced better (or different) results.
Among the lessons learned from earlier Among the lessons learned from earlier ~~smal~~ small business stimulus packages is that additional 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. Additionalcould help Congress in its oversight responsibilities. Additional funding for the SBAfunding for the SBA OIG to OIG to
conduct investigations of conduct investigations of ~~potential y~~potentially fraudulent behaviors by borrowers and lenders could also fraudulent behaviors by borrowers and lenders could also
prove useful in deterring fraud, waste, and abuse.prove useful in deterring fraud, waste, and abuse.~~114~~101 In addition, requiring the SBA to In addition, requiring the SBA to ~~periodical y~~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.~~

~~112 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.~~
~~113 SBA, “ SBA Loan Dollars in FY 2012 Reach Second Largest T otal 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.~~
~~114 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~~
~~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?~~
~~sortBy=Effective%20Date&search=&documentType=Report&program=Credit/Capital&documentActivity=Audit/~~
~~evaluation&office=7392&page=1.~~
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being spent both efficiently and effectively. SBA Entrepreneurial Development ~~Programs115~~Programs102
Overview
The SBA has provided technical and managerial assistance to The SBA has provided technical and managerial assistance to ~~smal~~ small businesses since it began businesses since it began
operations in 1953. operations in 1953. ~~Initial y~~Initially, the SBA provided its own , the SBA provided its own ~~smal~~ small business management and technical 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 increased in recent years, primarily because these programs are viewed as a means to assist ~~smal~~
small businesses create and retain jobs. businesses create and retain jobs. ~~These programs received $239 mil ion in FY2020 and $245.5~~
~~mil ion FY2021. These funds supported~~In FY2022, these programs received $256.6 million in appropriations. These funds support about 14,000 resource partners, including about 14,000 resource partners, including 6362 lead lead ~~smal~~
small business development centers (SBDCs) and nearly 900 SBDC local outreach locations, business development centers (SBDCs) and nearly 900 SBDC local outreach locations, ~~over 200~~146
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.~~116~~
103 The SBA reports that nearly a The SBA reports that nearly a ~~mil ion~~ million aspiring entrepreneurs and aspiring entrepreneurs and ~~smal~~ small business owners receive business owners receive
mentoring and training from an SBA-supported resource partner each year. Most of this training mentoring and training from an SBA-supported resource partner each year. Most of this training
is free, and some is offered at low cost.is free, and some is offered at low cost.~~117~~
~~The Department of Commerce also provides management and technical assistance training for~~
~~smal businesses. For example, its Minority Business Development Agency provides training to~~
~~minority business owners to assist them in obtaining contracts and financial awards.~~
~~Small Business Development Centers~~
~~SBDCs provide free or low-cost assistance to smal businesses using programs customized to~~
~~local conditions. SBDCs support smal businesses in marketing and business strategy, finance,~~
~~technology transfer, government contracting, management, manufacturing, engineering, sales,~~
~~accounting, exporting, and other topics. SBDCs are funded by SBA grants and matching funds~~
~~equal to the grant amount.~~
~~SBDC funding is al ocated 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~~
~~Samoa) by a statutory formula “based on the percentage of the population of each State, as~~
~~compared to the population of the United States.”118 If, as is currently the case, SBDC funding~~
~~exceeds $90 mil ion, the minimum funding level is “the sum of $500,000, plus a percentage of~~

~~115 For additional information and analysis, see CRS Report R41352,~~ ~~Small Business Management and Technical~~
~~Assistance Training Program s, by Robert Jay Dilger.~~
~~116 Other SBA entrepreneurial development programs include the following: the Microloan T echnical Assistance~~
~~Program;~~ 104 101 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 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?sortBy=Effective%20Date&search=&documentType=Report&program=Credit/Capital&documentActivity=Audit/evaluation&office=7392&page=1. 102 For additional information and analysis, see CRS Report R41352, Small Business Management and Technical Assistance Training Programs, by Robert Jay Dilger. 103 Other SBA entrepreneurial development programs include the following: the Microloan Technical Assistance Program; the Program for Investment in Microentrepreneurs (PRIME), Veterans Programs (including Veterans the Program for Investment in Microentrepreneurs (PRIME), Veterans Programs (including Veterans
BusinessBusiness Outreach Centers, Boots to Business,Outreach Centers, Boots to Business, Veteran Women Igniting the Spirit of Entrepreneurship [VWISE], Veteran Women Igniting the Spirit of Entrepreneurship [VWISE],
Entrepreneurship Bootcamp for Veterans with Disabilities,Entrepreneurship Bootcamp for Veterans with Disabilities, and Boots to Business:and Boots to Business: Reboot), the Native American Reboot), the Native American
Outreach Program, the Entrepreneurial Development Initiative (Regional Innovation Clusters), the Entrepreneurship Outreach Program, the Entrepreneurial Development Initiative (Regional Innovation Clusters), the Entrepreneurship
Education Initiative, Education Initiative, ~~t he~~the Growth Accelerators Initiative, and the 7(j) Growth Accelerators Initiative, and the 7(j) ~~T echnical~~Technical Assistance Program. Assistance Program.
~~117~~104 SBA, SBA, FY2021 Congressional Budget Justification and FY2019 Annual Performance Report, p. 18. , p. 18.
~~118 15 U.S.C. §648(a)(4)(C).~~
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Small Business Development Centers 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, technology transfer, government contracting, management, manufacturing, engineering, sales, accounting, exporting, and other topics. SBDCs are funded by SBA grants and matching funds equal to the grant amount. 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 Samoa) by a statutory formula “based on the percentage of the population of each State, as compared to the population of the United States.”105 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
$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
~~mil ion.”119~~million.”106
There are There are 6362 lead SBDC service centers, one located in each state (four in Texas and six in 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 $135appropriated $135 ~~mil ion in FY2020 and $136 mil ion in FY2021~~.0 million in FY2020, $136.0 million in FY2021, and $138.0 million in FY2022. The SBA also was provided . The SBA also was provided
an additionalan additional ~~$192 mil ion~~ $192.0 million in supplemental funding for SBDC grants in FY2020 under the in supplemental funding for SBDC grants in FY2020 under the
CARES Act.CARES Act.~~120~~107
In In ~~FY2020~~FY2021, SBDCs provided , SBDCs provided ~~technical assistance~~ training and counseling training and counseling ~~services to 498,557~~
to 643,144 unique SBDC clients, and unique SBDC clients, and ~~17,312~~22,589 new businesses were started largely as a result of SBDC new businesses were started largely as a result of SBDC
training and counseling.training and counseling.~~121~~108
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, lowAct, 1992) to address the perceived disadvantages faced by women, low -income, veteran, and -income, veteran, and
minority entrepreneurs and business owners gaining access to capital to start or expand their minority entrepreneurs and business owners gaining access to capital to start or expand their
business. The program became operational in 1992. business. The program became operational in 1992. ~~Initial y~~Initially, the SBA’s Microloan program was , the SBA’s Microloan program was
authorized as a five-year demonstration project. It was made permanent, subject to authorized as a five-year demonstration project. It was made permanent, subject to
reauthorization, by P.L. 105-135, the reauthorization, by P.L. 105-135, the ~~Smal~~ Small Business Reauthorization Act of 1997. Business Reauthorization Act of 1997.
The SBA’s Microloan Technical Assistance Program is affiliated with the SBA’s Microloan The SBA’s Microloan Technical Assistance Program is affiliated with the SBA’s Microloan
lendinglending program but receives a separate appropriation. This program provides grants to program but receives a separate appropriation. This program provides grants to
Microloan intermediaries for management and technical training assistance to Microloan program Microloan intermediaries for management and technical training assistance to Microloan program
borrowers and prospective borrowers.borrowers and prospective borrowers.~~122~~109 There are currently There are currently ~~144~~140 active Microloan intermediaries active Microloan intermediaries
serving 49 states, the District of Columbia, and Puerto Rico.serving 49 states, the District of Columbia, and Puerto Rico.~~123~~
~~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.”124~~
~~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~~
~~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~~
~~training.125~~

~~119 15 U.S.C.~~ 110 105 15 U.S.C. §648(a)(4)(C). 106 15 U.S.C. §648(a)(4)(C) and P.L. 106-554, the Consolidated Appropriations Act, 2001. §648(a)(4)(C) and P.L. 106-554, the Consolidated Appropriations Act, 2001.
~~120 T he CARES~~ 107 The CARES Act also provides $25 million for SBAAct also provides $25 million for SBA resource partners, including SBDCs,resource partners, including SBDCs, to establish a centralized to establish a centralized
hubhub for COVID-19 information, which includes an online platform that consolidates resources and information across for COVID-19 information, which includes an online platform that consolidates resources and information across
multiple federal agenciesmultiple federal agencies and training program to education resource partner counselors.and training program to education resource partner counselors.
~~121~~ 108 SBA, FY2023 ~~SBA,~~ ~~FY2022~~ Congressional Budget Justification ~~and FY2020~~FY2021 Annual Performance Report, p. 82, p. 82~~, at~~
~~https://www.sba.gov/document/report -congressional-budget-justification-annual-performance-report.~~
~~122~~. 109 For further analysis of the SBA’s For further analysis of the SBA’s Microloan program, see CRSMicroloan program, see CRS Report R41057, Report R41057, Small Business Administration
Microloan Program , by Robert Jay Dilger. , by Robert Jay Dilger.
~~123~~ 110 SBA, FY2023 ~~SBA,~~ ~~FY2021~~ Congressional Budget Justification ~~and FY2019~~FY2021 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-~~
~~program/list-lenders.~~
~~124 15 U.S.C. §636(m)(4)(A).~~
~~125 13 C.F.R. §120.712.~~
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~~In most instances, intermediaries must contribute, solely from nonfederal sources, an amount~~
~~equal to 25% of the grant amount.126 In addition to cash or other direct funding, the contribution~~
~~may include indirect costs or in-kind contributions paid for under nonfederal programs.127~~
~~In an effort to assist smal~~ 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.”111 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 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 training.112 In most instances, intermediaries must contribute, solely from nonfederal sources, an amount equal to 25% of the grant amount.113 In an effort to assist small businesses adversely affected by COVID-19, P.L. 116-260, the businesses adversely affected by COVID-19, P.L. 116-260, the
Economic Aid to Hard-Hit Economic Aid to Hard-Hit ~~Smal~~ Small Businesses, Nonprofits, and Venues Act (Division N, Title III of Businesses, Nonprofits, and Venues Act (Division N, Title III of
the Consolidated Appropriations Act of 2021), the Consolidated Appropriations Act of 2021), ~~waives~~waived the Microloan Technical Assistance 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 Assistance Program. However, intermediaries ~~typical y~~typically require Microloan borrowers to 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.~~128~~114
The SBA was provided $34.5 The SBA was provided $34.5 ~~mil ion~~million for Microloan technical assistance grants in FY2020 for Microloan technical assistance grants in FY2020 ~~and~~
~~$85 mil ion~~ , $85.0 million in FY2021 ($35in FY2021 ($35 ~~mil ion~~ .0 million in the Consolidated Appropriations Act, 2021 and an in the Consolidated Appropriations Act, 2021 and an
additional additional $50.0 million ~~$50 mil ion~~ in P.L. 116-260, the Economic Aid to Hard-Hit in P.L. 116-260, the Economic Aid to Hard-Hit ~~Smal~~ Small Businesses, Businesses,
Nonprofits, and Venues Act)Nonprofits, and Venues Act).
, and $37.0 million in FY2022. Women’s Business Centers
The WBC Renewable Grant Program was The WBC Renewable Grant Program was ~~initial y~~initially established by P.L. 100-533, the Women’s established by P.L. 100-533, the Women’s
Business Ownership Act of 1988, as the Women’s Business Demonstration Pilot Program, Business Ownership Act of 1988, as the Women’s Business Demonstration Pilot Program,
targeting the needs of targeting the needs of ~~social y and economical y~~socially and economically disadvantaged women. The act directed the SBA 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 projects giving financial, management, and marketing assistance to ~~smal~~ small businesses, including 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~~
~~Related Agencies Appropriations Act, 2006.129~~
~~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~~
~~months from the date of the award and four 12-month option periods.130 The SBA determines if~~

~~126 13 C.F.R. §120.712.~~
~~127 13 C.F.R. §120.712. Intermediaries may not borrow their contribution.~~
~~128~~ Microloan intermediaries by state, see SBA, “List of Lenders,” at https://www.sba.gov/partners/lenders/microloan-program/list-lenders. 111 15 U.S.C. §636(m)(4)(A). 112 13 C.F.R. §120.712. 113 In addition to cash or other direct funding, the matching contribution may include indirect costs or in-kind contributions paid for under nonfederal programs. See 13 C.F.R. §120.712. 114 Intermediaries that make at least 25% of their loans to small businesses Intermediaries that make at least 25% of their loans to small businesses located in or owned by residents of an located in or owned by residents of an
~~Econom ically~~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
belowbelow the poverty level), or have a portfolio of loans made under the program that averages not more than $10,000 the poverty level), or have a portfolio of loans made under the program that averages not more than $10,000
duringduring the period of the intermediary’s participation in the program are eligible to receive an additional training grant the period of the intermediary’s participation in the program are eligible to receive an additional training grant
equalequal to 5% of the total outstanding balance of loans made to the intermediary. Intermediaries are not required to make 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.a matching contribution as a condition of receiving these additional grant funds. ~~See~~ See 13 C.F.R. §120.712; and 15 U.S.C. 13 C.F.R. §120.712; and 15 U.S.C.
§636(m)(4)(C)(i). §636(m)(4)(C)(i).
~~129 P.L. 105-135, the Small Business Reauthorization Act of 1997, is sometimes referenced as providing the WBC~~
~~program permanent statutory authorization because it provided authorization for the program in any year that it~~
~~received appropriations.~~
~~130 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~~
~~1999, provided WBCs that had completed the initial five-year grant an opportunity to apply for an additional five-year~~
~~sustainability grant. T hus, 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~~
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Congressional Research Service 29 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options provided permanent legislative status by P.L. 109-108, the Science, State, Justice, Commerce, and Related Agencies Appropriations Act, 2006.115 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 months from the date of the award and four 12-month option periods.116 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 availabilityprogram authority, the availability of funds, and the recipient organization’s compliance with 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.~~131~~117
During their initial During their initial five-year grant period, WBCs are required to provide a nonfederal match of 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 initialdollar for each federal dollar in years three, four, and five (1:1). After the initial five-year grant 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).~~132~~118 The nonfederal match may consist of cash, in-kind, and program The nonfederal match may consist of cash, in-kind, and program
income.income.~~133~~
119 In an effort to assist In an effort to assist ~~smal~~ small businesses adversely affected by COVID-19, the CARES Act waived 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 116-260, the Economic Aid to Hard-Hit ~~Smal~~ Small Businesses, Nonprofits, and Venues Act (Division Businesses, Nonprofits, and Venues Act (Division
N, Title III of the Consolidated Appropriations Act of 2021), reactivated this waiver, made it 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. retroactive to March 27, 2020, and extended it through June 30, 2021.
Today, there are Today, there are ~~136~~146 WBCs located throughout WBCs located throughout ~~most of the United States and the~~the states and territories. territories.~~134~~120 In FY2021 In
~~FY2020~~, WBCs provided technical assistance training and counseling services to , WBCs provided technical assistance training and counseling services to ~~82,466~~87,957 unique unique
WBC clients, and WBC clients, and ~~2,216~~3,301 new businesses were started largely as a result of WBC training and new businesses were started largely as a result of WBC training and
counseling.counseling.~~135~~
~~The SBA was provided $22.5 mil ion for WBC grants in FY2020 and $23 mil ion in FY2021.~~
~~The SBA also was provided an additional $48 mil ion in supplemental funding for WBC grants in~~
~~FY2020 under the CARES Act.136~~
~~SCORE (formerly the Service Corps of Retired Executives)~~
~~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~~
~~single, national nonprofit organization.~~

121 115 P.L. 105-135, the Small Business Reauthorization Act of 1997, is sometimes referenced as providing the WBC program permanent statutory authorization because it provided authorization for the program in any year that it received appropriations. 116 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 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 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 ~~Perform ance~~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.
~~131~~117 P.L. 110-28, the U.S. P.L. 110-28, the U.S. ~~T roop~~Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations
Act, 2007, allowed WBCsAct, 2007, allowed WBCs that successfullythat successfully completed the initial five-year grant to apply for an unlimited number of completed the initial five-year grant to apply for an unlimited number of
three-year funding renewals. three-year funding renewals.
~~132~~ 118 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.
~~133~~119 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, includingof in-kind contributions that are budget line items only, including office equipment andoffice equipment and office space. office space.
~~134~~ 120 SBA, SBA, ~~“SBA Launches Largest Expansion of~~ “SBA Administrator Announces Five New Women’s Business 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~~ Centers To be Operated by Minority Serving Institutions,” May 23, 2022, at https://www.sba.gov/article/2022/may/23/sba-administrator-announces-five-new-womens-business-centers-be-operated-minority-serving; and SBA, ; and SBA,
“Women’s Business Centers Directory,” at https://www.sba.gov/tools/local-assistance/wbc. “Women’s Business Centers Directory,” at https://www.sba.gov/tools/local-assistance/wbc.
~~135~~ 121 SBA, FY2023 ~~SBA,~~ ~~FY2022~~ Congressional Budget Justification ~~and FY2020~~FY2021 Annual Performance Report, p. 84. Congressional Research Service 30 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options The SBA was provided $22.5 million for WBC grants in FY2020, $23.0 million in FY2021, and $24.4 million in FY2022. The SBA also was provided an additional $48.0 million in supplemental funding for WBC grants in FY2020 under the CARES Act.122 SCORE (formerly the Service Corps of Retired Executives) 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 single, national nonprofit organization. The SBA ~~Annual Performance Report, p. 84.~~
~~136 T he 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~~
~~multiple federal agencies and training programs to educat e resource partner counselors.~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

~~The SBA~~ currently provides grants to SCORE to provide in-person mentoring, online training, currently provides grants to SCORE to provide in-person mentoring, online training,
and “nearly 9,000 local training workshops and “nearly 9,000 local training workshops ~~annual y” to smal~~ annually” to small businesses.businesses.~~137~~123 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 leaders, to provide management and training assistance to ~~smal~~ small businesses “at no charge or at businesses “at no charge or at
very low cost.”very low cost.”~~138~~124
In In ~~FY2020~~FY2021, SCORE provided technical assistance training and counseling services to , SCORE provided technical assistance training and counseling services to ~~142,347~~145,838
unique SCORE clients, and unique SCORE clients, and ~~128~~3,064 new businesses were started largely as a result of SCORE new businesses were started largely as a result of SCORE
training and counseling.training and counseling.~~139~~
125 The SBA was provided $11.7 The SBA was provided $11.7 ~~mil ion~~million for SCORE grants in FY2020 for SCORE grants in FY2020 ~~and $12.2 mil ion in FY2021.~~
, $12.2 million in FY2021, and $14.0 million in FY2022. 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 additionalimmediately following the Great Recession. For example, ARRA provided an additional ~~$24~~
~~mil ion~~ $24 million for Microloan technical assistance grants. The for Microloan technical assistance grants. The ~~Smal~~ Small Business Jobs Act of 2010 provided Business Jobs Act of 2010 provided
SBDCs an additionalSBDCs an additional ~~$50 mil ion~~ $50 million and temporarily waived SBDC, Microloan technical assistance, 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 Similar proposals were made to address the COVID-19 pandemic. For example, during the 116th
Congress, the CARES Act appropriated an additional $265 Congress, the CARES Act appropriated an additional $265 ~~mil ion~~ million for SBAfor SBA entrepreneurial entrepreneurial
development programs ($192 development programs ($192 ~~mil ion~~million for SBDCs, $48 for SBDCs, $48 ~~mil ion~~million for WBCs, and $25 for WBCs, and $25 ~~mil ion~~ million for for
SBA resource partners to provide online information and training). The act also waived SBDC 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 and WBC matching requirements. P.L. 116-260, the Economic Aid to Hard-Hit ~~Smal~~ Small Businesses, Businesses,
Nonprofits, and Venues Act (Division N, Title III of the Consolidated Appropriations Act of Nonprofits, and Venues Act (Division N, Title III of the Consolidated Appropriations Act of
2021), appropriated an additional2021), appropriated an additional ~~$50 mil ion~~ $50 million for Microloan technical assistance grants, and for Microloan technical assistance grants, and
continued the waiver of the WBC matching requirement through June 30, 2021. During the 117th continued the waiver of the WBC matching requirement through June 30, 2021. During the 117th
Congress, P.L. 117-2, the American Rescue Plan Act of 2021, appropriated $100 Congress, P.L. 117-2, the American Rescue Plan Act of 2021, appropriated $100 ~~mil ion~~million for a for a
community navigator pilot grant program to improve community navigator pilot grant program to improve ~~smal~~ small business access to COVID-19-related business access to COVID-19-related
~~assistance programs and $75 mil ion for outreach and education programs. Al~~ 122 The CARES Act also provides $25 million for SBA resource ~~SBA resource~~
partners, including partners, including ~~SBDCs, WBCs, and SCORE, are eligible to compete for these grants.~~
~~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~~
~~Congress and make that information available to the public on the SBA website.~~

~~137 SBA,~~ WBCs, to establish a centralized 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. 123 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.
~~138~~124 SCORE SCORE (Service Corps of Retired Executives), “About SCORE,”(Service Corps of Retired Executives), “About SCORE,” Washington, DC,Washington, DC, at https://www.score.org/about-at https://www.score.org/about-
score. score.
~~139~~125 SBA, FY2023 ~~SBA,~~ ~~FY2022~~ Congressional Budget Justification ~~and FY2020~~FY2021 Annual Performance Report, p. 85. , p. 85.
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~~SBA Contracting Programs140~~ assistance programs and $75 million for outreach and education programs. All SBA resource partners, including SBDCs, WBCs, and SCORE, are eligible to compete for these grants. 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 Congress and make that information available to the public on the SBA website. SBA Contracting Programs126
Overview
Federal agencies are required to facilitate the maximum participation of Federal agencies are required to facilitate the maximum participation of ~~smal~~ small businesses as prime businesses as prime
contractors, subcontractors, and suppliers. For example, federal agencies are contractors, subcontractors, and suppliers. For example, federal agencies are ~~general y~~generally required to 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 $10,000), but not greater than the simplified acquisition threshold (~~c urrently~~currently $250,000) $250,000)
exclusively for exclusively for ~~smal~~ small businesses unless the contracting officer is unable to obtain offers from two businesses unless the contracting officer is unable to obtain offers from two
or more or more ~~smal~~ small businesses that are competitive with market prices and the quality and delivery of 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.~~141~~127
Several SBA programs assist Several SBA programs assist ~~smal~~ small businesses in obtaining and performing federal contracts and 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 other assistance (e.g., contracting technical training assistance and oversight of the federal ~~smal~~
small business goaling program and the Surety Bond Guarantee program).business goaling program and the Surety Bond Guarantee program).~~142~~128
8(a) ~~Program143~~Program129
The SBA’s 8(a) Business Development Program provides business development assistance to The SBA’s 8(a) Business Development Program provides business development assistance to
businesses owned and controlled by persons who are businesses owned and controlled by persons who are ~~social y and economical y~~socially and economically disadvantaged, disadvantaged,
have good character, and demonstrate a potential for success.have good character, and demonstrate a potential for success.~~144~~
130 Although the 8(a) Program was Although the 8(a) Program was ~~original y~~originally established in the 1980s for the benefit of established in the 1980s for the benefit of
disadvantaged individuals,disadvantaged individuals, Congress expanded the program to include Congress expanded the program to include ~~smal~~ small businesses owned by businesses owned by
four disadvantaged groups. four disadvantaged groups. ~~Smal~~ Small businesses owned by Alaska Native Corporations (ANCs), businesses owned by Alaska Native Corporations (ANCs),
Community Development Corporations (CDCs), Indian tribes, and Native Community Development Corporations (CDCs), Indian tribes, and Native ~~Hawai an~~Hawaiian
Organizations (NHOs) are also eligibleOrganizations (NHOs) are also eligible to participate in the 8(a) Program under somewhat 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~~
~~competition limited to just 8(a) participants (a set aside) or on a sole source basis, with the~~
~~contract amount general y determining the acquisition method used.~~

~~140~~different requirements. 126 For additional information and analysis concerning SBA For additional information and analysis concerning SBA contracting programs, see CRScontracting programs, see CRS Report R45576, Report R45576, An
Overview ~~of Sm all~~ of Small Business Contracting, by Robert Jay Dilger. , by Robert Jay Dilger.
~~141~~127 15 U.S.C. 15 U.S.C. §644(j)(1). Certain regulations implementing this provision of the Small Business§644(j)(1). Certain regulations implementing this provision of the Small Business Act effectively narrows Act effectively narrows
its scope. For example, certain small businessits scope. For example, certain small business contracts awardedcontracts awarded or performed overseas are not necessarily requiredor performed overseas are not necessarily required to to
be set asidebe set aside for small businesses,for small businesses, and the small businessand the small business provisions contained in Part 19 of the Federal Acquisition provisions contained in Part 19 of the Federal Acquisition
Regulation (FAR) generally do not apply to blanket purchase agreements and orders placedRegulation (FAR) generally do not apply to blanket purchase agreements and orders placed against Federalagainst Federal Supply Supply
ScheduleSchedule contracts. contracts.
~~142~~ 128 For additional information and analysis concerning the SBA’s For additional information and analysis concerning the SBA’s Surety BondSurety Bond Program, see CRSProgram, see CRS Report R42037, Report R42037, SBA
Surety Bond Guarantee Program , by Robert Jay Dilger. , by Robert Jay Dilger.
~~143~~129 For additional information and analysis concerning the 8(a) Program, see CRS For additional information and analysis concerning the 8(a) Program, see CRS Report R44844, Report R44844, SBA’s “8(a)
Program”: Overview, History, and Current Issues, by Robert Jay Dilger. , by Robert Jay Dilger.
~~144~~130 Section 8(a) of the Small Section 8(a) of the Small ~~Business~~ Business Act, P.L. 85-536, as amended, can be found at 15 U.S.C.Act, P.L. 85-536, as amended, can be found at 15 U.S.C. §637(a). Regulations §637(a). Regulations
are in 13 C.F.R.are in 13 C.F.R. §124. §124.
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~~For individual y owned smal~~ 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 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. For individually owned small businesses, when the contract’s anticipated total value, including businesses, when the contract’s anticipated total value, including
any options, does not exceed $4.5 any options, does not exceed $4.5 ~~mil ion~~million ($7.5 ($7.5 ~~mil ion~~million for manufacturing contracts), the contract for manufacturing contracts), the contract
is is ~~normal y~~normally awarded without competition (as a sole source award). In contrast, when the awarded without competition (as a sole source award). In contrast, when the
contract’s anticipated value exceeds these thresholds, the contract contract’s anticipated value exceeds these thresholds, the contract ~~general y~~generally must be awarded via must be awarded via
a set aside with competition limited to 8(a) firms so long as there is a reasonable expectation that a set aside with competition limited to 8(a) firms so long as there is a reasonable expectation that
at least two eligibleat least two eligible and responsible 8(a) firms and responsible 8(a) firms ~~wil~~ will submit offers and the award can be made at submit offers and the award can be made at
fair market price.fair market price.~~145~~
131 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 for 8(a) set asides and may receive sole source awards valued at less than $4 ~~mil ion ($7 mil ion~~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 sole source awards in excess of $4.5 ~~mil ion ($7.5 mil ion~~ million ($7.5 million for manufacturing contracts) even 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
~~wil~~ will submit offers and the award can be made at fair market price.submit offers and the award can be made at fair market price.~~146~~132 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.~~147~~133
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 least 5% of their federal contracting dollars to ~~smal~~ small disadvantaged businesses. disadvantaged businesses.
In FY2020, the federal government awarded $34.0 In FY2020, the federal government awarded $34.0 ~~bil ion~~billion to 8(a) firms. to 8(a) firms.
Historically Underutilized Business Zone ~~Program148~~Program134
The SBA oversees the The SBA oversees the ~~Historical y~~Historically Underutilized Underutilized Business Zones (HUBZones)Business Zones (HUBZones) Program. The Program. The
program assists program assists ~~smal~~ small businesses located in HUBZone-designated areas through set asides, sole 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, does not exceed $4.5 anticipated total value of the contract, including any options, does not exceed $4.5 ~~mil ion~~million, or , or
$7.5 $7.5 ~~mil ion~~ million for manufacturing contracts) and price evaluation preferences (of up to 10%) in full for manufacturing contracts) and price evaluation preferences (of up to 10%) in full
and open competitions.and open competitions.~~149~~135 The HUBZone The HUBZone program targets assistance to program targets assistance to ~~smal~~ small businesses located businesses located
in areas with low income, high poverty, or high unemployment.in areas with low income, high poverty, or high unemployment.~~150~~136 To be certified as a HUBZone 131 15 U.S.C. §637(a)(1)(D)(ii); and SBA, “Conforming Statutory Amendments and Technical Corrections to Small Business ~~To be certified as a HUBZone~~
~~smal business, at least 35% of the smal business’s employees must general y reside in a~~
~~HUBZone.~~
~~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 smal businesses.~~

~~145 15 U.S.C. §637(a)(1)(D)(ii); and SBA, “Conforming Statutory Amendments and T echnical Corrections to Small~~
~~Business~~ Government Contracting Regulations,” 83Government Contracting Regulations,” 83 Federal Register 12849, March 26, 2018. 12849, March 26, 2018.
~~146~~132 P.L. 100-656, §602(a), 102 Stat. 3887-88 (November 15, 1988) (codified at 15 U.S.C. 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. §637 note); and 48 C.F.R.
§19.805-1(b)(2). §19.805-1(b)(2).
~~147~~133 DOD’s authority to make sole source awards DOD’s authority to make sole source awards to NHO-ownedto NHO-owned firms of contracts valued at more than $4 million ($7 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 businessesleast two responsible small businesses existed on a temporary basis in 2004existed on a temporary basis in 2004 -2006 and became permanent in 2006. See -2006 and became permanent in 2006. See
P.L. 109-148, Department of Defense, Emergency Supplemental Appropriations to Address Hurricanes in the GulfP.L. 109-148, Department of Defense, Emergency Supplemental Appropriations to Address Hurricanes in the Gulf of of
Mexico, and Pandemic Influenza Act of 2006, §8020, 119 Mexico, and Pandemic Influenza Act of 2006, §8020, 119 ~~St at~~Stat. 2702-03 (December 30, 2005); 48 C.F.R. §219.805-. 2702-03 (December 30, 2005); 48 C.F.R. §219.805-
1(b)(2)(A)-(B). 1(b)(2)(A)-(B).
~~148~~ 134 For additional information and analysis, see CRS For additional information and analysis, see CRS Report R41268, Report R41268, Small Business Administration HUBZone
Program , by Robert Jay Dilger. , by Robert Jay Dilger.
~~149~~135 15 U.S.C. 15 U.S.C. §657a(b)(2-3); and SBA,§657a(b)(2-3); and SBA, “Conforming Statutory Amendments and “Conforming Statutory Amendments and ~~T echnical~~Technical Corrections to Small Corrections to Small
BusinessBusiness Government Contracting Regulations,” 83Government Contracting Regulations,” 83 Federal Register 12849, March 26, 2018. 12849, March 26, 2018.
~~150~~136 For specific criteria, see 15 U.S.C. For specific criteria, see 15 U.S.C. §632(p)(4); and 13 C.F.R. §126.103. §632(p)(4); and 13 C.F.R. §126.103.
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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 goal of awarding at least 3% of their federal contracting dollars to HUBZone small businesses.
In FY2020, the federal government awarded $13.6 In FY2020, the federal government awarded $13.6 ~~bil ion~~billion to HUBZone-certified to HUBZone-certified ~~smal~~
small businesses. businesses.
Service-Disabled Veteran-Owned Small Business Program
The SBA oversees the Service-Disabled Veteran-Owned The SBA oversees the Service-Disabled Veteran-Owned ~~Smal~~ Small Business (SDVOSB) Program. Business (SDVOSB) Program.
The program The program ~~al ows~~allows agencies to set aside contracts for SDVOSBs. Federal agencies may award 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, does not exceed $4 price, and the anticipated total value of the contract, including any options, does not exceed $4
~~mil ion ($7 mil ion~~ million ($7 million for manufacturing contracts).for manufacturing contracts).~~151~~137 For purposes of this program, veterans with For purposes of this program, veterans with
service-related disabilities are defined as they are under the statutes governing veterans affairs.service-related disabilities are defined as they are under the statutes governing veterans affairs.~~152~~
138 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 FY2020, the federal government awarded $26.1 In FY2020, the federal government awarded $26.1 ~~bil ion~~billion to SDVOSBs. to SDVOSBs.
Women-Owned Small Business Program
The SBA oversees the Women-Owned The SBA oversees the Women-Owned ~~Smal~~ Small Businesses (WOSB) Program. Under this program, 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
~~Economical y~~Economically Disadvantaged Women-Owned Disadvantaged Women-Owned ~~Smal~~ Small Businesses (EDWOSBs) in industries in Businesses (EDWOSBs) in industries in
which the SBA determines WOSBs are which the SBA determines WOSBs are ~~substantial y~~substantially underrepresented in federal procurement. 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,
does not exceed $4.5 does not exceed $4.5 ~~mil ion ($7 mil ion~~ million ($7 million for manufacturing contracts).for manufacturing contracts).~~153~~
139 In FY2020, the federal government awarded $27.2 In FY2020, the federal government awarded $27.2 ~~bil ion~~billion to WOSBs. 137 15 U.S.C. §657f(a-b); and SBA, “Conforming Statutory Amendments and Technical ~~to WOSBs.~~
~~SBA Surety Bond Program154~~
~~The SBA’s Surety Bond Guarantee Program has been operational since April 1971.155 It is~~
~~designed to increase smal business’ access to federal, state, and local government contracting, as~~

~~151 15 U.S.C. §657f(a-b); and SBA, “Conforming Statutory Amendments and T echnical~~ Corrections to Small Business Corrections to Small Business
Government Contracting Regulations,” 83Government Contracting Regulations,” 83 Federal Register 12849, March 26, 2018. 12849, March 26, 2018.
~~152~~138 38 U.S.C. 38 U.S.C. §8127(f). Veteran-owned small businesses§8127(f). Veteran-owned small businesses and service-disabledand service-disabled veteran-owned small businessesveteran-owned small businesses are are
eligibleeligible for separate preferences in procurements conducted by the Department of Veterans Affairs under for separate preferences in procurements conducted by the Department of Veterans Affairs under ~~th e~~the authority 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.
~~153~~ 139 15 U.S.C. 15 U.S.C. §637(m); and SBA,§637(m); and SBA, “Conforming Statutory Amendments and “Conforming Statutory Amendments and ~~T echnical~~Technical Corrections to Small Business Corrections to Small Business
Government Contracting Regulations,” 83Government Contracting Regulations,” 83 Federal Register 12849, March 26, 2018. 12849, March 26, 2018.
~~154 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.~~
~~155 P.L. 91-609, the Housing and Urban Development Act of 1970; and U.S. Congress, Senate Committee on Banking,~~
~~Housing, and Urban Affairs, Sm all Business Legislation - 1974, hearing on S. 3137 and S. 3138, 93rd Cong., 2nd sess.,~~
~~March 13, 1974 (Washington, DC: GPO, 1974), p. 19.~~
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~~wel~~ Congressional Research Service 34 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options SBA Surety Bond Program140 The SBA’s Surety Bond Guarantee Program has been operational since April 1971.141 It is 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 as private sector contracting, by guaranteeing bid, performance, payment, and specified
~~ancil ary~~ancillary bonds “on contracts … for bonds “on contracts … for ~~smal~~ small and emerging contractors who cannot obtain bonding and emerging contractors who cannot obtain bonding
through regular commercial channels.”through regular commercial channels.”~~156~~142 The program guarantees individual contracts of up to The program guarantees individual contracts of up to
$6.5 $6.5 ~~mil ion~~million, and up to $10 , and up to $10 ~~mil ion~~ million for federal contracts if a federal contracting officer certifies for federal contracts if a federal contracting officer certifies
that such a guarantee is necessary. The $6.5 that such a guarantee is necessary. The $6.5 ~~mil ion~~million limit limit ~~is periodical y~~ is periodically adjusted for inflation.adjusted for inflation.~~157~~
143 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 FY2020, the SBA In FY2020, the SBA guaranteed 10,577 bid and final surety bonds (a payment bond, performance guaranteed 10,577 bid and final surety bonds (a payment bond, performance
bond, or both a payment and performance bond) with a total contract value of nearly $7.2 bond, or both a payment and performance bond) with a total contract value of nearly $7.2
~~bil ion.158~~billion.144
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 that the project is completed. Surety bonds encourage project owners to contract with ~~smal~~
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 Surety bonds are important to ~~smal~~ small businesses interested in competing for federal contracts 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 Congress included enhancements for ~~smal~~ small business contracting in both ARRAbusiness contracting in both ARRA (increased funding (increased funding
and higher maximum bond amounts for the SBA Surety Bond program) and the and higher maximum bond amounts for the SBA Surety Bond program) and the ~~Smal~~ Small Business Business
Jobs Act of 2010 (new restrictions on the consolidation or bundling of contracts that make it more Jobs Act of 2010 (new restrictions on the consolidation or bundling of contracts that make it more
difficult for difficult for ~~smal~~ small businesses to be awarded the contract). The CARES Act authorizes federal 140 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. 141 P.L. 91-609, the Housing and Urban Development Act of 1970; and U.S. Congress, Senate Committee on Banking, Housing, and Urban Affairs, Small Business Legislation - 1974, hearing on S. 3137 and S. 3138, 93rd Cong., 2nd sess., March 13, 1974 (Washington, DC: GPO, 1974), p. 19. 142 SBA, “FY2016 Congressional Budget ~~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~~
~~bil ing 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~~
~~September 30, 2020. Eligible contractors are those whose employees or subcontractors cannot~~
~~perform work on a federal y approved site due to facility closures or other restrictions because of~~
~~COVID-19 and cannot telework because their job duties cannot be performed remotely.~~

~~156 SBA, “ FY2016 Congressional Budget~~ Justification and FY2014 Annual Performance Report,” p. 44, at 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 ensureswhich ensures that requirements integral to the contract, but not directly performance related, are performed, is eligible 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 SBAif it is incidental and essential to a contract for which SBA has guaranteed a final bond.has guaranteed a final bond. A reclamation bond is eligible A reclamation bond is eligible
if it is issuedif it is issued to reclaim an abandoned mine site and for a project undertaken for a specific period of time. to reclaim an abandoned mine site and for a project undertaken for a specific period of time.
~~157~~143 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. from $2 million to $6.5 million, and up to $10 million for a federal contract if certified. ~~T he~~The act also includes a 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.” Section 1908 of title 41, United States Code.” ~~T hat~~That section of the section of the U.S. Code provides for an inflation adjustment on provides for an inflation adjustment on
October 1 of each year evenly divisibleOctober 1 of each year evenly divisible by five. by five.
~~158~~ 144 SBA, SBA, FY2020 Program Performance: SBA Surety Bond Guarantee Program , at https://content.govdelivery.com/, at https://content.govdelivery.com/
accounts/USSBA/bulletins/2a5a0e6. accounts/USSBA/bulletins/2a5a0e6.
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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 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 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. Concluding Observations
In response to the Great Recession, Congress took a number of actions to enhance In response to the Great Recession, Congress took a number of actions to enhance ~~smal~~
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 The goal then, as it is now, was to provide ~~smal~~ small businesses with the resources necessary to 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~~ legislation passed during the 111th Congress to address the severe economic slowdown during and 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
legislationlegislation and the CARES Act is that the CARES Act includes loan deferrals, loan forgiveness, and the CARES Act is that the CARES Act includes loan deferrals, loan forgiveness,
and greatly expanded eligibility,and greatly expanded eligibility, including, for the first time, specified types of nonprofit 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 littlebusinesses and households, there has been relatively little concern expressed about federal fiscal 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 would have the greatest impact and which types of ~~smal~~ small businesses and businesses and ~~smal~~ small business owners 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. through investigations and audits, serve as a deterrent to fraud.
The CARES Act addressed this issue by providing the SBA’s OIG $25 The CARES Act addressed this issue by providing the SBA’s OIG $25 ~~mil ion~~ million for its for its
investigative functions. Also, P.L. 116-260, the Economic Aid to Hard-Hit investigative functions. Also, P.L. 116-260, the Economic Aid to Hard-Hit ~~Smal~~ Small Businesses, Businesses,
Nonprofits, and Venues Act (DivisionNonprofits, and Venues Act (Division N, Title III of the Consolidated Appropriations Act of N, Title III of the Consolidated Appropriations Act of
2021), provided the SBA OIG an additional2021), provided the SBA OIG an additional ~~$20 mil ion~~ $20 million to prevent waste, fraud, and abuse in the to prevent waste, fraud, and abuse in the
awarding of EIDL Targeted advance payment grants. The act also provided the SBA $50 awarding of EIDL Targeted advance payment grants. The act also provided the SBA $50 ~~mil ion~~million
for PPP auditing and fraud mitigation efforts. In addition, P.L. 117-2, the American Rescue Plan for PPP auditing and fraud mitigation efforts. In addition, P.L. 117-2, the American Rescue Plan
Act of 2021, appropriated an additional $25 Act of 2021, appropriated an additional $25 ~~mil ion~~ million for SBA’s Office of Inspector General for for SBA’s Office of Inspector General for
oversight. oversight.
Requiring the SBA to report regularly on its implementation of the CARES Act and succeeding Requiring the SBA to report regularly on its implementation of the CARES Act and succeeding
~~legislation~~ legislation could also promote transparency and assist Congress in performing its oversight could also promote transparency and assist Congress in performing its oversight
responsibilities. In addition, requiring output and outcome performance measures and requiring responsibilities. In addition, requiring output and outcome performance measures and requiring
the SBAthe SBA to report this information directly to both Congress and the public by posting that to report this information directly to both Congress and the public by posting that
Congressional Research Service 36 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options information on the SBA’s website could enhance both congressional oversight and public information on the SBA’s website could enhance both congressional oversight and public
confidence in the SBA’s efforts to assist confidence in the SBA’s efforts to assist ~~smal~~ small businesses. 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~~
and the Paycheck Protection Program Flexibility 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 rate not to exceed 4% to assist ~~smal~~ small businesses and other organizations adversely 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 PPP loans ~~wil~~ will have a two-year term at a 1% interest rate;have a two-year term at a 1% interest rate;
~~ defines~~  defined a covered loan as a loan made to an eligible a covered loan as a loan made to an eligible recipient from February 15, recipient from February 15,
2020, through June 30, 2020; 2020, through June 30, 2020;
  ~~waives~~waived the up-front loan guarantee fee and annual servicing fee, the no credit 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~~expanded eligibility eligibility for a covered loan to include 7(a) eligiblefor a covered loan to include 7(a) eligible businesses and any 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 employed individuals ~~are~~were also eligible also eligible to receive a covered loan;to receive a covered loan;~~159~~
~~ al ows~~145  allowed borrowers to refinance Economic Injury Disaster Loans (EIDLs) made borrowers to refinance Economic Injury Disaster Loans (EIDLs) made on
on or after January 31, 2020, as part of a covered loan; or after January 31, 2020, as part of a covered loan;
  ~~increases~~increased the maximum loan amount for a covered loan to the lesser of (1) 2.5 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 is refinanced as part of a covered loan, or (2) $10 ~~mil ion~~million; ;
  ~~specifies~~specified that covered loans are nonrecourse (meaning that the SBA cannot 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)

~~159~~except to the extent that the covered loan proceeds are used for nonauthorized purposes;  allowed 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 145 For purposes of determining not more than 500 employees, the term employee includes individuals For purposes of determining not more than 500 employees, the term employee includes individuals employed on a employed on a
full-time, partfull-time, part -time, or other basis. Also, special eligibility-time, or other basis. Also, special eligibility considerations are provided for certain businessesconsiderations are provided for certain businesses and and
organizations. For example, businessesorganizations. For example, businesses operating in NAICSoperating in NAICS Sector 72 (Sector 72 ( Accommodation and Food ServicesAccommodation and Food Services industry) industry)
that employ not more than 500 employees per physical location are also eligiblethat employ not more than 500 employees per physical location are also eligible for a covered loan. Affiliation rules are for a covered loan. Affiliation rules are
also waivedalso waived for: (1) NAICSfor: (1) NAICS Sector 72 businesses,Sector 72 businesses, (2) franchises, and (3) SBIC-owned(2) franchises, and (3) SBIC-owned businesses.businesses. In other words, these In other words, these
businessesbusinesses ~~would~~ would not be deniednot be denied a covered loan solely becausea covered loan solely because they employ more than 500 employees across multiple they employ more than 500 employees across multiple
businessesbusinesses ~~under~~ under common ownership. common ownership.
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~~except to the extent that the covered loan proceeds are used for nonauthorized~~
~~purposes;~~
~~ al ows 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~~
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~~expanded lender delegated loan approval authority for making covered loans to lender delegated loan approval authority for making covered loans to al
all 7(a) lenders to expedite PPP loan processing; 7(a) lenders to expedite PPP loan processing;
  ~~requires~~required lenders, when evaluating borrower eligibility lenders, when evaluating borrower eligibility for a covered loan, to 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~~required borrowers to, among other acknowledgements, 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  acknowledge that the funds ~~wil~~ will be used to retain workers, maintain payroll, 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~~required lenders to provide “impacted borrowers” adversely affected by COVID- lenders to provide “impacted borrowers” adversely affected by COVID-
19 “complete payment deferment relief” 19 “complete payment deferment relief”~~160~~146 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 covered loan payments ~~wil~~ will be deferred for six months. However, interest be deferred for six months. However, interest ~~wil~~
~~continue~~continued to accrue on these loans during the six-month deferment; to accrue on these loans during the six-month deferment;~~161~~147
  ~~presumes~~presumed that each eligible recipient that applies for a PPP loan is an impacted 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 more than one year. The SBA ~~has~~ announced that the deferment relief on covered announced that the deferment relief on covered
loans loans ~~wil~~ will be for six months; be for six months;
  ~~provides~~provided for the forgiveness of covered loan amounts equal to the amount the 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 utilitypayment on any utility for which service began before February 15, 2020. The 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 The forgiveness is reduced ~~proportional y~~proportionally by formulas related to the borrower’s 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

~~160~~most recent full quarter before the covered period.148 Borrowers that re-hire workers previously laid off are not penalized for having a reduced payroll at the 146 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.
~~161~~ 147 SBA, SBA, “Business“Business Loan Program Loan Program ~~T emporary~~Temporary Changes; Paycheck Protection Program,” 85 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.162 Borrowers that re-hire~~
~~workers previously laid off wil not be penalized for having a reduced payroll at~~
~~the beginning of the period. Cancel ed~~148 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 paid to tipped employees. Congressional Research Service 39 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options beginning of the period. Cancelled debt resulting from loan forgiveness is ~~debt resulting from loan forgiveness~~
~~would not be~~ included in the borrower’s taxable federal income; included in the borrower’s taxable federal income;
 The SBA  The SBA ~~has~~ announced that due to likely high subscription, at least 75% of the announced that due to likely high subscription, at least 75% of the
forgiven loan amount must forgiven loan amount must ~~have been~~be used for payroll; used for payroll;~~163~~
~~ requires~~149  required the SBA to pay the principal, interest, and any associated fees that are 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 already on deferment ~~wil receive~~received six months of payment by the SBA beginning 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 after enactment ~~wil also receive~~also received a full six months of SBA loan payments; a full six months of SBA loan payments;
  ~~requires~~required federal banking agencies or the National Credit Union Administration 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~~increased the SBA’s lending authorization under Section 7(a) of the the SBA’s lending authorization under Section 7(a) of the ~~Smal~~
Small Business Act from $30 Business Act from $30 ~~bil ion~~billion to $349 to $349 ~~bil ion~~ billion during the covered period; during the covered period;
  ~~increases~~increased the SBAExpress loan limit from $350,000 to $1 the SBAExpress loan limit from $350,000 to $1 ~~mil ion (reverts~~million (reverted to to
$350,000 on January 1, 2021); $350,000 on January 1, 2021);
 permanently  permanently ~~eliminates~~eliminated the zero subsidy requirement to waive SBAExpress loan the zero subsidy requirement to waive SBAExpress loan
fees for veterans; fees for veterans;
  ~~appropriates $349 bil ion~~ appropriated $349 billion for loan guarantees and subsidies (remaining available for loan guarantees and subsidies (remaining available
through FY2021), $675 through FY2021), $675 ~~mil ion~~million for the SBA’s salaries and expenses account, $25 for the SBA’s salaries and expenses account, $25
~~mil ion~~ million for the SBA’s Office of Inspector General (OIG), $562 for the SBA’s Office of Inspector General (OIG), $562 ~~mil ion~~million for for
disaster loans, $265 disaster loans, $265 ~~mil ion~~million for entrepreneurial development programs ($192 for entrepreneurial development programs ($192
~~mil ion~~ million for SBDCs, $48 for SBDCs, $48 ~~mil ion~~ million for WBCs, and $25 for WBCs, and $25 ~~mil ion~~ million for SBAfor SBA resource resource
partners to provide online information and training), $17 partners to provide online information and training), $17 ~~bil ion~~ billion for subsidies for for subsidies for
certain loan payments, and $10 certain loan payments, and $10 ~~mil ion~~million for the Department of Commerce’s for the Department of Commerce’s
Minority Business Development Agency; Minority Business Development Agency;
  ~~al ows~~allowed the period of use of FY2018 and FY2019 grant awards made under the 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~~reimbursed (up to the grant amount received) STEP award recipients for financial (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
~~cancel ed~~cancelled solely due to a public health emergency declared due to COVID-19; solely due to a public health emergency declared due to COVID-19;
  ~~waives~~waived SBDC and WBC matching requirements; SBDC and WBC matching requirements;
  ~~requires~~required federal agencies to continue to pay federal agencies to continue to pay ~~smal~~ small business contractors and revise business contractors and revise
delivery schedules, holding delivery schedules, holding ~~smal~~ small contractors harmless for being unable to 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~~required federal agencies to promptly pay federal agencies to promptly pay ~~smal~~ small business prime contractors and business prime contractors and
requires prime contractors to promptly pay requires prime contractors to promptly pay ~~smal~~ small business subcontractors within 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

~~162 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~~
~~paid to tipped employees.~~
~~163 SBA, “Business Loan Program T emporary~~duration of the President invoking the Defense Production Act in response to COVID-19; and  provided SBA Emergency Injury Disaster Loan (EIDL) enhancements during the covered period of January 31, 2020, through December 31, 2020, including 149 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program,” 85 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~~
~~COVID-19; and~~
~~ provides SBA Emergency Injury Disaster Loan (EIDL) enhancements during the~~
~~covered period of January 31, 2020, through December 31, 2020, including~~
 expanding eligibility expanding eligibility beyond currently eligible beyond currently eligible ~~smal~~ small businesses, private businesses, private
nonprofit organizations, and nonprofit organizations, and ~~smal~~ small agricultural cooperatives, to include 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 eligibledays after receiving an EIDL application from an eligible entity. Applicants 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 limiteddisruptions. The SBA limited EIDL-advance payments to $1,000 per 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  appropriating an additional $10 ~~bil ion~~ billion for EIDL assistance. for EIDL assistance.
The Paycheck Protection Program and Health Care Enhancement
Act (P.L. 116-139)
  ~~increases~~increased the SBA’s lending authorization under Section 7(a) of the the SBA’s lending authorization under Section 7(a) of the ~~Smal~~
Small Business Act from $349 Business Act from $349 ~~bil ion~~billion during the covered period to $659 during the covered period to $659 ~~bil ion;~~
~~ requires~~billion;  required that no less than $30 that no less than $30 ~~bil ion~~ billion of this authorization amount be set aside for 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 consolidated assets of $10 ~~bil ion~~billion to $50 to $50 ~~bil ion;~~
~~ requires~~billion;  required that no less than $30 that no less than $30 ~~bil ion~~ billion of this authorization amount be set aside for 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-certifiedSBA-certified development companies, and SBA microloan intermediaries), and development companies, and SBA microloan intermediaries), and
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

insured depository institutions and credit unions with consolidated assets less insured depository institutions and credit unions with consolidated assets less
than $10 than $10 ~~bil ion;~~
~~ increases~~billion;  increased the PPP appropriation amount from $349 the PPP appropriation amount from $349 ~~bil ion~~billion to $670.335 to $670.335 ~~bil ion;~~
~~ appropriates~~billion;  appropriated an additional $50 an additional $50 ~~bil ion~~ billion for EIDL loans; for EIDL loans;
  ~~appropriates~~appropriated an additional $10 an additional $10 ~~bil ion~~ billion for Emergency EIDL grants; for Emergency EIDL grants;
Congressional Research Service 41 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options  appropriated~~ appropriates~~ an additional $2.1 an additional $2.1 ~~bil ion~~ billion for the SBA’s salaries and expenses 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~~provided agricultural enterprises eligibility agricultural enterprises eligibility for Emergency EIDL grants and for Emergency EIDL grants and
COVID-19-related EIDL loans during the covered period (January 31, 2020 COVID-19-related EIDL loans during the covered period (January 31, 2020
through December 31, 2020). through December 31, 2020).
The Paycheck Protection Program Flexibility Act (P.L. 116-142)
  ~~extends~~extended the PPP loan forgiveness covered period from 8 weeks after the loan’s 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~~provided borrowers that received a PPP loan prior to the enactment date (June 5, 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~~replaced the 75%/25% rule on the use of PPP loan proceeds for loan forgiveness 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;~~164~~150
  ~~provides~~provided borrowers a “safe harbor” from the loan forgiveness rehiring borrowers a “safe harbor” from the loan forgiveness rehiring
requirement if the borrower is unable to rehire an individual requirement if the borrower is unable to rehire an individual who was an 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 similarlydemonstrate an inability to hire similarly qualified employees on or before qualified employees on or before
December 31, 2020; December 31, 2020;
  ~~establishes~~established a minimum PPP loan maturity of five years for loans made on or after a minimum PPP loan maturity of five years for loans made on or after
the date of enactment; the date of enactment;
  ~~extends~~extended the PPP loan deferral period from six months (under SBA regulations) the PPP loan deferral period from six months (under SBA regulations) to
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~~eliminated the exception in the CARES Act preventing taxpayers who receive 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.~~165~~
~~The Heroes Act (H.R. 6800)~~
~~H.R. 6800, would, among other provisions,~~
~~ expand the PPP loan covered period from June 30, 2020, to December 31, 2020;~~

~~164 If a borrower uses less~~ 151 Author Information Robert Jay Dilger Bruce R. Lindsay Senior Specialist in American National Government Specialist in American National Government 150 If a borrower uses less than 60% of the PPP loan amount for payroll costs during the forgiveness covered than 60% of the PPP loan amount for payroll costs during the forgiveness covered
period, the borrower willperiod, the borrower will continue to be eligiblecontinue to be eligible for partial loan forgiveness, subject to at least 60% of the loan for partial loan forgiveness, subject to at least 60% of the loan
forgiveness amountforgiveness amount having been usedhaving been used for payroll costs. for payroll costs.
~~165 See FAQs~~ 151 See FAQs 3 and 4 in IRS,3 and 4 in IRS, “Deferral of Employment Tax Deposits and Payments “Deferral of Employment Tax Deposits and Payments ~~T hrough~~Through December 31, 2020,” at December 31, 2020,” at
https://www.irs.gov/newsroom/deferral-of-employmenthttps://www.irs.gov/newsroom/deferral-of-employment ~~-tax-deposits-and-payments-through-december-31-2020.~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

~~ extend PPP eligibility to al 501(c) nonprofit organizations of al sizes;~~
~~ 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~~
~~smal 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~~
~~organizations with not more than 500 employees; and the lesser of 25% of~~
~~existing PPP funds or $10 bil ion be issued to community financial institutions,~~
~~such as Community Development Financial Institutions (CDFIs), SBA microloan~~
~~intermediaries, and SBA-certified development companies;~~
~~ establish technical assistance grants for smal community financial institutions~~
~~with assets of less than $10 bil ion;~~
~~ bifurcate the SBA’s lending authority for the 7(a) and PPP programs;~~
~~ increase the SBA’s 7(a) loan authorization amount from $30 bil ion to $75 bil ion~~
~~for FY2020;~~
~~ provide SCORE and veterans business outreach centers eligibility for $10 mil ion~~
~~each from the CARES Act’s $265 mil ion entrepreneurial development resource~~
~~partners grant program;~~
~~ 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~~
~~reporting, and eliminate the 75%/25% rule on the use of loan proceeds;~~
~~ 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~~
~~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;~~
~~ al ow certain previously incarcerated individuals to be approved for PPP and~~
~~SBA disaster loans;~~
~~ 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%~~
~~for loans with an outstanding loan balance of $150,000 or less, to 90% of the~~
~~outstanding loan balance;~~
~~ 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~~
~~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;~~
~~ temporarily reduce, for FY2020, 7(a) and 504/CDC fees to the maximum extent~~
~~possible given available appropriations; temporarily increase, for FY2020, the~~
~~maximum 7(a) loan amount from $5 mil ion to $10 mil ion and the maximum~~
~~504/CDC loan amount from $5.5 mil ion to $10 mil ion; and permanently~~
~~increase the 504/CDC maximum loan amount for smal manufacturers from $5.5~~
~~mil ion to $10 mil ion;~~
~~ eliminate the exception in the CARES Act preventing taxpayers who receive PPP~~
~~loan forgiveness from delaying the payment of employer payroll taxes;~~
~~ authorize, for each of FY2021-FY2025, $80 mil ion for Microloan technical~~
~~assistance grants and $110 mil ion for Microloan; and authorize to be~~
~~appropriated during FY2020, to remain available until expended, $50 mil ion for~~
~~Microloan technical assistance grants and $7 mil ion for Microloans;~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

~~ appropriate $500 mil ion for fee reductions and guaranty and maximum loan~~
~~amount increases; and~~
~~ appropriate $10 bil ion for Emergency EIDL grants.~~
~~The Continuing Small Business Recovery and Paycheck Protection~~
~~Program Act (S. 4321)~~
~~S. 4321 would, among other provisions,~~
~~ extend the PPP loan covered period from August 8, 2020, to December 31, 2020,~~
~~and reduce the maximum PPP loan amount from $10 mil ion to $2 mil ion;~~
~~ expand PPP forgivable expenses to include covered operations expenditures (e.g.,~~
~~software, cloud computing, and other human resources and accounting needs),~~
~~property damages due to public disturbances that occurred during 2020 (not~~
~~covered by insurance or other compensation), covered supplier costs essential to~~
~~the recipient’s current operations, and covered worker protection expenditures to~~
~~comply with federal health and safety guidelines related to COVID-19;~~
~~ al ow borrowers to select a preferred 8-week period after the loan’s origination~~
~~date through December 31, 2020, for determining loan forgiveness;~~
~~ create simplified loan forgiveness application processes for loans of $150,000 or~~
~~less and for loans of $150,000 to $2 mil ion. The SBA would retain the right to~~
~~review and audit these loans for fraud. Reporting of demographic information~~
~~would be optional;~~
~~ expand eligibility to include certain 501(c)(6) organizations, including Chambers~~
~~of Commerce and Destination Marketing Organizations, that have 300 or fewer~~
~~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.~~
~~Recipients cannot use any loan proceeds for lobbying activities;~~
~~ al ow 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~~
~~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~~
~~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~~
~~payroll costs, up to $2 mil ion (not more than $10 mil ion in the aggregate). Full~~
~~loan forgiveness would be based on a 60/40 cost al ocation between payroll and~~
~~eligible nonpayroll costs;~~
~~ establish a specific loan calculation for farmers and ranchers who operate as a~~
~~sole proprietor, independent contractor, or self-employed individual and al ow~~
~~Farm Credit System Institutions to make PPP loans;~~
~~ increase the PPP authorization amount from $659 bil ion to $749 bil ion, rescind~~
~~$100 bil ion from the SBA’s business loan program account, and appropriate an~~
~~additional $190 bil ion for the cost of PPP and PPP second draw loans. In~~
~~funding, $25 bil ion would be set-aside for entities employing 10 or fewer~~
~~employees and $10 bil ion would be set-aside for community lenders;~~
~~ appropriate $57.7 bil ion to support up to $100 bil ion in lending for a new 7(a)~~
~~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~~
~~requirements is that seasonal businesses have no more than 250 employees and~~
~~nonseasonable businesses have no more than 500 employees) and can~~
~~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~~
~~borrower’s annual revenue, capped at $10 mil ion, have a maturity of up to 20~~
~~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~~
~~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~~
~~an additional two years of deferment. Loan proceeds could be used for working~~
~~capital, acquisition of fixed assets, and refinancing existing indebtedness. The~~
~~loans would be available through December 31, 2020.~~
~~ appropriate $10 bil ion for a new Smal Business Growth and Domestic~~
~~Production Investment Facility under the SBA’s Smal Business Investment~~
~~Company (SBIC) program to provide funds to firms that invest in businesses~~
~~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.~~
~~At least 50% of the investments by the participating investment company must be~~
~~in eligible smal businesses. The program’s goals are to “improve the recovery of~~
~~eligible smal business concerns from the COVID-19 pandemic, increase~~
~~resiliency in the manufacturing supply chain of eligible smal business concerns,~~
~~and increase the economic development of smal business low-income census~~
~~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~~
~~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~~
~~capital or $200 mil ion. 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~~
~~commitments.~~
~~The (updated) Heroes Act (H.R. 925)~~
~~The (updated) Heroes Act (H.R. 925) would, among other provisions,~~
~~ al ow 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~~
~~mil ion;~~
~~ expand the list of al owable uses of proceeds and loan forgiveness to include~~
~~personal protective equipment, supplier costs, and costs related to property~~
~~damage from public disturbances;~~
~~ exclude publicly traded entities from being eligible for PPP loans;~~
~~ exclude businesses that are 51% or more foreign owned, controlled, and managed~~
~~from receiving a PPP loan;~~
~~ 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~~
~~apply for PPP loans greater than $350,000; and~~
~~ prevent the SBA from imposing an EIDL loan cap below the program’s statutory~~
~~limit of $2 mil ion and al ow current EIDL borrowers to modify their loans to~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

~~seek additional funds up to the $2 mil ion maximum loan size. Due to high~~
~~demand, the SBA currently caps COVID-19-related EIDL at $150,000.~~
~~In addition, the bil would appropriate~~
~~ $50 bil ion for Emergency EIDL Advance Payment grants, including $40 bil ion~~
~~for a new Lifeline Grant program targeting smal businesses with not more than~~
~~50 employees and that have suffered specified economic loss (related to~~
~~reductions in gross receipts) of not less than 30%;~~
~~ $8 bil ion 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~~
~~approved prior to February 15, 2020, and in a regular servicing status;~~
~~ $1 bil ion for a new Micro-SBIC program to provide financing to micro-SBICs~~
~~of up to 50% of private capital raised, not to exceed $25 mil ion or, in the case of~~
~~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 mil ion;~~
~~ $1 bil ion to increase 7(a) loan guarantees from 75% and 85%, depending on the~~
~~amount borrowed, to 90% for al 7(a) loans during FY2021, increase the~~
~~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~~
~~on 7(a) and 504/CDC loans during FY2021;~~
~~ $57 mil ion for Microloan program enhancements, including $50 mil ion for~~
~~Microloan technical assistance grants and $7 mil ion in loan credit subsidies to~~
~~support up to $72 mil ion in additional Microloan lending;~~
~~ $15 bil ion for a one-year, state and local government smal business local relief~~
~~grant program within the Department of the Treasury. The program would~~
~~provide states, localities, and Indian Tribes grants to create a smal business~~
~~emergency fund. The fund would support loans and other assistance to nonprofit~~
~~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~~
~~due to COVID-19; and~~
~~ $10 bil ion for a SBA grant program for independent live venue operators,~~
~~producers, promoters, or talent representatives to address the economic effects of~~
~~COVID-19 on certain live venues. An initial grant of up to $12 mil ion dollars,~~
~~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~~
~~personal protective equipment.~~

~~Author Information~~

~~Robert Jay Dilger~~
~~Bruce R. Lindsay~~
~~Senior Specialist in American National Government Specialist in American National Government~~

~~Congressional Research Service~~
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~~COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options~~

~~Acknowledgments~~
~~Sean Lowry, former CRS analyst, co-authored previous versions of this report.~~
-tax-deposits-and-payments-through-december-31-2020. Congressional Research Service 42 COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options
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