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

Changes from May 31, 2022 to March 1, 2023

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COVID-19 Relief Assistance to Small
~~May 31, 2022~~March 1, 2023
Businesses: Issues and Policy Options
~~Robert Jay Dilger~~Bruce R. Lindsay
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 Specialist in
American small businesses, including direct disaster loan programs for businesses, homeowners, and small businesses, including direct disaster loan programs for businesses, homeowners, and
~~American National~~National Government
renters; loan guaranty and venture capital programs; management and technical assistance renters; loan guaranty and venture capital programs; management and technical assistance
~~Government~~
training programs; and contracting programs. Congressional interest in these programs has training programs; and contracting programs. Congressional interest in these programs has

Adam G. Levin become especially acute in the wake of the Coronavirus Disease 2019 (COVID-19) pandemic’s become especially acute in the wake of the Coronavirus Disease 2019 (COVID-19) pandemic’s
~~Bruce R. Lindsay~~Analyst in Economic
widespread adverse economic impact on the national economy. widespread adverse economic impact on the national economy.
~~Specialist in American~~
~~National Government~~
Development Policy 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-
R. Corinne Blackford 2009) and during the COVID-19 pandemic, including the following: 2009) and during the COVID-19 pandemic, including the following:

 Analyst in Small Business and Economic  Development Policy P.L. 116-123, the Coronavirus Preparedness and Response Supplemental Appropriations P.L. 116-123, the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, Act, 2020,
provided the SBA an additional $20 million for SBA disaster assistance administrative expenses and made provided the SBA an additional $20 million for SBA disaster assistance administrative expenses and made
economic injury from the coronavirus an eligible economic injury from the coronavirus an eligible expense for SBA’s Economic Injury Disaster Loans expense for SBA’s Economic Injury Disaster Loans
(EIDL). (EIDL).
 P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), among other  P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), among other
provisions, provided $349 billion to support SBA’s Section 7(a) lending programs and create a new provisions, provided $349 billion to support SBA’s Section 7(a) lending programs and create a new
Paycheck Protection Program (PPP) 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, the Paycheck Protection Program and Health Care Enhancement Act (Enhancement Act),  P.L. 116-139, the Paycheck Protection Program and Health Care Enhancement Act (Enhancement Act),
among other provisions, provided $321.335 billion to support up to $659 billion in Section 7(a) lending. among other provisions, provided $321.335 billion to support up to $659 billion in Section 7(a) lending.
 P.L. 116-142, the Paycheck Protection Program Flexibility Act, among other provisions, extended the PPP  P.L. 116-142, the Paycheck Protection Program Flexibility Act, among other provisions, extended the PPP
loan forgiveness covered period from 8 weeks after the loan’s origination date to the earlier of 24 weeks or loan forgiveness covered period from 8 weeks after the loan’s origination date to the earlier of 24 weeks or
December 31, 2020. PPP borrowers could use the 8-week-covered period if they received their loan prior to December 31, 2020. PPP borrowers could use the 8-week-covered period if they received their loan prior to
enactment (June 5, 2020). enactment (June 5, 2020).
 P.L. 116-147, to extend the authority for commitments for the paycheck protection program, extended the  P.L. 116-147, to extend the authority for commitments for the paycheck protection program, extended the
PPP covered loan period from June 30, 2020, to August 8, 2020, and authorized $659 billion for PPP loan PPP covered loan period from June 30, 2020, to August 8, 2020, and authorized $659 billion for PPP loan
commitments and $30 billion for 7(a) loan commitments. commitments and $30 billion for 7(a) loan commitments.
 P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N,  P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N,
Title III of the Consolidated Appropriations Act of 2021), 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 Small Business Administration (SBA) administers several types of programs to support small The Small Business Administration (SBA) administers several types of programs to support small
businesses, including businesses, including
 direct disaster loan programs for businesses, homeowners, and renters to assist  direct disaster loan programs for businesses, homeowners, and renters to assist
their recovery from natural disasters; their recovery from natural disasters;
 loan guaranty and venture capital programs to enhance small business access to  loan guaranty and venture capital programs to enhance small business access to
capital; capital;
 small business management and technical assistance training programs to assist  small business management and technical assistance training programs to assist
business formation and expansion; and business formation and expansion; and
 contracting programs to increase small business opportunities in federal  contracting programs to increase small business opportunities in federal
contracting. contracting.
Congressional interest in the SBA’s programs has increased in recent years, primarily because Congressional interest in the SBA’s programs has increased in recent years, primarily because
small businesses are viewed as a means to stimulate economic activity and create jobs. small businesses are viewed as a means to stimulate economic activity and create jobs.
Congressional interest, however, has become especially acute in the wake of the Coronavirus Congressional interest, however, has become especially acute in the wake of the Coronavirus
Disease 2019 (COVID-19) pandemic’s widespread adverse economic impact on the national Disease 2019 (COVID-19) pandemic’s widespread adverse economic impact on the national
economy, including productivity losses, supply chain disruptions, major labor dislocation, and economy, including productivity losses, supply chain disruptions, major labor dislocation, and
significant financial pressure on both businesses and households. significant financial pressure on both businesses and households.
This report begins with an overview of legislation considered during the 116th and 117th This report begins with an overview of legislation considered during the 116th and 117th
Congresses to assist small businesses adversely affected by the COVID-19 pandemic. It then Congresses to assist small businesses adversely affected by the COVID-19 pandemic. It then
provides an overview of SBA disaster loans and discusses various issues related to providing provides an overview of SBA disaster loans and discusses various issues related to providing
disaster assistance to small businesses adversely affected by COVID-19. It then presents an disaster assistance to small 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 (Small guarantee, and Microloan programs), SBA management and technical training programs (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 legislation enacted during the 111th Congress to assist small businesses during and immediately of legislation enacted during the 111th Congress to assist small 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 small businesses adversely affected by the COVID-19 pandemic were 117th Congresses to assist small businesses adversely affected by the COVID-19 pandemic were
included in legislation enacted during the 111th Congress to assist small businesses during and included in legislation enacted during the 111th Congress to assist small businesses during and
immediately following the Great Recession, including SBA fee waivers and increased loan limits. immediately following the Great Recession, including SBA fee waivers and increased loan limits.
However, the legislation enacted during the 116th and 117th Congresses is much larger in scope However, the legislation 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, including, for the first time, specified types of forgiveness, and greatly expanded eligibility, 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 small businesses 2020, was the first act to include provisions targeting SBA assistance to small businesses
adversely affected by COVID-19. The act provided the SBA an additional $20 million for SBA adversely affected by COVID-19. The act provided the SBA an additional $20 million for SBA
disaster assistance administrative expenses and deemed the coronavirus to be a disaster under the disaster assistance administrative expenses and deemed the coronavirus to be a disaster under the
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SBA’s Economic Injury Disaster Loan (EIDL) program. This change made economic injury from SBA’s Economic Injury Disaster Loan (EIDL) program. This change made economic injury from
the coronavirus an eligible EIDL expense. the coronavirus an eligible EIDL expense.
At that time, the SBA had $1.1 billion in disaster loan credit subsidies available, enough to At that time, the SBA had $1.1 billion in disaster loan credit subsidies available, enough to
support between $7 billion and $8 billion in disaster loans. Anticipating high demand, the SBA support between $7 billion and $8 billion in disaster loans. Anticipating high demand, the SBA
initially reduced the maximum COVID-19 EIDL loan amount from the statutory imposed $2 initially reduced the maximum COVID-19 EIDL loan amount from the statutory imposed $2
million lending cap to $500,000. Due to unprecedented demand, on May 3, 2020, the SBA million lending cap to $500,000. Due to unprecedented demand, on May 3, 2020, the SBA
lowered the maximum COVID-19 EIDL loan amount to 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
available to small businesses, small 501(c)(3) nonprofit organizations, and small 501(c)(19) available to small businesses, small 501(c)(3) nonprofit organizations, and small 501(c)(19)
veterans organizations—and are eligible for loan forgiveness. The SBA initially announced that veterans organizations—and are eligible for loan forgiveness. The SBA initially announced that
the loans would have a two-year term at a 1% interest rate. the loans would have a two-year term at a 1% interest rate.
The CARES Act provided deferment relief for PPP loans and existing loans made under the 7(a), The CARES Act provided deferment relief for PPP loans and existing loans made under the 7(a),
504/CDC, and Microloan programs. The act also appropriated $349 billion for PPP loan 504/CDC, and Microloan programs. The act also appropriated $349 billion for PPP loan
guarantees and subsidies (to remain available through FY2021), $10 billion for Emergency EIDL guarantees and subsidies (to remain available through FY2021), $10 billion for Emergency EIDL
Advance Payment grants, $675 million for the SBA’s salaries and expenses account, $562 million Advance Payment grants, $675 million for the SBA’s salaries and expenses account, $562 million
for disaster loans, $25 million for the SBA’s Office of Inspector General (OIG), $265 million for for disaster loans, $25 million for the SBA’s Office of Inspector General (OIG), $265 million for
entrepreneurial development programs ($192 million for small business development centers entrepreneurial development programs ($192 million for small business development centers
(SBDCs), $48 million for women’s business centers (WBCs), and $25 million for SBA resource (SBDCs), $48 million for women’s business centers (WBCs), and $25 million for SBA resource
partners to provide online information and training), and $17 billion for six months of debt relief partners to provide online information and training), and $17 billion for six months of debt relief
for the SBA’s 7(a), 504/CDC, and Microloan programs. for the SBA’s 7(a), 504/CDC, and Microloan programs.
A summary of the CARES Act’s major small business-related provisions is presented in the A summary of the CARES Act’s major small business-related provisions is presented in the
Appendix.
On March 30, 2020, the SBA updated its website to allow COVID-19-related EIDL applicants an On March 30, 2020, the SBA updated its website to allow 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 billion authorization limit for Section 7(a) lending, which at that time included the PPP, the $349 billion authorization limit for Section 7(a) lending, which at that time included the PPP, the
SBA stopped accepting new PPP loan applications on April 15, 2020.4 A total of 1,661,367 PPP SBA stopped accepting new PPP loan applications on April 15, 2020.4 A total of 1,661,367 PPP

1 Additionally, on April 3, 2020, the Small Business Administration (SBA) lowered the COVID-19 Economic Injury 1 Additionally, on April 3, 2020, the Small Business Administration (SBA) lowered the COVID-19 Economic Injury
Disaster Loan (EIDL) lending cap from $500,000 to $15,000. On April 11, 2020, the SBA restored the cap to $500,000. Disaster Loan (EIDL) lending cap from $500,000 to $15,000. On April 11, 2020, the SBA restored the cap to $500,000.
See SBA, Office of Inspector General (OIG), See SBA, Office of Inspector General (OIG), Inspection of Small Business Administration’s Initial Disaster Assistance
Response to the Coronavirus Pandemic, Report Number 21-02, October 28, 2020, pp. 9, 10, at https://www.sba.gov/, Report Number 21-02, October 28, 2020, pp. 9, 10, at https://www.sba.gov/
document/report-21-02-inspection-small-business-administrations-initial-disaster-assistance-response-coronavirus-document/report-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 to reapply for an 2 EIDL applicants that applied for a COVID-19-related EIDL prior to March 30, 2020, were required to reapply for an
Emergency EIDL Advance Payment grant. Emergency EIDL Advance Payment grant.
3 The SBA accepted Paycheck Protection Program (PPP) loan applications from independent contractors and self- 3 The SBA accepted 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, “Statement by Secretary Mnuchin and Administrator Carranza on the Paycheck Protection Program and 4 SBA, “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/statement-secretary-mnuchin-and-administrator-carranza-paycheck-protection-program-and-releases-media-advisories/statement-secretary-mnuchin-and-administrator-carranza-paycheck-protection-program-and-
economic (hereinafter SBA, “Statement by Secretary Mnuchin and Administrator Carranza on the Paycheck Protection economic (hereinafter SBA, “Statement by Secretary Mnuchin and Administrator Carranza on the Paycheck 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 Act) authorized $349 billion for P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) 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 also stopped accepting COVID-19-related EIDL and Emergency EIDL Advance The SBA 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 limit from $349 billion to $659 billion and appropriated $321.335 billion to loan authorization limit from $349 billion to $659 billion and appropriated $321.335 billion to
support that level of lending. The act also appropriated $50 billion for EIDL (to support $367.1 support that level of lending. The act also appropriated $50 billion for EIDL (to support $367.1
billion in loan authority), $10 billion for Emergency EIDL advance payments (grants), and $2.1 billion in loan authority), $10 billion for Emergency EIDL advance payments (grants), and $2.1
billion for SBA salaries and expenses. billion for SBA salaries and expenses.
The SBA began accepting new EIDL and Emergency EIDL Advance Payment grant applications The SBA began accepting new EIDL and Emergency EIDL Advance Payment grant applications
on a limited basis on May 4 to accommodate agricultural businesses that were provided COVID-on a limited basis on May 4 to accommodate agricultural businesses that were provided COVID-
19-related EIDL eligibility by the Enhancement Act. The SBA also processed applications from 19-related EIDL eligibility by the Enhancement Act. The SBA also processed applications from
agricultural businesses that had submitted an EIDL application prior to the legislative change. agricultural businesses that had submitted an EIDL application prior to the legislative change.
Those agricultural businesses did not need to reapply. All other EIDL loan applications that were Those agricultural businesses did not need to reapply. All other EIDL loan applications that were
submitted before the SBA stopped accepting new applications on April 15 continued to be submitted before the SBA stopped accepting new applications on April 15 continued to be
processed on a first-in, first-out basis.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 all borrowers on June 15, 2020.8 Emergency EIDL Advance Payment applications from all borrowers on June 15, 2020.8
A summary of the Enhancement Act’s major small business-related provisions is presented in the A summary of the Enhancement Act’s major small business-related provisions is presented in the
Appendix.
Numerous proposals to amend the PPP were introduced throughout the spring, summer, and fall Numerous proposals to amend the PPP were introduced throughout the spring, summer, and fall
of 2020, including of 2020, including
 H.R. 6800, the Health and Economic Recovery Omnibus Emergency Solutions  H.R. 6800, the Health and Economic Recovery Omnibus Emergency Solutions
Act (Heroes Act), which was passed by the House on May 15, 2020; Act (Heroes Act), which was passed by the House on May 15, 2020;
 S. 4321, the Continuing Small Business Recovery and Paycheck Protection  S. 4321, the Continuing Small Business Recovery and Paycheck Protection
Program Act, which was introduced in the Senate on July 27, 2020; and Program Act, which was introduced in the Senate on July 27, 2020; and
 H.R. 925, the (updated) Heroes Act, which was passed by the House on October  H.R. 925, the (updated) Heroes Act, which was passed by the House on October
1, 2020. 1, 2020.

general business loans authorized under Section 7(a) of the Small Business Act. This authorization limit applied to the general business loans authorized under Section 7(a) of the Small Business Act. This authorization limit applied to the
7(a) lending programs as well as to the PPP. 7(a) lending programs as well as to the PPP.
5 SBA, “Paycheck Protection Program (PPP) Report through April 16, 2020, at 12 PM EST,” at https://content.sba.gov/ 5 SBA, “Paycheck Protection Program (PPP) Report through April 16, 2020, at 12 PM EST,” at https://content.sba.gov/
sites/default/files/2020-05/PPP%20Deck%20copy.pdf. sites/default/files/2020-05/PPP%20Deck%20copy.pdf.
6 SBA, “Statement by Secretary Mnuchin and Administrator Carranza on the Paycheck Protection Program and 6 SBA, “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, “Economic Injury Disaster Loan Emergency Advance,” May 4, 2020, at https://www.sba.gov/funding-7 SBA, “Economic Injury Disaster Loan Emergency Advance,” May 4, 2020, at https://www.sba.gov/funding-
programs/loans/coronavirus-relief-options/economic-injury-disaster-loan-emergency-advance. programs/loans/coronavirus-relief-options/economic-injury-disaster-loan-emergency-advance.
8 SBA, “SBA’s Economic Injury Disaster Loans and Advance Program Reopened to All Eligible Small Businesses and 8 SBA, “SBA’s Economic Injury Disaster Loans and Advance Program Reopened to All Eligible Small Businesses and
Non-Profits Impacted by COVID-19 Pandemic,” June 15, 2020, at https://www.sba.gov/about-sba/sba-newsroom/Non-Profits Impacted by COVID-19 Pandemic,” June 15, 2020, at https://www.sba.gov/about-sba/sba-newsroom/
press-releases-media-advisories/sbas-economic-injury-disaster-loans-and-advance-program-reopened-all-eligible-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 who was an requirement if the borrower is unable to rehire an individual who was an
employee of the recipient on or before February 15, 2020, or if the borrower can employee of the recipient on or before February 15, 2020, or if the borrower can
demonstrate an inability to hire similarly qualified employees on or before demonstrate an inability to hire similarly qualified employees on or before
December 31, 2020; December 31, 2020;
 established a minimum PPP loan maturity of five years for loans made on or after  established a minimum PPP loan maturity of five years for loans made on or after
the date of enactment; and the date of enactment; and
 extended the PPP loan deferral period from six months (under SBA regulations)  extended the PPP loan deferral period from six months (under SBA regulations)
to the date that the SBA remits the borrower’s loan forgiveness amount to the to the date that the SBA remits the borrower’s loan forgiveness amount to the
lender or, if the borrower does not apply for loan forgiveness, 10 months after the lender or, if the borrower does not apply for loan forgiveness, 10 months after the
end of the borrower’s loan forgiveness covered period. end of the borrower’s loan forgiveness covered period.
Under the act, June 30, 2020, remained the last date on which a PPP loan application could be Under the act, June 30, 2020, remained the last date on which a PPP loan application could be
approved. A summary of the Paycheck Protection Program Flexibility Act is presented in the approved. A summary of the Paycheck Protection Program Flexibility Act is presented in the
Appendix.
As required by the CARES Act, the SBA stopped accepting new PPP loan applications at As required by the CARES Act, the SBA stopped accepting new PPP loan applications at
midnight on June 30, 2020. midnight on June 30, 2020.
P.L. 116-147, to extend the authority for commitments for the paycheck protection program and P.L. 116-147, to extend the authority for commitments for the paycheck protection program and
separate amounts authorized for other loans under Section 7(a) of the Small Business Act, and for separate amounts authorized for other loans under Section 7(a) of the Small Business Act, and for
other purposes, enacted on July 4, 2020, extended the PPP covered loan period from June 30, other purposes, enacted on July 4, 2020, extended the PPP covered loan period from June 30,
2020, to August 8, 2020, and authorized $659 billion for PPP loan commitments and $30 billion 2020, to August 8, 2020, and authorized $659 billion for PPP loan commitments and $30 billion
for 7(a) loan commitments. The Senate passed the bill by voice vote on June 30, 2020, and the for 7(a) loan commitments. The Senate passed the bill by voice vote on June 30, 2020, and the
House passed it by unanimous consent on July 1, 2020. House passed it by unanimous consent on July 1, 2020.
On July 11, 2020, the SBA announced that it had stopped accepting Emergency EIDL Advance On July 11, 2020, the SBA announced that it had stopped accepting Emergency EIDL Advance
Payment grant applications because the program had reached its authorization limit of $20 billion Payment grant applications because the program had reached its authorization limit of $20 billion
in grants.10 The SBA approved 5,781,390 Emergency EIDL Advance Payment grant in grants.10 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 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 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. having been used for payroll costs.
10 SBA, “SBA provided $20 billion to Small Businesses and Non-Profits Through the Emergency Economic Injury 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-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-releases-media-advisories/sba-provided-20-billion-small-businesses-and-non-profits-through-economic-injury-disaster-
loan. loan.
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applications.11 As of February 15, 2021, the SBA had approved 3,734,701 COVID-19-related applications.11 As of February 15, 2021, the SBA had approved 3,734,701 COVID-19-related
EIDL loans, totaling over $203 billion.12 EIDL loans, totaling over $203 billion.12
As required by P.L. 116-147, the SBA stopped accepting PPP loan applications on August 8, As required by P.L. 116-147, the SBA stopped accepting PPP loan applications on August 8,
2020. 2020.
As of August 8, 2020, the SBA had approved, after cancellations, 5,212,128 PPP loans, totaling As of August 8, 2020, the SBA had approved, after cancellations, 5,212,128 PPP loans, totaling
over $525 billion (seeover $525 billion (see Table 1). For comparative purposes, that loan approval amount is more . For comparative purposes, that loan approval amount is more
than the amount the SBA has approved in all of its loan programs, including disaster loans, during than the amount the SBA has approved in all of its loan programs, including disaster loans, during
the last 29 years (from October 1, 1991, through December 31, 2019; $509.9 billion).13 the last 29 years (from October 1, 1991, through December 31, 2019; $509.9 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 cancellations) (after cancellations)
Source: Small Business Administration (SBA), “Additional Program Information: approvals as of August 8, 2020,” Small Business Administration (SBA), “Additional Program Information: approvals as of August 8, 2020,”
at https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program. at https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program.
Note: Cancellations include duplicative loans, loans not closed for any reason, and loans that have been paid off. Cancellations include duplicative loans, loans not closed for any reason, and loans that have been paid off.
As of August 8, 2020, four industry sectors had received at least 10% of PPP net loan amounts: As of August 8, 2020, four industry sectors had received at least 10% of PPP net loan amounts:
 Health Care and Social Assistance (12.9%);  Health Care and Social Assistance (12.9%);
 Professional, Scientific, and Technical Services (12.7%);  Professional, Scientific, and Technical Services (12.7%);
 Construction (12.4%); and  Construction (12.4%); and
 Manufacturing (10.3%).14  Manufacturing (10.3%).14
House and Senate leaders continued negotiations on legislation to reopen and amend the PPP 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, 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 Nonprofits, and Venues Act (Division N, Title III of the Consolidated Appropriations Act of
2021), enacted on December 27, 2020, among other provisions, 2021), enacted on December 27, 2020, among other provisions,
 extended the PPP loan covered period from August 8, 2020, to March 31, 2021;  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  expanded the list of allowable uses of proceeds and loan forgiveness to include
personal protective equipment, supplier costs, payments for software, cloud personal protective equipment, supplier costs, payments for software, cloud
computing, and other human resources and accounting needs, and costs related to 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 billion. See As of April 24, 2020, the SBA had approved nearly 1.2 million Emergency EIDL grants, totaling $4.8 billion. See
SBA, “COVID-19 EIDL Advance Reports, April 24, 2020,” at https://www.sba.gov/document/report-covid-19-eidl-SBA, “COVID-19 EIDL Advance Reports, April 24, 2020,” at https://www.sba.gov/document/report-covid-19-eidl-
advance-report-04-24-20. advance-report-04-24-20.
11 SBA, “Disaster Assistance Update EIDL Advance July 15, 2020 (figures as of July 14, 2020),” at 11 SBA, “Disaster Assistance Update EIDL Advance July 15, 2020 (figures as of July 14, 2020),” at
https://www.sba.gov/sites/default/files/2020-07/EIDL%20COVID-19%20Advance%207.15.20.pdf. https://www.sba.gov/sites/default/files/2020-07/EIDL%20COVID-19%20Advance%207.15.20.pdf.
12 SBA, “SBA Disaster Assistance Update Nationwide EIDL Loans/COVID-19, February 16, 2021 (figures as of 12 SBA, “SBA 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.
13 SBA, “WDS Lending Data File,” October 18, 2019; and SBA, “Small Business Administration loan program 13 SBA, “WDS Lending Data File,” October 18, 2019; and SBA, “Small Business Administration loan program
performance: Table 2 - Gross Approval Amount by Program, December 31, 2019,” at https://www.sba.gov/document/performance: Table 2 - Gross Approval Amount by Program, December 31, 2019,” at https://www.sba.gov/document/
report-small-business-administration-loan-program-performance. report-small-business-administration-loan-program-performance.
14 SBA, “Paycheck Protection Program (PPP) Report: Approvals through August 8, 2020; Industry by NAICS Sector,” 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. at https://www.sba.gov/document/report-paycheck-protection-program-report-through-august-8-2020.
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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;
 allowed borrowers to select a PPP loan forgiveness covered period of either 8  allowed 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;
 created a simplified loan forgiveness application process for loans of $150,000 or  created a simplified loan forgiveness application process for loans of $150,000 or
less, which includes an application form that is not more than one page in length less, which includes an application form that is not more than one page in length
and only requires borrowers to provide a description of the number of employees and only requires borrowers to provide a description of the number of employees
the borrower was able to retain because of the loan, the estimated amount of the the borrower was able to retain because of the loan, the estimated amount of the
loan amount spent on payroll costs, and the total loan amount;15 loan amount spent on payroll costs, and the total loan amount;15
 allowed PPP borrowers with fewer than 300 employees, that have or will use the  allowed PPP borrowers with fewer than 300 employees, that have or will use the
full amount of their PPP loan, and can document quarterly revenue losses of at full amount of their PPP loan, and can document quarterly revenue losses of at
least 25% in the first, second, or third quarter of 2020 relative to the same quarter least 25% in the first, second, or third quarter of 2020 relative to the same quarter
of 2019 to receive a second-draw PPP loan of up to $2 million; of 2019 to receive a second-draw PPP loan of up to $2 million;
 increased the PPP loan authorization level from $659 billion to $806.45 billion,  increased the PPP loan authorization level from $659 billion to $806.45 billion,
appropriated an additional $284.45 billion for the PPP, and rescinded $146.5 appropriated an additional $284.45 billion for the PPP, and rescinded $146.5
billion from the SBA’s business loans program account (appropriated funds that billion from the SBA’s business loans program account (appropriated funds that
were not spent prior to enactment); were not spent prior to enactment);
 set aside funds for new and smaller small businesses, for borrowers in low- and  set aside funds for new and smaller small businesses, for borrowers in low- and
moderate-income communities, and for community and smaller lenders;16 moderate-income communities, and for community and smaller lenders;16
 extended the covered period for Emergency EIDL advance payments (grants)  extended the covered period for Emergency EIDL advance payments (grants)
from December 31, 2020, to December 31, 2021 and repealed the requirement 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 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 forgiveness amount if the advance payment was refinanced into their PPP
loan; loan;
 appropriated $20 billion for an EIDL Targeted advance payment (grant)  appropriated $20 billion for an EIDL Targeted advance payment (grant)
program;17 program;17
 increased the 7(a) loan guarantee program’s authorization limit from $30 billion  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 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 program subsidy costs, and costs related to (1) increasing the 7(a) program’s loan
guarantee percentage from 75% and 85%, depending on the loan amount, to 90% guarantee percentage from 75% and 85%, depending on the loan amount, to 90%
for all 7(a) loans; (2) increasing the SBAExpress loan amount from $350,000 to for all 7(a) loans; (2) increasing the SBAExpress loan amount from $350,000 to

15 The borrower was also required to attest that they complied with all PPP loan requirements, retain relevant 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 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. 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 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 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 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 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 borrowers with a maximum of 10 employees or for loans less than $250,000 to borrowers in low- or moderate-income
neighborhoods. neighborhoods.
17 The EIDL Targeted advance payment (grant) program provided a $10,000 advance payment to borrowers located in 17 The EIDL Targeted advance payment (grant) program provided a $10,000 advance payment to borrowers located in
low-income communities that had suffered a revenue loss greater than 30% over specified time periods and had no low-income communities that had suffered a revenue loss greater than 30% over specified time periods and had no
more than 300 employees. Applicants that meet these requirements and received an Emergency EIDL advance payment more than 300 employees. Applicants that meet these requirements and received an Emergency EIDL advance payment
previously were eligible to receive an amount equal to the difference of what the borrower received and $10,000. The previously were eligible to receive an amount equal to the difference of what the borrower received and $10,000. The
SBA was required to provide first priority in awarding the grants to eligible borrowers located in low-income SBA was required to provide first priority in awarding the grants to eligible borrowers located in low-income
communities that received an Emergency EIDL advance payment of less than $10,000 previously, and second priority communities that received an Emergency EIDL advance payment of less than $10,000 previously, and second priority
to eligible first-time applicants located in low-income communities. to eligible first-time applicants located in low-income communities.
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$1 million on January 1, 2021 (reverted permanently to $500,000 on October 1, $1 million on January 1, 2021 (reverted 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 (reverted permanently to 50% for all 75% for loans of $350,000 or less (reverted permanently to 50% for all
SBAExpress loans on October 1, 2021); (4) waiving 7(a) and 504/CDC lender SBAExpress loans on October 1, 2021); (4) waiving 7(a) and 504/CDC lender
and borrower fees in FY2021; and (5) providing lower interest rates for the and borrower fees in FY2021; and (5) providing lower interest rates for the
504/CDC refinancing program; 504/CDC refinancing program;
 appropriated $3.5 billion to resume the first six months of payments of principal,  appropriated $3.5 billion to resume the first six months of payments of principal,
interest, and fees for SBA 7(a) loans, 504/CDC loans, and Microloans, capped at interest, and fees for SBA 7(a) loans, 504/CDC loans, and Microloans, capped at
$9,000 per month per borrower; $9,000 per month per borrower;
 appropriated $15 billion for a new Shuttered Venue Operators Grant program to  appropriated $15 billion for a new Shuttered Venue Operators Grant program to
provide grants to eligible live venue operators or promoters, theatrical producers, provide grants to eligible 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
revenue over specified time periods;18 and revenue over specified time periods;18 and
 appropriated $57 million for Microloan program enhancements, including $50  appropriated $57 million for Microloan program enhancements, including $50
million for Microloan technical assistance grants and $7 million in loan credit million for Microloan technical assistance grants and $7 million in loan credit
subsidies to support up to $64 million in additional Microloan lending. subsidies to support up to $64 million in additional Microloan lending.
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.19 On January 8, 2021, the SBA announced that it would reopen 116-260’s PPP-related provisions.19 On January 8, 2021, the SBA announced that it would reopen
the PPP loan portal on January 11, 2021, on a restricted basis. Initially, only community financial the PPP loan portal on January 11, 2021, on a restricted basis. Initially, only community financial
institutions were allowed to submit PPP loan applications (first-draw loans were accepted starting institutions were allowed to submit PPP loan applications (first-draw loans were accepted starting
on January 11 and second-draw loans were accepted starting on January 13) as a means to on January 11 and second-draw loans were accepted starting on January 13) as a means to
promote PPP loan access for minority, underserved, veteran and women-owned small promote PPP loan access for minority, underserved, veteran and women-owned small
businesses.20 Community financial institutions are generally recognized as more likely to serve businesses.20 Community financial institutions are generally recognized as more likely to serve
these populations than are other lending institutions. these populations than are other lending institutions.
The SBA reopened the PPP loan portal to PPP-eligible lenders with $1 billion or less in assets on The SBA reopened the PPP loan portal to PPP-eligible lenders with $1 billion or less in assets on
January 15, 2021, and to all PPP-eligible lenders on January 19, 2021.21 January 15, 2021, and to 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 18 For additional information and analysis concerning the Shuttered Venue Operators Grant Program, see CRS Report
R46689, R46689, SBA Shuttered Venue Operators Grant Program (SVOG), by Robert Jay Dilger and Sean Lowry. , by Robert Jay Dilger and Sean Lowry.
19 These rules were subsequently printed in the 19 These rules were subsequently printed in the Federal Register on January 14, 2021. See SBA and Department of the on January 14, 2021. See SBA and Department of the
Treasury, “Business Loan Program Temporary Changes; Paycheck Protection Program as Amended by Economic Aid Treasury, “Business Loan Program Temporary Changes; Paycheck Protection Program as Amended by Economic Aid
Act,” 86 Act,” 86 Federal Register 3692-3712, January 14, 2021; and SBA and Department of the Treasury, “Business Loan 3692-3712, January 14, 2021; and SBA and Department of the Treasury, “Business Loan
Program Temporary Changes; Paycheck Protection Program Second Draw Loans,” 86 Program Temporary Changes; Paycheck Protection Program Second Draw Loans,” 86 Federal Register 3712-3723, 3712-3723,
January 14, 2021. January 14, 2021.
20 SBA, “Guidance on Accessing Capital for Minority, Underserved, Veteran and Women-Owned Business Concerns,” 20 SBA, “Guidance on Accessing Capital for Minority, Underserved, Veteran and Women-Owned Business Concerns,”
January 6, 2021, at https://www.sba.gov/sites/default/files/2021-01/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; and SBA, “SBA and Owned%20Business%20Concerns%20.pdf?utm_medium=email&utm_source=govdelivery; and SBA, “SBA and
Treasury Announce PPP Re-Opening; Issue New Guidance,” January 8, 2021. Treasury Announce PPP Re-Opening; Issue New Guidance,” January 8, 2021.
21 SBA, “SBA Re-Opening Paycheck Protection Program to Small Lenders on Friday, January 15 and All Lenders on 21 SBA, “SBA Re-Opening Paycheck Protection Program to Small Lenders on Friday, January 15 and All Lenders on
Tuesday, January 19,” at https://www.sba.gov/article/2021/jan/13/sba-re-opening-paycheck-protection-program-small-Tuesday, January 19,” at https://www.sba.gov/article/2021/jan/13/sba-re-opening-paycheck-protection-program-small-
lenders-friday-january-15-all-lenders-tuesday. lenders-friday-january-15-all-lenders-tuesday.
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In addition, in an effort to enhance PPP access for smaller entities, the SBA announced on 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 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 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 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 “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 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 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
eligible and if they use an Individual Taxpayer Identification Number (ITIN) to pay their taxes eligible 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.24 they may use their ITIN as an identifier when applying for a PPP loan.24
In a related development, on January 20, 2021, the Biden Administration requested an additional In a related development, on January 20, 2021, the Biden Administration requested an additional
$50 billion for SBA program enhancements in its “American Rescue Plan,” including $25 billion $50 billion for SBA program enhancements in its “American Rescue Plan,” including $25 billion
for a Restaurant Revitalization grant program.25 During congressional consideration of the for a Restaurant Revitalization grant program.25 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
billion and accepted the Administration’s other small business proposals. billion and accepted the Administration’s other small business proposals.
Specifically, P.L. 117-2, the American Rescue Plan Act of 2021, provided an additional $53.6 Specifically, P.L. 117-2, the American Rescue Plan Act of 2021, provided an additional $53.6
billion for SBA program enhancements, including billion for SBA program enhancements, including
 $28.6 billion for the Restaurant Revitalization grant program to provide grants of  $28.6 billion for the Restaurant Revitalization grant program to provide grants of
up to $10 million per entity (up to $5 million per physical location, limited to 20 up to $10 million per entity (up to $5 million 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 billion for the Targeted Economic Injury Disaster Loan Advance payment  $15 billion for the Targeted Economic Injury Disaster Loan Advance payment
program; program;
 $7.25 billion for the PPP;  $7.25 billion for the PPP;
 $1.25 billion for the Shuttered Venue Operators Grant Program;  $1.25 billion for the Shuttered Venue Operators Grant Program;

22 SBA, “Biden Administration takes steps to promote equitable access to SBA Relief,” February 22, 2021, at 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. 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 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 (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) “may elect to calculate the owner individuals (the self-employed, sole proprietors, and independent contractors) “may elect to calculate the owner
compensation share of its payroll costs—that is, the share of its payroll costs that represents compensation of the compensation share of its payroll costs—that is, the share of its payroll costs that represents compensation of the
owner—based on either (i) net profit or (ii) gross income.” See SBA, “Business Loan Program Temporary Changes; owner—based on either (i) net profit or (ii) gross income.” See SBA, “Business Loan Program Temporary 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.
24 The SBA also eliminated “an exclusionary restriction on PPP access for small business owners with prior non-fraud 24 The SBA also eliminated “an exclusionary restriction on PPP access for small business owners with prior non-fraud
felony convictions, consistent with a bipartisan congressional proposal” and “federal student loan debt delinquency and felony convictions, consistent with a bipartisan congressional proposal” and “federal student loan debt delinquency and
default as disqualifiers to participating in the PPP.” See SBA, “SBA Prioritizes Smallest of Small Businesses in the default as disqualifiers to participating in the PPP.” See SBA, “SBA Prioritizes Smallest of Small Businesses in the
Paycheck Protection Program,” February 22, 2021, at https://www.sba.gov/article/2021/feb/22/sba-prioritizes-smallest-Paycheck Protection Program,” February 22, 2021, at https://www.sba.gov/article/2021/feb/22/sba-prioritizes-smallest-
small-businesses-paycheck-protection-program; and The (Biden) White House, “Fact Sheet: Biden-Harris small-businesses-paycheck-protection-program; and The (Biden) White House, “Fact Sheet: Biden-Harris
Administration Increases Lending to Small Businesses in Need, Announces Changes to PPP to Further Promote Administration Increases Lending to Small Businesses in Need, Announces Changes to PPP to Further Promote
Equitable Access to Relief,” February 22, 2021, at https://www.whitehouse.gov/briefing-room/statements-releases/Equitable Access to Relief,” February 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/.
25 The (Biden) White House, “President Biden Announces American Rescue Plan,” January 20, 2021, at 25 The (Biden) White House, “President Biden Announces American Rescue Plan,” January 20, 2021, at
https://www.whitehouse.gov/briefing-room/legislation/2021/01/20/president-biden-announces-american-rescue-plan/. https://www.whitehouse.gov/briefing-room/legislation/2021/01/20/president-biden-announces-american-rescue-plan/.
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 $840 million for administrative costs to prevent, prepare and respond to the  $840 million for administrative costs to prevent, prepare and respond to the
COVID-19 pandemic, including expenses related to PPP, SVOG, and grants to COVID-19 pandemic, including expenses related to PPP, SVOG, and grants to
restaurants; restaurants;
 $460 million for the disaster loan program ($70 million for credit subsidies and  $460 million for the disaster loan program ($70 million for credit subsidies and
$390 million for administrative costs); $390 million for administrative costs);
 $100 million for a community navigator pilot grant program to improve small  $100 million for a community navigator pilot grant program to improve small
business access to COVID-19-related assistance programs; business access to COVID-19-related assistance programs;
 $75 million for outreach, education, and improving the SBA website; and  $75 million for outreach, education, and improving the SBA website; and
 $25 million for SBA’s Office of Inspector General for oversight, to remain  $25 million for SBA’s Office of Inspector General for oversight, to remain
available until expended.26 available until expended.26
On March 24, 2021, the SBA announced that, as of April 6, 2021, the maximum COVID-19 EIDL 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 months of economic 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 existing EIDL borrowers via 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 increase.27 email to provide details about how they can request an increase.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 informed lenders that due to budgetary limitations it was limiting new On May 4, 2021, the SBA 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.28 applications that had already been submitted.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 million PPP loans totaling over $799.8 billion, including more SBA had approved more than 11.8 million PPP loans totaling over $799.8 billion, including more
than 6.6 million PPP loans totaling over $277.7 billion during 2021 (seethan 6.6 million PPP loans totaling over $277.7 billion during 2021 (see Table 2).29 29

26 U.S. House of Representatives, Committee on Small Business, “Committee Approves $50 Billion in Small Business 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?Aid for COVID Relief Package,” February 10, 2021, at https://smallbusiness.house.gov/news/documentsingle.aspx?
DocumentID=3559. DocumentID=3559.
27 SBA, “SBA to Increase Lending Limit for COVID-19 Economic Injury Disaster Loans,” March 24, 2021, at 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. 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 28 National Association of Government Guaranteed Lenders (NAGGL), “Recent PPP Updates,” May 4, 2021, at
https://www.naggl.org/. 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 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 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-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. 19-relief-options/paycheck-protection-program/ppp-data.
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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 cancellations) (after cancellations)
Source: Small Business Administration (SBA), “Paycheck Protection Program (PPP) Data: Approvals through Small Business Administration (SBA), “Paycheck Protection Program (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: Cancellations include duplicative loans, loans not closed for any reason, and loans that have been paid off. Cancellations include duplicative loans, loans not closed for any reason, and loans that have been paid off.
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
million from $500,000 (effective October 8, 2021), offering 24 months of loan deferment after million from $500,000 (effective October 8, 2021), offering 24 months of loan deferment after
loan origination (later extended to 30 months), and allowing EIDL funds to be used to prepay loan origination (later extended to 30 months), and allowing EIDL funds to be used to prepay
commercial debt (typically used to prepay loans with a higher interest rate) and make payments commercial debt (typically used to prepay loans with a higher interest rate) and make payments
on federal business debt.30 on federal business debt.30
As of January 1, 2022, the SBA had stopped accepting applications for new COVID-19 EIDL 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 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 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. 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 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 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 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 SBA disaster assistance is provided in the form of loans, not grants, which must be repaid to the
federal government. The SBA’s disaster loans are unique in two respects: (1) they go directly to federal government. The SBA’s disaster loans are unique in two respects: (1) they go directly to
the ultimate borrower, and (2) they are not limited to small businesses.32 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 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 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 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 https://www.sba.gov/article/2021/sep/09/Businesses Facing 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-program-aid-small-businesses; and SBA, sba-administrator-guzman-enhances-covid-economic-injury-disaster-loan-program-aid-small-businesses; and SBA,
“SBA Administrator Guzman Announces Key Policy Change: Existing COVID Economic Injury Disaster Loan “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/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. 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 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-Advances, April 28, 2022 (figures as of April 27, 2022),” at https://www.sba.gov/document/report-covid-19-eidl-
reports-2022. reports-2022.
32 13 C.F.R. §123.200. 32 13 C.F.R. §123.200.
33 13 C.F.R. §123.105 and 13 C.F.R. §123.203. 33 13 C.F.R. §123.105 and 13 C.F.R. §123.203.
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(EIDL) are available to eligible small businesses, small agricultural cooperatives, small (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
individuals and households (renters and property owners) to repair and replace homes and individuals and households (renters and property owners) to repair and replace homes and
personal property. The SBA disbursed $401 million in disaster loans in FY2016, $889 million in personal property. The SBA disbursed $401 million in disaster loans in FY2016, $889 million in
FY2017, $3.59 billion in FY2018, $1.5 billion in FY2019, $178.5 billion in FY2020 (primarily to FY2017, $3.59 billion in FY2018, $1.5 billion in FY2019, $178.5 billion in FY2020 (primarily to
businesses for COVID-19-related assistance), and $73.8 billion in FY2021 (primarily to businesses for COVID-19-related assistance), and $73.8 billion in FY2021 (primarily to
businesses for COVID-19-related assistance).34 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.35 This report focuses on the EIDL program because it was used to address the adverse and EIDLs.35 This report focuses on the EIDL program because it was used to address the adverse
economic impact of COVID-19 on small businesses and other EIDL-eligible organizations. economic impact of COVID-19 on small businesses and other EIDL-eligible organizations.
P.L. 116-123, the Coronavirus Preparedness and Response Supplemental Appropriations Act, P.L. 116-123, the Coronavirus Preparedness and Response Supplemental Appropriations Act,
2020, deemed the coronavirus to be a disaster under the EIDL program. This change made 2020, deemed the coronavirus to be a disaster under the EIDL program. This change made
economic injury from the coronavirus an eligible EIDL expense. The act also provided the SBA economic injury from the coronavirus an eligible EIDL expense. The act also provided the SBA
an additional $20 million for disaster loan administrative expenses. an additional $20 million for disaster loan administrative expenses.
For a discussion of all SBA disaster loans, see CRS Report R41309, For a discussion of all SBA disaster loans, see CRS Report R41309, The SBA Disaster Loan
Program: Overview and Possible Issues for Congress, by Bruce R. Lindsay. , by Bruce R. Lindsay.
Economic Injury Disaster Loans
EIDLs provide up to $2 million for working capital (including fixed debts, payroll, accounts EIDLs provide up to $2 million for working capital (including fixed debts, payroll, accounts
payable and other bills that cannot be paid because of the disaster’s impact) to help small payable and other bills that cannot be paid because of the disaster’s impact) to help small
businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most
private, nonprofit organizations meet their financial obligations and operating expenses that private, nonprofit organizations meet their financial obligations and operating expenses that
cannot be met as a direct result of the disaster.36 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 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 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 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 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 SBA announced that it was increasing the EIDL borrowing limit to $2 million from $500,000
(effective October 8, 2021). (effective October 8, 2021).

34 SBA, Office of Legislative and Congressional Affairs, “WDS Report Amount Fiscal Year 2019, Table 1.4 34 SBA, Office of Legislative and Congressional Affairs, “WDS Report Amount Fiscal Year 2019, Table 1.4
Disbursements by Program,” October 18, 2019; SBA, “Agency Financial Report, Fiscal Year 2020,” p. 82, at Disbursements by Program,” October 18, 2019; SBA, “Agency Financial Report, Fiscal Year 2020,” p. 82, at
https://www.sba.gov/document/report-agency-financial-report; and SBA, “Agency Financial Report, Fiscal Year https://www.sba.gov/document/report-agency-financial-report; and SBA, “Agency Financial Report, Fiscal Year
2021,” p. 76, at https://www.sba.gov/document/report-agency-financial-report. 2021,” p. 76, at https://www.sba.gov/document/report-agency-financial-report.
35 The SBA also offers military reservist economic injury disaster loans. These loans are available when economic 35 The SBA also offers military reservist economic injury disaster loans. These loans are available when economic
injury is incurred as a direct result of a business owner or an essential employee being called to active duty. These loans injury is incurred as a direct result of a business owner or an essential employee being called to active duty. These loans
are generally not associated with disasters. See CRS Report R42695, are generally not associated with disasters. See CRS Report R42695, SBA Veterans Assistance Programs: An Analysis
of Contemporary Issues, by Robert Jay Dilger and Sean Lowry. , by Robert Jay Dilger and Sean Lowry.
36 SBA, “Fact Sheet – Economic Injury Disaster Loans, California Declaration #16332,” March 19, 2020, at 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 https://disasterloan.sba.gov/ela/Declarations/DeclarationDetails?declNumber=3485&direct=false (hereinafter cited as
SBA, “Fact Sheet”). SBA, “Fact Sheet”).
37 SBA, “SBA to Increase Lending Limit for COVID-19 Economic Injury Disaster Loans,” March 24, 2021, at 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. https://www.sba.gov/article/2021/mar/24/sba-increase-lending-limit-covid-19-economic-injury-disaster-loans.
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Public nonprofit organizations and several specific business types are not eligible for EIDL Public nonprofit organizations and several specific business types are not eligible for EIDL
assistance. Ineligible businesses include, but are not limited to, the following: assistance. Ineligible businesses include, but are not limited to, the following:
 businesses that do not meet the SBA’s small business eligibility criteria,  businesses that do not meet the SBA’s small business eligibility criteria,
including the SBA’s size standards; including the SBA’s size standards;
 businesses that derive more than one-third of their annual gross revenue from  businesses that derive more than one-third of their annual gross revenue from
legal gambling activities; legal gambling activities;
 casinos and racetracks;  casinos and racetracks;
 religious organizations;  religious organizations;
 political and lobbying concerns;  political and lobbying concerns;
 government-owned concerns (expect for businesses owned or controlled by a  government-owned concerns (expect for businesses owned or controlled by a
Native American tribe); and Native American tribe); and
 businesses determined by the SBA to have credit available elsewhere.38  businesses determined by the SBA to have credit available elsewhere.38
EIDL loan amounts are based on actual economic injury and financial needs, regardless of EIDL loan amounts are based on actual economic injury and financial needs, regardless of
whether the business or eligible nonprofit suffered any property damage. If an applicant is a whether the business or eligible nonprofit suffered any property damage. If an applicant is a
major source of employment, the SBA may waive the $2 million statutory limit.39 In addition, major source of employment, the SBA may waive the $2 million statutory limit.39 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.40 or bonuses, or for relocation.40
Applicants must have a credit history acceptable to the SBA, the ability to repay the loan, and Applicants must have a credit history acceptable to the SBA, the ability to repay the loan, and
present collateral for all EIDL loans over $25,000 if available. The SBA collateralizes real estate present collateral for all EIDL loans over $25,000 if available. The SBA collateralizes real estate
or other assets when available, but it will not deny a loan for lack of collateral.41 or other assets when available, but it will not deny a loan for lack of collateral.41
EIDL interest rates are determined by formulas established in law (discussed later) and are fixed EIDL interest rates are determined by formulas established in law (discussed later) and are fixed
for the life of the loan. EIDL interest rate ceilings are statutorily set at no more than 4% per for the life of the loan. EIDL interest rate ceilings are statutorily set at no more than 4% per
annum. EIDL applicants are not eligible if the SBA determines that the applicant has credit annum. EIDL applicants are not eligible if the SBA determines that the applicant has credit
available elsewhere. available elsewhere.
EIDL loans can have maturities up to 30 years. The SBA determines an appropriate installment EIDL loans can have maturities up to 30 years. The SBA determines an appropriate installment
payment based on each borrower’s financial condition, which, in turn, determines the loan term.42 payment based on each borrower’s financial condition, which, in turn, determines the loan term.42
There are no prepayment penalties. There are no prepayment penalties.
SBA EIDL assistance is not automatically available. It must be requested in one of two ways: (1) SBA EIDL assistance is not automatically available. It must be requested in one of two ways: (1)
a state or territory governor can submit a request to the President for a major disaster declaration a state or territory governor can submit a request to the President for a major disaster declaration
under the Robert T. Stafford Disaster Relief and Emergency Assistance Act43 or (2) a state or under the Robert T. Stafford Disaster Relief and Emergency Assistance Act43 or (2) a state or
governor can submit a request for SBA EIDL from the SBA Administrator under the Small governor can submit a request for SBA EIDL from the SBA Administrator under the Small
Business Act. Business Act.
There was some initial concern that COVID-19 would not be a declarable disaster under the There was some initial concern that COVID-19 would not be a declarable disaster under the
Small Business Act because it did not meet the legal definition for a disaster. As mentioned, to Small Business Act because it did not meet the legal definition for a disaster. As mentioned, to
prevent any potential ambiguity, Title II of P.L. 116-123 deemed the coronavirus a disaster under prevent any potential ambiguity, Title II of P.L. 116-123 deemed the coronavirus a disaster under

38 SBA, “Disaster Assistance Program, SOP 50 30 9, pp. 70, 71, at https://www.sba.gov/document/sop-50-30-9-38 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”). disaster-assistance-program-posted-05-31 (hereinafter cited as SBA, “Disaster Assistance Program SOP”).
39 SBA, “Fact Sheet.” 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. 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.” 41 SBA, “Fact Sheet.”
42 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. 43 P.L. 93-288, as amended. Tribal nations are also authorized to request and receive major disaster assistance.
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Section 7(b)(2)(D) of the Small Business Act, making economic injury from the coronavirus an Section 7(b)(2)(D) of the Small Business Act, making economic injury from the coronavirus an
eligible expense under the SBA’s Economic Injury Disaster Loan program. eligible expense under the SBA’s Economic Injury Disaster Loan program.
Initial EIDL Response to COVID-19
On March 16, 2020, the SBA Administrator began issuing declarations for SBA EIDLs in On March 16, 2020, the SBA Administrator began issuing declarations for SBA EIDLs in
response to states seeking SBA disaster assistance for small businesses.44 The SBA changed its response to states seeking SBA disaster assistance for small businesses.44 The SBA changed its
requirement that a state or territory “provide documentation certifying that at least five small requirement that a state or territory “provide documentation certifying that at least five small
businesses have suffered substantial economic injury as a result of the disaster, with at least one businesses have suffered substantial economic injury as a result of the disaster, with at least one
business located in each declared county/parish.”45 Under new criteria, states and territories were business located in each declared county/parish.”45 Under new criteria, states and territories were
“only required to certify that at least five small businesses within the state/territory have suffered “only required to certify that at least five small businesses within the state/territory have suffered
substantial economic injury, regardless of where the businesses are located.”46 The SBA substantial economic injury, regardless of where the businesses are located.”46 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 billion in disaster loan credit Prior to the CARES Act’s enactment, the SBA had about $1.1 billion in disaster loan credit
subsidy available to support about $7 billion to $8 billion in disaster loans. Loan credit subsidy is subsidy available to support about $7 billion to $8 billion in disaster loans. Loan credit subsidy is
the amount provided to cover the government’s cost of extending or guaranteeing credit.47 The the amount provided to cover the government’s cost of extending or guaranteeing credit.47 The
loan credit subsidy amount is about one-seventh of the cost of each disaster loan.48 The credit loan credit subsidy amount is about one-seventh of the cost of each disaster loan.48 The credit
subsidy amount is used to protect the government against the risk of estimated shortfalls in loan subsidy amount is used to protect the government against the risk of estimated shortfalls in loan
repayments. There was some concern that the SBA’s funding for disaster loan credit subsidies repayments. There was some concern that the SBA’s funding for disaster loan credit subsidies
would be insufficient to meet the demand for disaster loans now that EIDL eligibility had been would be insufficient to meet the demand for disaster loans now that EIDL eligibility had been
extended to economic injuries related to COVID-19. extended to economic injuries related to COVID-19.
The CARES Act addressed this issue by providing an additional $562 million to support disaster The CARES Act addressed this issue by providing an additional $562 million to support disaster
loans and $10 billion to support the Emergency EIDL grant program. As mentioned, the Paycheck loans and $10 billion to support the Emergency EIDL grant program. As mentioned, the Paycheck
Protection Program and Health Care Enhancement Act (P.L. 116-139) appropriated an additional Protection Program and Health Care Enhancement Act (P.L. 116-139) appropriated an additional
$50 billion for EIDL and $10 billion for Emergency EIDL grants. P.L. 116-260, the Economic $50 billion for EIDL and $10 billion for Emergency EIDL grants. P.L. 116-260, the Economic
Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, Title III of the Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, Title III of the
Consolidated Appropriations Act of 2021), appropriated an additional $20 billion for the EIDL Consolidated Appropriations Act of 2021), appropriated an additional $20 billion for the EIDL

44 A similar definitional issue may exist under the Stafford Act which does not specify an infectious disease as an 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 incident in its definition of a major disaster. There are, however, indications that the President considers COVID-19 a
major disaster. See the White House, major disaster. See the White House, Letter from President Donald J. Trump on Emergency Determination Under the
Stafford Act, March 13, 2020, at https://www.whitehouse.gov/briefings-statements/letter-president-donald-j-trump-, March 13, 2020, at https://www.whitehouse.gov/briefings-statements/letter-president-donald-j-trump-
emergency-determination-stafford-act/. emergency-determination-stafford-act/.
45 SBA, 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-, March 17, 2020, at https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-
advisories/sba-updates-criteria-states-requesting-disaster-assistance-loans-small-businesses-impacted (hereinafter cited advisories/sba-updates-criteria-states-requesting-disaster-assistance-loans-small-businesses-impacted (hereinafter cited
as SBA, as SBA, SBA Updates Criteria on States for Requesting Disaster Assistance). ).
46 SBA, 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 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 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 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, 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, 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, , GAO-16-41, January 29, 2016,
p. i, at https://www.gao.gov/products/GAO-16-41. p. i, at https://www.gao.gov/products/GAO-16-41.
48 SBA, 48 SBA, FY2021 Congressional Budget Justification FY2019 Annual Performance Report,” p. 13, at ,” p. 13, at
https://www.sba.gov/document/report—congressional-budget-justification-annual-performance-report (hereinafter https://www.sba.gov/document/report—congressional-budget-justification-annual-performance-report (hereinafter
cited as SBA, cited as SBA, FY2021 Congressional Budget Justification FY2019 Annual Performance Report”). ”).
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Targeted advance payment (grant) program. P.L. 117-2, the American Rescue Plan Act of 2021, 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 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 payment program and $460 million for the disaster loan program ($70 million for credit subsidies
and $390 million for administrative costs). and $390 million for administrative costs).
Also, in anticipation of increased demand for EIDL loans, the CARES Act addressed anticipated 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 response to delays in EIDL application loan processing by authorizing the SBA Administrator, in response to
economic injuries caused by COVID-19, to economic injuries caused by COVID-19, to
 waive the “credit not available elsewhere” requirement,  waive the “credit not available elsewhere” requirement,
 approve an applicant based solely on their credit score,  approve an applicant based solely on their credit score,
 not require applicants to submit a tax return or tax return transcript for approval,  not require applicants to submit a tax return or tax return transcript for approval,
 waive any rules related to the personal guarantee on advances and loans of not  waive any rules related to the personal guarantee on advances and loans of not
more than $200,000, and more than $200,000, and
 waive the requirement that the applicant needs to be in business for the one-year  waive the requirement that the applicant needs to be in business for the one-year
period before the disaster declaration (except that no waiver may be made for a period before the disaster declaration (except that no waiver may be made for a
business that was not in operation on January 31, 2020). business that was not in operation on January 31, 2020).
SBA EIDL Repayment and Forgiveness
Under present law and regulations, the first SBA EIDL payment is normally due five months after Under present law and regulations, the first SBA EIDL payment is normally due five months after
disbursement. However, on March 23, 2020, the SBA announced that it would defer payments on disbursement. However, on March 23, 2020, the SBA announced that it would defer payments on
existing disaster loans through December 31, 2020, “to help borrowers during this unprecedented existing disaster loans through December 31, 2020, “to help borrowers during this unprecedented
time.”49 The SBA also announced that payments on new EIDL loans would be deferred for one time.”49 The SBA also announced that payments on new EIDL loans would be deferred for one
year (interest does accrue). year (interest does accrue).
Additionally, on March 12, 2021, the SBA extended the deferment period for all COVID-19- Additionally, on March 12, 2021, the SBA extended the deferment period for all COVID-19-
related EIDL and other disaster loans until 2022. Specifically, all disaster loans made in calendar related EIDL and other disaster loans until 2022. Specifically, all disaster loans made in calendar
year 2020 will have a first payment due extended from 12 months to 24 months from the date of year 2020 will have a first payment due extended from 12 months to 24 months from the date of
the note, and all disaster loans made in calendar year 2021 will have a first payment due extended the note, and all disaster loans made in calendar year 2021 will have a first payment due extended
from 12 months to 18 months from the date of the note.50 from 12 months to 18 months from the date of the note.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 small businesses “get through the pandemic deferred for 24 months after loan origination to help small businesses “get through the pandemic
without having to worry about making ends meet.”51 Also, on March 15, 2022, the SBA extended 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 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 months from the date of the note (interest continues to accrue).52

49 SBA, “Carranza Implements Automatic Deferment on Existing SBA Disaster Loans Through End of 2020,” March 49 SBA, “Carranza Implements Automatic Deferment on Existing SBA Disaster Loans Through End of 2020,” March
23, 2020, at https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/carranza-implements-23, 2020, at https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/carranza-implements-
automatic-deferment-existing-sba-disaster-loans-through-end-2020. automatic-deferment-existing-sba-disaster-loans-through-end-2020.
50 SBA, “SBA Extends Deferment Period for all COVID-19 EIDL and Other Disaster Loans until 2022,” March 12, 50 SBA, “SBA Extends Deferment Period for all COVID-19 EIDL and Other Disaster Loans until 2022,” March 12,
2021. 2021.
51 SBA, “SBA Administrator Guzman Enhances COVID Economic Injury Disaster Loan Program to Aid Small 51 SBA, “SBA Administrator Guzman Enhances COVID Economic Injury Disaster Loan Program to Aid Small
Businesses Facing Challenges from Delta Variant,” September 9, 2021, at https://www.sba.gov/article/2021/sep/09/Businesses Facing 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-program-aid-small-businesses. sba-administrator-guzman-enhances-covid-economic-injury-disaster-loan-program-aid-small-businesses.
52 SBA, “SBA Administrator Guzman Announces Key Policy Change: Existing COVID Economic Injury Disaster 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/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. mar/15/sba-administrator-guzman-announces-key-policy-change-existing-covid-economic-injury-disaster-loan.
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The CARES Act also authorized the SBA to provide complete payment deferment relief, for not 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) 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 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 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 subsequently deferred PPP loan payments for six months. Interest continued to accrue on these
loans during the six-month deferment.53 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 1965.54 Section 3 of the act authorized the SBA Southeast Hurricane Disaster Relief Act of 1965.54 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 a period not to exceed three years; and (2) may lend to a privately owned $1,800 over a period not to exceed three years; and (2) may lend to a privately owned
school, college, or university without regard to whether the required financial assistance is school, college, or university without regard to whether the required financial assistance is
otherwise available from private sources, and may waive interest payments and defer otherwise available from private sources, and may waive interest payments and defer
principal payments on such a loan for the first three years of the term of the loan.55 principal payments on such a loan for the first three years of the term of the loan.55
Disaster Grants
Historically, businesses that suffer uninsured loss as a result of a major disaster declaration are Historically, businesses that suffer uninsured loss as a result of a major disaster declaration are
not eligible for Federal Emergency Management Agency (FEMA) disaster grant assistance, and not eligible for Federal Emergency Management Agency (FEMA) disaster grant assistance, and
grant assistance from other federal sources is limited. On some occasions, Congress has provided grant assistance from other federal sources is limited. On some occasions, Congress has provided
disaster assistance to businesses through the Department of Housing and Urban Development’s disaster assistance to businesses through the Department of Housing and Urban Development’s
(HUD’s) Community Development Block Grant (CDBG) program. The CDBG program provides (HUD’s) Community Development Block Grant (CDBG) program. The CDBG program provides
loans and grants to eligible businesses to help them recover from disasters as well as grants loans and grants to eligible businesses to help them recover from disasters as well as grants
intended to attract new businesses to the disaster-stricken area. intended to attract new businesses to the disaster-stricken area.
In a few cases, CDBG has also been used to compensate businesses and workers for lost wages or In a few cases, CDBG has also been used to compensate businesses and workers for lost wages or
revenues. However, CDBG disaster assistance is not available for all major disasters. States can revenues. However, CDBG disaster assistance is not available for all major disasters. States can
use CDBG funding to respond to emergencies or other “urgent needs” through the conventional use CDBG funding to respond to emergencies or other “urgent needs” through the conventional
CDBG entitlement and states program,56 but existing (or future) CDBG monies generally must be CDBG entitlement and states program,56 but existing (or future) CDBG monies generally must be
reprogrammed in consultation with HUD to respond to the emergency.57 For these reasons, reprogrammed in consultation with HUD to respond to the emergency.57 For these reasons,
CDBG is generally used for long-term recovery needs rather than providing immediate, direct CDBG is generally used for long-term recovery needs rather than providing immediate, direct
disaster assistance. disaster assistance.

53 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program,” 8553 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program,” 85 Federal Register 20813, 20813,
April 15, 2020. April 15, 2020.
54 P.L. 89-339, 79 Stat. 1301. 54 P.L. 89-339, 79 Stat. 1301.
55 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 56 For example, the City of Seattle is currently administering $10,000 grants to small businesses using CDBG funds to
respond to COVID-19. respond to COVID-19.
57 For eligible Community Development Block Grant activities related to COVID-19, see U.S. Department of Housing 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 Activities to Support Infectious Disease Response,” March and Urban Development, “Quick Guide to CDBG Eligible Activities to Support Infectious Disease Response,” March
19, 2020, at https://files.hudexchange.info/resources/documents/Quick-Guide-CDBG-Infectious-Disease-Response.pdf. 19, 2020, at https://files.hudexchange.info/resources/documents/Quick-Guide-CDBG-Infectious-Disease-Response.pdf.
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Thus, prior to COVID-19, advocates of providing disaster grants to small businesses generally 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 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 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-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 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 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 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 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 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. 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 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 affected by COVID-19. For example, the CARES Act authorized the SBA Administrator to
provide up to $10,000 as an advance payment in the amount requested within three days after provide up to $10,000 as an advance payment in the amount requested within three days after
receiving an EIDL application from an eligible entity. Applicants were not required to repay the receiving an EIDL application from an eligible entity. Applicants were not required to repay the
advance payment, referred to in the CARES Act as an Emergency EIDL grant, even if advance payment, referred to in the CARES Act as an Emergency EIDL grant, even if
subsequently denied an EIDL loan. Due to anticipated demand, the SBA limited Emergency EIDL subsequently denied an EIDL loan. Due to anticipated demand, the SBA limited Emergency EIDL
grants to $1,000 per employee, up to a maximum of $10,000. grants to $1,000 per employee, up to a maximum of $10,000.
The CARES Act also provided the SBA’s OIG $25 million for oversight of the SBA’s The CARES Act also provided the SBA’s OIG $25 million for oversight of the SBA’s
administration of its lending programs and for investigations to serve as a general deterrent to administration of its lending programs and for investigations to serve as a general deterrent to
fraud, waste, and abuse. 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 billion for Emergency EIDL grants. P.L. 116-260, the 139) appropriated an additional $10 billion for Emergency EIDL grants. P.L. 116-260, the
Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, Title III of Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, Title III of
the Consolidated Appropriations Act of 2021), appropriated an additional $20 billion for the the Consolidated Appropriations Act of 2021), appropriated an additional $20 billion for the
EIDL Targeted advance payment (grant) program. SBA’s OIG is to receive $20 million of that EIDL Targeted advance payment (grant) program. SBA’s OIG is to receive $20 million of that
amount “to prevent waste, fraud, and abuse” in the 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 billion for the Targeted American Rescue Plan Act of 2021, appropriated an additional $15 billion for the Targeted
Economic Injury Disaster Loan Advance payment program. Economic Injury Disaster Loan Advance payment program.
SBA EIDL Interest Rates
SBA EIDL interest rates for COVD-19 are 3.75% for businesses and 2.75% for nonprofit SBA EIDL interest rates for COVD-19 are 3.75% for businesses and 2.75% for nonprofit
organizations.59 organizations.59

58 Federal Emergency Management Agency, 58 Federal Emergency Management Agency, Disaster Relief Fund: Monthly Report, August 7, 2020, at , August 7, 2020, at
https://www.fema.gov/about/reports-and-data/disaster-relief-fund-monthly-reports. For more information on the DRF https://www.fema.gov/about/reports-and-data/disaster-relief-fund-monthly-reports. For more information on the DRF
see CRS Report R45484, see CRS Report R45484, The Disaster Relief Fund: Overview and Issues, by William L. Painter. , by William L. Painter.
Also, on August 8, 2020, President Trump issued a memorandum directing “up to $44 billion from the Disaster Relief Also, on August 8, 2020, President Trump issued a memorandum directing “up to $44 billion from the Disaster Relief
Fund at the statutorily mandated 75 percent Federal cost share be made available for lost wages assistance to eligible Fund at the statutorily mandated 75 percent Federal cost share be made available for lost wages assistance to eligible
claimants, to supplement State expenditures in providing these payments. At least $25 billion of total DRF balances claimants, to supplement State expenditures in providing these payments. At least $25 billion of total DRF balances
will be set aside to support ongoing disaster response and recovery efforts and potential 2020 major disaster costs.” See will be set aside to support ongoing disaster response and recovery efforts and potential 2020 major disaster costs.” See
President Donald Trump, “Memorandum on Authorizing the Other Needs Assistance Program for Major Disaster President Donald Trump, “Memorandum on Authorizing the Other Needs Assistance Program for Major Disaster
Declarations Related to Coronavirus Disease 2019,” August 8, 2020, at https://www.whitehouse.gov/presidential-Declarations Related to Coronavirus Disease 2019,” August 8, 2020, at https://www.whitehouse.gov/presidential-
actions/memorandum-authorizing-needs-assistance-program-major-disaster-declarations-related-coronavirus-disease-actions/memorandum-authorizing-needs-assistance-program-major-disaster-declarations-related-coronavirus-disease-
2019/. 2019/.
59 SBA, 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-, 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. advisories/sba-updates-criteria-states-requesting-disaster-assistance-loans-small-businesses-impacted.
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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.”60 To determine EIDL unable to obtain credit elsewhere, not to exceed 4 per centum per annum.”60 To determine EIDL
interest rates, SBA uses a formula under 15 U.S.C. §636(d)(4)(A): interest rates, SBA uses a formula under 15 U.S.C. §636(d)(4)(A):
Notwithstanding the provisions of the constitution of any State or Notwithstanding the provisions of the constitution of any State or the laws of anythe laws of any State State
limiting the rate or amount of interest which may be charged, taken, received, or reserved, limiting the rate or amount of interest which may be charged, taken, received, or reserved,
the maximum legal rate of interest on any financing made on a deferred basis pursuant to the maximum legal rate of interest on any financing made on a deferred basis pursuant to
thisthis ~~subsection shall not exceed a rate prescribed by the Administration, and the rate~~ subsection shall not exceed a rate prescribed by the Administration, and the rate of of
interest for the Administration’s share of any direct or immediate participation loan shall interest for the Administration’s share of any direct or immediate participation loan shall
not exceed the current average market yield on outstanding marketable obligations of the not exceed the current average market yield on outstanding marketable obligations of the
United States with remaining periods to maturity comparable to the average maturities of United States with remaining periods to maturity comparable to the average maturities of
such loans and adjusted to the nearest one-eighth of 1 per centum, and an additional amount such loans and adjusted to the nearest one-eighth of 1 per centum, and an additional amount
as determined by the Administration, but not to exceed 1 per centum per annum: Provided, as determined by the Administration, but not to exceed 1 per centum per annum: Provided,
That for those loans to assist any public or private organization for the handicapped or to That for those loans to assist any public or private organization for the handicapped or to
assist any handicapped individual as provided in paragraph (10) of this subsection, the assist any handicapped individual as provided in paragraph (10) of this subsection, the
interest rate shall be 3 per centum per annum. interest rate shall be 3 per centum per annum.
Congress could request SBA to reevaluate its interpretation of 15 U.S.C. §636(d)(4)(A) and Congress could request SBA to reevaluate its interpretation of 15 U.S.C. §636(d)(4)(A) and
provide detailed information explaining how the formula provides nonprofit organizations with provide detailed information explaining how the formula provides nonprofit organizations with
lower interest rates than small businesses. Alternatively, Congress could change the formula lower interest rates than small businesses. Alternatively, Congress could change the formula
under the Small Business Act if it considered the language ambiguous, or it could designate an under the Small Business Act if it considered the language ambiguous, or it could designate an
interest rate (including a zero interest rate) for all SBA EIDL for the duration of COVID-19. interest rate (including a zero interest rate) for all SBA EIDL for the duration of COVID-19.
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 1998.61 The SBA Microloan program intermediaries, has not exercised that authority since 1998.61 The SBA
indicated that it stopped issuing direct business loans primarily because the subsidy rate was “10 indicated that it stopped issuing direct business loans primarily because the subsidy rate was “10
to 15 times higher” than the subsidy rate for its loan guaranty programs.62 Instead of making 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 direct loans, the SBA guarantees loans issued by approved lenders to encourage those lenders to
provide loans to small businesses “that might not otherwise obtain financing on reasonable terms provide loans to small businesses “that might not otherwise obtain financing on reasonable terms

60 Only businesses and nonprofit organizations that cannot get credit elsewhere are eligible for SBA EIDL. 60 Only businesses and nonprofit organizations that cannot get credit elsewhere are eligible for SBA EIDL.
61 Prior to October 1, 1985, the SBA provided direct business loans to qualified small businesses. From October 1, 61 Prior to October 1, 1985, the SBA provided direct business loans to qualified small businesses. From October 1,
1985, to September 30, 1994, SBA direct business loan eligibility was limited to qualified small businesses owned by 1985, to September 30, 1994, SBA direct business loan eligibility was limited to qualified small businesses owned by
individuals with low incomes or located in areas of high unemployment, owned by Vietnam-era or disabled veterans, individuals with low incomes or located in areas of high unemployment, owned by Vietnam-era or disabled veterans,
owned by the handicapped or certain organizations employing them, and certified under the minority small business owned by the handicapped or certain organizations employing them, and certified under the minority small business
capital ownership development program. Microloan program intermediaries were also eligible. On October 1, 1994, capital ownership development program. Microloan program intermediaries were also eligible. On October 1, 1994,
SBA direct loan eligibility was limited to Microloan program intermediaries and small businesses owned by the SBA direct loan eligibility was limited to Microloan program intermediaries and small businesses owned by the
handicapped. Funding to support direct loans to the handicapped through the Handicapped Assistance (renamed the handicapped. Funding to support direct loans to the handicapped through the Handicapped Assistance (renamed the
Disabled Assistance) Loan program ended in 1996. The last loan under the Disabled Assistance Loan program was Disabled Assistance) Loan program ended in 1996. The last loan under the Disabled Assistance Loan program was
issued in FY1998. See U.S. Congress, House Committee on Small Business, issued in FY1998. See U.S. Congress, House Committee on Small Business, Summary of Activities, 105rd Cong., 2nd , 105rd Cong., 2nd
sess., January 2, 1999, H.Rept. 105-849 (Washington, DC: GPO, 1999), p. 8. sess., January 2, 1999, H.Rept. 105-849 (Washington, DC: GPO, 1999), p. 8.
62 U.S. Congress, Senate Committee on Small Business, 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, , 103rd Cong., 2nd sess., February 22, 1994, S.Hrg. 103-583 (Washington, DC: GPO,
1994), p. 20. 1994), p. 20.
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and conditions.”63 With few exceptions, to qualify for SBA assistance, an organization must be and conditions.”63 With few exceptions, to qualify for SBA assistance, an organization must be
both a for-profit business and small.64 both a for-profit business and small.64
What Is a “Small Business”?
To participate in any of the SBA loan guaranty programs, a business must meet the Small To participate in any of the SBA loan guaranty programs, a business must meet the 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;65 and  is not dominant in its field on a national basis;65 and
 does not exceed size standards established, and updated periodically, by the  does not exceed size standards established, and updated periodically, by the
SBA.66 SBA.66
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”?67
The SBA uses two measures to determine if a business is small: SBA-derived industry specific The SBA uses two measures to determine if a business is small: SBA-derived industry specific
size standards or a combination of the business’s net worth and net income. For example, size standards or a combination of the business’s net worth and net income. For example,
businesses participating in the SBA’s 7(a) loan guaranty program are deemed small if they either businesses participating in the SBA’s 7(a) loan guaranty program are deemed small if they either
meet the SBA’s industry-specific size standards for firms in 1,047 industrial classifications in 18 meet the SBA’s industry-specific size standards for firms in 1,047 industrial classifications in 18
subindustry activities described in the North American Industry Classification System (NAICS) subindustry activities described in the North American Industry Classification System (NAICS)
or do not have more than $15 million in tangible net worth and not more than $5 million in or do not have more than $15 million in tangible net worth and not more than $5 million in
average net income after federal taxes (excluding any carryover losses) for the two full fiscal average net income after federal taxes (excluding any carryover losses) for the two full fiscal
years before the date of the application. All of the company’s subsidiaries, parent companies, and years before the date of the application. All of the company’s subsidiaries, parent companies, and
affiliates are considered in determining if it meets the size standard.68 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 The SBA’s industry size standards vary by industry, and they are based on one of the following
four measures: the firm’s (1) average annual receipts in the previous three (or five) years, (2) four measures: the firm’s (1) average annual receipts in the previous three (or five) years, (2)
number of employees, (3) asset size, or (4) for refineries, a combination of number of employees number of employees, (3) asset size, or (4) for refineries, a combination of number of employees
and barrel per day refining capacity. Historically, the SBA has used the number of employees to and barrel per day refining capacity. Historically, the SBA has used the number of employees to

63 SBA, 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.
64 The SBA provides financial assistance to nonprofit organizations to provide training to small business owners and to 64 The SBA provides financial assistance to nonprofit organizations to provide training to small business owners and to
provide loans to small businesses through the SBA Microloan program. Also, nonprofit child care centers are eligible provide loans to small businesses through the SBA Microloan program. Also, nonprofit child care centers are eligible
to participate in SBA’s Microloan program. to participate in SBA’s Microloan program.
65 13 C.F.R. §121.105. 65 13 C.F.R. §121.105.
66 P.L. 111-240, the Small Business Jobs Act of 2010, requires the SBA to conduct a detailed review of not less than 66 P.L. 111-240, the Small Business Jobs Act of 2010, requires the SBA to conduct a detailed review of not less than
one-third of the SBA’s industry size standards every 18 months beginning on the new law’s date of enactment one-third of the SBA’s industry size standards every 18 months beginning on the new law’s date of enactment
(September 27, 2010) and ensure that each size standard is reviewed at least once every five years. (September 27, 2010) and ensure that each size standard is reviewed at least once every five years.
67 For additional information and analysis, see CRS Report R40860, 67 For additional information and analysis, see CRS Report R40860, Small Business Size Standards: A Historical
Analysis of Contemporary Issues, by Robert Jay Dilger. , 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. 68 13 C.F.R. §121.201 and P.L. 111-240, the Small Business Act of 2010, §1116. Alternative Size Standards.
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determine if manufacturing and mining companies are small and average annual receipts for most determine if manufacturing and mining companies are small and average annual receipts for most
other industries. other industries.
The SBA’s size standards are designed to encourage competition within each industry. They are The SBA’s size standards are designed to encourage competition within each industry. They are
derived through an assessment of the following four economic factors: “average firm size, derived through an assessment of the following four economic factors: “average firm size,
average assets size as a proxy of start-up costs and entry barriers, the 4-firm concentration ratio as average assets size as a proxy of start-up costs and entry barriers, the 4-firm concentration ratio as
a measure of industry competition, and size distribution of firms.”69 The SBA also considers the a measure of industry competition, and size distribution of firms.”69 The SBA also considers the
ability of small businesses to compete for federal contracting opportunities and, when necessary, ability of small businesses to compete for federal contracting opportunities and, when necessary,
several secondary factors “as they are relevant to the industries and the interests of small several secondary factors “as they are relevant to the industries and the interests of small
businesses, including technological change, competition among industries, industry growth businesses, including technological change, competition among industries, industry growth
trends, and impacts of size standard revisions on small businesses.”70 trends, and impacts of size standard revisions on small businesses.”70
SBA Loan Guarantee Programs
Overview
The SBA provides loan guarantees for small businesses that cannot obtain credit elsewhere on The SBA provides loan guarantees for small businesses that cannot obtain credit elsewhere on
reasonable terms and conditions. Its largest loan guaranty programs are the 7(a) loan guaranty reasonable terms and conditions. Its largest loan guaranty programs are the 7(a) loan guaranty
program and the 504/CDC loan guaranty program. program and the 504/CDC loan guaranty 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%.71 Most of the SBA’s lending of default with lenders by making the guaranty less than 100%.71 Most of the SBA’s lending
programs, including the 7(a) and 504/CDC loan guaranty programs, charge fees to help offset 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 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 set in statute.72 In addition, lenders are authorized to collect fees from borrowers to offset their
administrative expenses. administrative expenses.
The SBA’s goal is to achieve a zero subsidy rate, meaning that the appropriation of budget The SBA’s goal is to achieve a zero subsidy rate, meaning that the appropriation of budget
authority for new loan guaranties is not required. authority for new loan guaranties is not required.
In an effort to assist small business owners, the SBA has, from time-to-time, reduced its fees. For In an effort to assist small business owners, the SBA has, from time-to-time, reduced its fees. For
example, in FY2019, the SBA waived the annual service fee for 7(a) loans of $150,000 or less example, in FY2019, the SBA waived the annual service fee for 7(a) loans of $150,000 or less
made to small businesses located in a rural area or a HUBZone and reduced the up-front one-time made to small businesses located in a rural area or a HUBZone and reduced the up-front one-time
guaranty fee for these loans from 2% to 0.6667% of the guaranteed portion of the loan.73 guaranty fee for these loans from 2% to 0.6667% of the guaranteed portion of the loan.73

69 SBA, Office of Government Contracting and Business Development, “SBA Size Standards Methodology,” April 69 SBA, Office of Government Contracting and Business Development, “SBA Size Standards Methodology,” April
2019, p. 29, at https://www.sba.gov/document/support—size-standards-methodology-white-paper (hereinafter cited as 2019, p. 29, at https://www.sba.gov/document/support—size-standards-methodology-white-paper (hereinafter cited as
SBA, “SBA Size Standards Methodology”). SBA, “SBA Size Standards Methodology”).
70 SBA, “SBA Size Standards Methodology,” p. 1. 70 SBA, “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 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 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 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 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 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 ineligible. P.L. 105-135, the Small Business Reauthorization Act of 1997, expanded the SBA’s Microloan program’s
eligibility to include borrowers establishing a nonprofit child care business. eligibility to include borrowers establishing a nonprofit child care business.
72 For example, for 7(a) loans with a maturity exceeding 12 months, the SBA is authorized to charge lenders an up- 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 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 guaranteed guaranteed 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 in excess of $1 portion of loans exceeding $700,000. Lenders who have a 7(a) loan that has a SBA guaranteed portion in excess of $1
million can be charged an additional fee not to exceed 0.25% of the guaranteed amount in excess of $1 million. million can be charged an additional fee not to exceed 0.25% 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/ 73 SBA, “SBA Information Notice: 7(a) Fees Effective on October 1, 2018,” at https://www.sba.gov/document/
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In an effort to assist small businesses adversely affected by COVID-19, the CARES Act In an effort to assist small businesses adversely affected by COVID-19, the CARES Act
permanently required the SBA to waive the up-front, one-time guaranty fee on all veteran loans permanently required the SBA to waive the up-front, one-time guaranty fee on all veteran loans
under the 7(a) SBAExpress program.74 In addition, P.L. 116-260, the Economic Aid to Hard-Hit under the 7(a) SBAExpress program.74 In addition, P.L. 116-260, the Economic Aid to Hard-Hit
Small Businesses, Nonprofits, and Venues Act (Division N, Title III of the Consolidated Small Businesses, Nonprofits, and Venues Act (Division N, Title III of the Consolidated
Appropriations Act of 2021), 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 Program75
The 7(a) loan guaranty program is named after the section of the Small Business Act that The 7(a) loan guaranty program is named after the section of the Small Business Act that
authorizes it. The loans are made by SBA lending partners (mostly banks but also some other authorizes it. The loans are made by SBA lending partners (mostly banks but also some other
financial institutions) and partially guaranteed by the SBA. Borrowers may use 7(a) loan proceeds financial institutions) and partially guaranteed by the SBA. Borrowers may use 7(a) loan proceeds
to establish a new business or to assist in the operation, acquisition, or expansion of an existing to establish a new business or to assist in the operation, acquisition, or expansion of an existing
business.76 business.76
Lenders are permitted to charge borrowers “a reasonable fixed interest rate” or, with the SBA’s 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 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 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 As mentioned, the CARES Act appropriated $17 billion to pay the principal, interest, and any
associated fees that are owed on an existing 7(a) loan, 504/CDC loan, or Microloan and for loans associated fees that are owed on an existing 7(a) loan, 504/CDC loan, or Microloan and for loans
subsequently approved and fully disbursed prior to September 27, 2020, for a six-month period.80 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. 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 74 The SBA had waived the up-front, one-time guaranty fee on all veteran loans under the 7(a) SBAExpress program
from January 1, 2014, through the end of FY2015. P.L. 114-38 made the SBAExpress program’s veteran fee waiver from January 1, 2014, through the end of FY2015. P.L. 114-38 made the SBAExpress program’s veteran fee waiver
permanent, except during any upcoming fiscal year for which the President’s budget, submitted to Congress, includes a permanent, except during any upcoming fiscal year for which the President’s budget, submitted to Congress, includes a
cost for the 7(a) program, in its entirety, that is above zero. The SBA waived the fee, pursuant to P.L. 114-38, in cost for the 7(a) program, in its entirety, that is above zero. The SBA waived the fee, pursuant to P.L. 114-38, in
FY2016, FY2017, FY2018, and FY2019. P.L. 116-136, the CARES Act, removed the requirement that the cost for the FY2016, FY2017, FY2018, and FY2019. P.L. 116-136, the CARES Act, removed the requirement that the cost for the
7(a) program is above zero. 7(a) program is above zero.
75 For further information and analysis, see CRS Report R41146, 75 For further information and analysis, see CRS Report R41146, Small Business Administration 7(a) Loan Guaranty
Program, by Robert Jay Dilger. , by Robert Jay Dilger.
76 7(a) loan proceeds may be used to acquire land (by purchase or lease); improve a site (e.g., grading, streets, parking 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 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 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; 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.. 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 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 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 rate and the maximum allowable variable interest rate in the Federal Register. See 13 C.F.R. §120.213; and SBA, . See 13 C.F.R. §120.213; and SBA,
“Maximum Allowable 7(a) Fixed Interest Rates,” 83 “Maximum Allowable 7(a) Fixed Interest Rates,” 83 Federal Register 55478, November 6, 2018. For the previously 55478, November 6, 2018. For the previously
used fixed interest rates formula, see SBA, “Business Loan Program Maximum Allowable Fixed Rate,” 74 used fixed interest rates formula, see SBA, “Business Loan Program Maximum Allowable Fixed Rate,” 74 Federal
Register 50263-50264, September 30, 2009. 50263-50264, September 30, 2009.
The SBA has a separate formula for Community Advantage loan interest rates and does not prescribe interest rates for The 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 charged for reasonableness. the Export Working Capital Loans, but it does monitor the rates charged for reasonableness.
78 SBA, “Small Business Administration loan program performance: Table 2 – Gross Approval Amount by Program 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/and Table 3 – Number of Approved Loans by Program,” effective September 30, 2021, at https://www.sba.gov/
document/report-small-business-administration-loan-program-performance. document/report-small-business-administration-loan-program-performance.
79 SBA, 79 SBA, FY2023 Congressional Budget Justification FY2021 Annual Performance Report, p. 32, at , p. 32, at
https://www.sba.gov/document/report-congressional-budget-justification-annual-performance-report (hereinafter SBA, 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 80 Payments for loans in a regular servicing status begin on the next payment due. Payments for loans in deferment
begin on the next payment due following the deferment period. begin on the next payment due following the deferment period.
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Of this amount, $7.1 billion was spent and the remainder was rescinded by P.L. 116-260, the 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 Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, Title III of
the Consolidated Appropriations Act of 2021).81 the Consolidated Appropriations Act of 2021).81
P.L. 116-260 appropriated $3.5 billion to resume SBA’s monthly debt relief payments, capped at P.L. 116-260 appropriated $3.5 billion to resume SBA’s monthly debt relief payments, capped at
$9,000 per month per borrower. The SBA is authorized to provide up to an additional eight $9,000 per month per borrower. The SBA is authorized to provide up to an additional eight
monthly payments, depending on the availability of funds, when the loan was disbursed, the type monthly payments, depending on the availability 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 determined that the $3.5 billion provided was insufficient to make the Because the SBA determined that the $3.5 billion 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 economically hard-hit industries will receive an additional Microloan, or operating in specified economically hard-hit industries will 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,
will receive three monthly payments beginning with the first payment due.82 will receive three monthly payments beginning with the first payment due.82
P.L. 116-260 also waived SBA fees for the 7(a) and 504/CDC loan guarantee programs in P.L. 116-260 also waived SBA 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 million—or less and 75% for loans greater than $150,000 (up to a maximum guaranty of $3.75 million—
75% of $5 million) to 90% through October 1, 2021. 75% of $5 million) to 90% through October 1, 2021.
The 504/CDC Loan Guaranty 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.84 The small business must contribute at least 10% as equity. debenture.84 The small business must contribute at least 10% as equity.
To participate in the program, small businesses cannot exceed $15 million in tangible net worth To participate in the program, small businesses cannot exceed $15 million in tangible net worth
and cannot have average net income of more than $5 million for two full fiscal years before the and cannot have average net income of more than $5 million for two full fiscal years before the
date of application. Also, CDCs must intend to create or retain one job for every $75,000 of the date of application. Also, CDCs must intend to create or retain one job for every $75,000 of the

81 SBA, “SBA Extends Crucial Lifeline to Borrowers Impacted by COVID-19 with Debt Relief,” January 10, 2021, at 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. 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 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. 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 82 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/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-procedural-notice-5000-20095-adjustment-number-months-section-1112-payments-7a-504-microloan-programs-due-
insufficiency-funds. insufficiency-funds.
Economically hard-hit industries are defined as those assigned a North American Industry Classification System Economically hard-hit industries are defined as those assigned a North American Industry Classification System
(NAICS) code beginning with 61, 71, 72, 213, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812 (food service (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). and accommodation; arts, entertainment and recreation; education; and laundry and personal care services).
83 For further information and analysis, see CRS Report R41184, 83 For further information and analysis, see CRS Report R41184, Small Business Administration 504/CDC Loan
Guaranty Program, by Robert Jay Dilger. , by Robert Jay Dilger.
84 A debenture is a bond that is not secured by a lien on specific collateral. 84 A debenture is a bond that is not secured by a lien on specific collateral.
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debenture ($120,000 for small manufacturers) or meet an alternative job creation standard if they debenture ($120,000 for small manufacturers) or meet an alternative job creation standard if they
meet any one of 15 community or public policy goals. meet any one of 15 community or public policy goals.
Maximum 504/CDC participation in a single project is $5 million and $5.5 million for Maximum 504/CDC participation in a single project is $5 million and $5.5 million for
manufacturers and specified energy-related projects; the minimum is $25,000. There is no limit manufacturers and specified energy-related projects; the minimum is $25,000. There is no limit
on the project size. Loan maturity is 10 years for equipment and 20 or 25 years for real estate. on the project size. Loan maturity is 10 years for equipment and 20 or 25 years for real estate.
Unguaranteed financing may have a shorter term. The maximum fixed interest rate allowed is Unguaranteed financing may have a shorter term. The maximum fixed interest rate allowed is
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
FY2022), 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
(0.2475% for regular 504/CDC loans and 0.2590% for 504/CDC debt refinance (0.2475% for regular 504/CDC loans and 0.2590% for 504/CDC debt refinance
loans in FY2022), loans in 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 and the loan was approved after September 30, 1996). position to the SBA and the loan was approved after September 30, 1996).
In addition, CDCs are allowed to charge borrowers a processing (or packaging) fee of up to 1.5% In addition, CDCs are allowed to charge borrowers a processing (or packaging) fee of up to 1.5%
of the net debenture proceeds and a closing fee, servicing fee, late fee, assumption fee, Central of the net debenture proceeds and a closing fee, servicing fee, late fee, assumption fee, Central
Servicing Agent (CSA) fee, other agent fees, and an underwriters’ fee. Servicing Agent (CSA) fee, other agent fees, and an underwriters’ fee.
In FY2021, the SBA approved 9,676 504/CDC loans totaling over $8.2 billion.85 In FY2020, 208 In FY2021, the SBA approved 9,676 504/CDC loans totaling over $8.2 billion.85 In FY2020, 208
CDCs provided at least one 504/CDC loan.86 CDCs provided at least one 504/CDC loan.86
As mentioned, the CARES Act appropriated $17 billion to provide six monthly debt relief As mentioned, the CARES Act appropriated $17 billion 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 billion to resume up to eight monthly debt to September 27, 2020. P.L. 116-260 appropriated $3.5 billion to resume up to eight monthly debt
relief payments, depending on the availability of funds, when the loan was disbursed, the type of relief payments, depending on the availability of funds, when the loan was disbursed, the type of
loan received, and the business’s industry. The SBA announced that the $3.5 billion appropriation loan received, and the business’s industry. The SBA announced that the $3.5 billion 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 economically hard-hit Community Advantage loan, Microloan, or operating in specified economically hard-hit
industries will receive an additional three monthly payments. Loans approved from February 1, industries will receive an additional three monthly payments. Loans approved from February 1,
2021, through September 30, 2021, will receive three monthly payments beginning with the first 2021, through September 30, 2021, will receive three monthly payments beginning with the first
payment due.87 payment due.87
In addition, in an effort to assist small businesses adversely affected by COVID-19, P.L. 116-260 In addition, in an effort to assist small businesses adversely affected by COVID-19, P.L. 116-260
waived SBA fees in the 7(a) and 504/CDC loan guarantee programs in FY2021. waived 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-85 SBA, “SBA Lending Statistics for Major Programs (as of 9/30/2021),” at https://www.sba.gov/document/report-
2021-weekly-lending-reports. 2021-weekly-lending-reports.
86 86 SBA,SBA, FY2022 Congressional Justification and FY2020 Annual Performance Report, p. 40. , p. 40.
87 SBA, “Adjustment to Number of Months of Section 1112 Payments in the 7(a), 504 and Microloan Programs Due to 87 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/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-procedural-notice-5000-20095-adjustment-number-months-section-1112-payments-7a-504-microloan-programs-due-
insufficiency-funds. insufficiency-funds.
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The Microloan Program88
The Microloan program provides direct loans to qualified nonprofit intermediary Microloan The Microloan program provides direct loans to qualified nonprofit intermediary Microloan
lenders that, in turn, provide “microloans” of up to $50,000 to small businesses and nonprofit lenders that, in turn, provide “microloans” of up to $50,000 to small businesses and nonprofit
child care centers. Microloan lenders also provide marketing, management, and technical child care centers. Microloan lenders also provide marketing, management, and technical
assistance to Microloan borrowers and potential borrowers. assistance to Microloan borrowers and potential borrowers.
The program was authorized in 1991 as a five-year demonstration project and became operational The program was authorized in 1991 as a five-year demonstration project and became operational
in 1992. It was made permanent, subject to reauthorization, by P.L. 105-135, the Small Business in 1992. It was made permanent, subject to reauthorization, by P.L. 105-135, the Small Business
Reauthorization Act of 1997. Although the program is open to all small businesses, it targets new Reauthorization Act of 1997. Although the program is open to all small businesses, it targets new
and early stage businesses in underserved markets, including borrowers with little to no credit and early stage businesses in underserved markets, including borrowers with little to no credit
history, low-income borrowers, and women and minority entrepreneurs in both rural and urban history, low-income borrowers, and women and minority entrepreneurs in both rural and urban
areas who generally do not qualify for conventional loans or other, larger SBA guaranteed loans. areas who generally do not qualify for conventional loans or other, larger SBA guaranteed loans.
Microloans can be used for working capital and acquisition of materials, supplies, furniture, Microloans can be used for working capital and acquisition of materials, supplies, furniture,
fixtures, and equipment. Loans cannot be made to acquire land or property. Loan terms are up to fixtures, and equipment. Loans cannot be made to acquire land or property. Loan terms are up to
seven years. seven years.
The SBA charges intermediaries an interest rate that is based on the five-year Treasury rate, The SBA charges intermediaries an interest rate that is based on the five-year Treasury rate,
adjusted to the nearest one-eighth percent (called the Base Rate), less 1.25% if the intermediary adjusted to the nearest one-eighth percent (called the Base Rate), less 1.25% if the intermediary
maintains a historic portfolio of Microloans averaging more than $10,000 and less 2% if the maintains a historic portfolio of Microloans averaging more than $10,000 and less 2% if the
intermediary maintains a historic portfolio of Microloans averaging $10,000 or less. The Base intermediary maintains a historic portfolio of Microloans averaging $10,000 or less. The Base
Rate, after adjustment, is called the Intermediary’s Cost of Funds. The Intermediary’s Cost of Rate, after adjustment, is called the Intermediary’s Cost of Funds. The Intermediary’s Cost of
Funds is initially calculated one year from the date of the note and is reviewed annually and Funds is initially calculated one year from the date of the note and is reviewed annually and
adjusted as necessary (called recasting). The interest rate cannot be less than zero. adjusted as necessary (called recasting). The interest rate cannot be less than zero.
On loans of more than $10,000, the maximum interest rate that can be charged to the borrower is On loans of more than $10,000, the maximum interest rate that can be charged to the borrower is
the interest rate charged by the SBA on the loan to the intermediary, plus 7.75%. On loans of the interest rate charged by the SBA on the loan to the intermediary, plus 7.75%. On loans of
$10,000 or less, the maximum interest rate that can be charged to the borrower is the interest $10,000 or less, the maximum interest rate that can be charged to the borrower is the interest
charged by the SBA on the loan to the intermediary, plus 8.5%. Rates are negotiated between the charged by the SBA on the loan to the intermediary, plus 8.5%. Rates are negotiated between the
borrower and the intermediary and typically range from 6% to 9%. borrower and the intermediary and typically range from 6% to 9%.
The SBA does not charge intermediaries up-front or ongoing service fees under the Microloan The SBA does not charge intermediaries up-front or ongoing service fees under the Microloan
program. program.
In FY2021, microloan intermediaries provided 4,510 loans to small businesses totaling $74.6 In FY2021, microloan intermediaries provided 4,510 loans to small businesses totaling $74.6
million. The average Microloan amount was $16,557.89 million. The average Microloan amount was $16,557.89
As mentioned, the CARES Act appropriated $17 billion to provide six monthly debt relief As mentioned, the CARES Act appropriated $17 billion 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 billion to resume up to eight monthly debt to September 27, 2020. P.L. 116-260 appropriated $3.5 billion to resume up to eight monthly debt
relief payments, depending on the availability of funds, when the loan was disbursed, the type of relief payments, depending on the availability 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 billion loan received, and the business’s industry. The SBA has announced that the $3.5 billion
appropriation will enable the agency to provide two additional monthly payments on 7(a) and appropriation will 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 SBA Community Advantage loan, Microloan, or operating in specified economically with an SBA Community Advantage loan, Microloan, or operating in specified economically
hard-hit industries will receive an additional three monthly payments. Loans approved from hard-hit industries will receive an additional three monthly payments. Loans approved from

88 For further information and analysis, see CRS Report R41057, 88 For further information and analysis, see CRS Report R41057, Small Business Administration Microloan Program, ,
by Robert Jay Dilger. by Robert Jay Dilger.
89 SBA, “Nationwide Loan Report, October 1, 2020 through September 30, 2021,” December 13, 2021. 89 SBA, “Nationwide Loan Report, October 1, 2020 through September 30, 2021,” December 13, 2021.
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February 1, 2021, through September 30, 2021, will receive three monthly payments beginning February 1, 2021, through September 30, 2021, will receive three monthly payments beginning
with the first payment due.90 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 small businesses Many of the proposals under consideration to address the capital needs of small businesses
adversely affected by the COVID-19 pandemic were used to address the severe economic adversely affected by the COVID-19 pandemic were used to address the severe economic
slowdown during and immediately following the Great Recession (2007-2009). The main slowdown during and immediately following the Great Recession (2007-2009). The main
difference is that given the unique nature of the COVID-19 pandemic’s impact on households, difference is that given the unique nature of the COVID-19 pandemic’s impact on households,
especially physical distancing and the resulting decrease in consumer spending, there is an added especially physical distancing and the resulting decrease in consumer spending, there is an added
emphasis today on SBA loan deferrals, loan forgiveness, and expanded eligibility, including, for emphasis today on SBA loan deferrals, loan forgiveness, and expanded eligibility, including, for
the first time, specified types of nonprofit organizations. the first time, specified types of nonprofit organizations.
During the 111th Congress, P.L. 111-5, the American Recovery and Reinvestment Act of 2009 During the 111th Congress, P.L. 111-5, the American Recovery and Reinvestment Act of 2009
(ARRA), provided the SBA an additional $730 million, including $375 million to temporarily (ARRA), provided the SBA an additional $730 million, including $375 million to temporarily
subsidize the 7(a) and 504/CDC loan guaranty programs’ fees ($299 million) and to temporarily subsidize the 7(a) and 504/CDC loan guaranty programs’ fees ($299 million) and to temporarily
increase the 7(a) program’s maximum loan guaranty percentage to 90% ($76 million).91 ARRA increase the 7(a) program’s maximum loan guaranty percentage to 90% ($76 million).91 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
Small Business Investment Company (SBIC venture capital) program.92 SBICs provide loans and Small Business Investment Company (SBIC venture capital) program.92 SBICs provide loans and
equity investments in small businesses. equity investments in small 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 that provided be exhausted in November 2009, when Congress passed the first of six laws that provided
additional funding to extend the loan subsidies and 90% maximum loan guaranty percentage.93 additional 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 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 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 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/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-procedural-notice-5000-20095-adjustment-number-months-section-1112-payments-7a-504-microloan-programs-due-
insufficiency-funds. insufficiency-funds.
91 SBA, “Recovery Act Agency Plan,” May 15, 2009, at https://www.sba.gov/sites/default/files/recovery_act_reports/ 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. sba_recovery_act_plan.pdf.
92 For additional information and analysis, see CRS Report R41456, 92 For additional information and analysis, see CRS Report R41456, SBA Small Business Investment Company
Program, by Robert Jay Dilger. , by Robert Jay Dilger.
93 P.L. 111-118, the Department of Defense Appropriations Act, 2010, provided the SBA $125 million to continue the 93 P.L. 111-118, the Department of Defense Appropriations Act, 2010, provided the SBA $125 million to continue the
fee subsidies and 90% maximum loan guaranty percentage through February 28, 2010. P.L. 111-144, the Temporary fee subsidies and 90% maximum loan guaranty percentage through February 28, 2010. P.L. 111-144, the Temporary
Extension Act of 2010, provided the SBA $60 million to continue the fee subsidies and 90% maximum loan guaranty Extension Act of 2010, provided the SBA $60 million to continue the fee subsidies and 90% maximum loan guaranty
percentage through March 28, 2010. P.L. 111-150, an act to extend the Small Business Loan Guarantee Program, and percentage through March 28, 2010. P.L. 111-150, an act to extend the Small Business Loan Guarantee Program, and
for other purposes, provided the SBA authority to reprogram $40 million in previously appropriated funds to continue for other purposes, provided the SBA authority to reprogram $40 million in previously appropriated funds to continue
the fee subsidies and 90% maximum loan guaranty percentage through April 30, 2010. P.L. 111-157, the Continuing the fee subsidies and 90% maximum loan guaranty percentage through April 30, 2010. P.L. 111-157, the Continuing
Extension Act of 2010, provided the SBA $80 million to continue the SBA’s fee subsidies and 90% maximum loan Extension Act of 2010, provided the SBA $80 million to continue the SBA’s fee subsidies and 90% maximum loan
guaranty percentage through May 31, 2010. P.L. 111-240, the Small Business Jobs Act of 2010, provided $505 million guaranty percentage through May 31, 2010. P.L. 111-240, the Small Business Jobs Act of 2010, provided $505 million
(plus an additional $5 million for administrative expenses) to continue the SBA’s fee subsidies and 90% maximum loan (plus an additional $5 million for administrative expenses) to continue the SBA’s fee subsidies and 90% maximum loan
guaranty percentage from the act’s date of enactment (September 27, 2010) through December 31, 2010. P.L. 111-322, guaranty percentage from the act’s date of enactment (September 27, 2010) through December 31, 2010. P.L. 111-322,
the Continuing Appropriations and Surface Transportation Extensions Act, 2011, authorized the SBA to use funds the Continuing Appropriations and Surface Transportation Extensions Act, 2011, authorized the SBA to use funds
provided under the Small Business Jobs Act of 2010 to continue the SBA’s fee subsidies and 90% maximum loan provided under the Small 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 funding is exhausted. guaranty percentage through March 4, 2011, or until available funding is exhausted.
94 SBA, “Jobs Act Supported More Than $12 Billion in SBA Lending to Small Businesses in Just Three Months,” 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-January 3, 2011, at https://www.sba.gov/content/jobs-act-supported-more-12-billion-sba-lending-small-businesses-just-
three-months. three-months.
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In addition to providing additional funding to continue the SBA’s fee subsidies, P.L. 111-240, the In addition to providing additional funding to continue the SBA’s fee subsidies, P.L. 111-240, the
Small Business Jobs Act of 2010, among other provisions, Small Business Jobs Act of 2010, among other provisions,
 increased the 7(a) program’s gross loan limit from $2 million to $5 million;  increased the 7(a) program’s gross loan limit from $2 million to $5 million;
 increased the 504/CDC Program’s loan limits from $1.5 million to $5 million for  increased the 504/CDC Program’s loan limits from $1.5 million to $5 million for
“regular” borrowers, from $2 million to $5 million if the loan proceeds are “regular” borrowers, from $2 million to $5 million if the loan proceeds are
directed toward one or more specified public policy goals, and from $4 million to directed toward one or more specified public policy goals, and from $4 million to
$5.5 million for manufacturers; $5.5 million for manufacturers;
 temporarily expanded for two years the eligibility for low-interest refinancing  temporarily expanded for two years the eligibility for low-interest refinancing
under the SBA’s 504/CDC program for qualified debt; under the SBA’s 504/CDC program for qualified debt;
 temporarily increased for one year the SBAExpress Program’s loan limit from  temporarily increased for one year the SBAExpress Program’s loan limit from
$350,000 to $1 million (expired on September 26, 2011); $350,000 to $1 million (expired on September 26, 2011);
 increased the Microloan Program’s loan limit for borrowers from $35,000 to  increased the Microloan Program’s loan limit for borrowers from $35,000 to
$50,000; and increased the loan limits for Microloan intermediaries after their $50,000; and increased the loan limits for Microloan intermediaries after their
first year in the program from $3.5 million to $5 million; first year in the program from $3.5 million to $5 million;
 authorized the U.S. Treasury to make up to $30 billion of capital investments for  authorized the U.S. Treasury to make up to $30 billion of capital investments for
a Small Business Lending Fund ($4 billion was issued);95 a Small Business Lending Fund ($4 billion was issued);95
 authorized to be appropriated $1.5 billion for the State Small Business Credit  authorized to be appropriated $1.5 billion for the State Small Business Credit
Initiative Program;96 Initiative Program;96
 authorized a three-year Intermediary Lending Pilot Program to allow the SBA to  authorized a three-year Intermediary Lending Pilot Program to allow the SBA to
make direct loans to not more than 20 eligible nonprofit lending intermediaries make direct loans to not more than 20 eligible nonprofit lending intermediaries
each year totaling not more than $20 million. The intermediaries, in turn, would each year totaling not more than $20 million. The intermediaries, in turn, would
be allowed to make loans to new or growing small businesses, not to exceed be allowed to make loans to new or growing small businesses, not to exceed
$200,000 per business; $200,000 per business;
 established an alternative size standard for the 7(a) and 504/CDC loan programs  established an alternative size standard for the 7(a) and 504/CDC loan programs
to enable more small businesses to qualify for assistance;97 and to enable more small businesses to qualify for assistance;97 and
 provided small businesses with about $12 billion in tax relief.98  provided small businesses with about $12 billion in tax relief.98
There were also efforts during the 111th and 112th Congresses to require the SBA to reinstate There were also efforts during the 111th and 112th Congresses to require the SBA to reinstate
direct lending to small businesses direct lending to small businesses ~~H.R. 3007~~ (see H.R. 3854, the Small Business Financing and (see H.R. 3854, the Small Business Financing and
Investment
95 For additional information and analysis, see CRS Report R42045, 95 For additional information and analysis, see CRS Report R42045, The Small Business Lending Fund, by Robert Jay , by Robert Jay
Dilger. Dilger.
96 For additional information and analysis, see CRS Report R42581, 96 For additional information and analysis, see CRS Report R42581, State Small Business Credit Initiative:
Implementation and Funding Issues, by Robert Jay Dilger. , by Robert Jay Dilger.
97 P.L. 111-240, the Small Business Jobs Act of 2010, established the following interim alternative size standard for 97 P.L. 111-240, the Small Business Jobs Act of 2010, established the following interim alternative size standard for
both the 7(a) and 504/CDC programs: the business qualifies as small if it does not have a tangible net worth in excess both the 7(a) and 504/CDC programs: the business qualifies as small if it does not have a tangible net worth in excess
of $15 million and does not have an average net income after federal taxes (excluding any carry-over losses) in excess of $15 million and does not have an average net income after federal taxes (excluding any carry-over losses) in excess
of $5 million for two full fiscal years before the date of application. of $5 million for two full fiscal years before the date of application.
98 P.L. 111-240 raised the exclusion of gains on the sale or exchange of qualified small business stock from the federal 98 P.L. 111-240 raised the exclusion of gains on the sale or exchange of qualified small business stock from the federal
income tax to 100%, with the full exclusion applying only to stock acquired the day after the date of enactment through income tax to 100%, with the full exclusion applying only to stock acquired the day after the date of enactment through
the end of 2010; increased the deduction for qualified start-up expenditures from $5,000 to $10,000 in 2010, and raised the end of 2010; increased the deduction for qualified start-up expenditures from $5,000 to $10,000 in 2010, and raised
the phaseout threshold from $50,000 to $60,000 for 2010; placed limitations on the penalty for failure to disclose the phaseout threshold from $50,000 to $60,000 for 2010; placed limitations on the penalty for failure to disclose
reportable transactions based on resulting tax benefits; allowed general business credits of eligible small businesses for reportable transactions based on resulting tax benefits; allowed general business credits of eligible small businesses for
2010 to be carried back five years; exempted general business credits of eligible small businesses in 2010 from the 2010 to be carried back five years; exempted general business credits of eligible small businesses in 2010 from the
alternative minimum tax; allowed a temporary reduction in the recognition period for built-in gains tax; increased alternative minimum tax; allowed a temporary reduction in the recognition period for built-in gains tax; increased
expensing limitations for 2010 and 2011 and allowed certain real property to be treated as Section 179 property; expensing limitations for 2010 and 2011 and allowed certain real property to be treated as Section 179 property;
allowed additional first-year depreciation for 50% of the basis of certain qualified property; and removed cellular allowed additional first-year depreciation for 50% of the basis of certain qualified property; and removed cellular
telephones and similar telecommunications equipment from listed property so their cost can be deducted or depreciated telephones and similar telecommunications equipment from listed property so their cost can be deducted or depreciated
like other business property. like other business property.
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~~Investment~~ Act of 2009, Act of 2009, H.R. 3007, the Give Credit to Main Street Act of 2011, and H.R. 5835, the Veterans , the Give Credit to Main Street Act of 2011, and H.R. 5835, the Veterans
Access to Capital Act of 2012). Access to Capital Act of 2012).
Current Issues, Debates, and Lessons Learned
During the 111th Congress (2009-2010), there was a consensus in Congress that the federal During the 111th Congress (2009-2010), there was a consensus in Congress that the federal
government had to take decisive action to address the capital needs of small businesses, primarily government had to take decisive action to address the capital needs of small businesses, primarily
as a means to promote job retention and creation. Similar sentiments are being expressed today as as a means to promote job retention and creation. Similar sentiments are being expressed today as
Congress considers proposals to assist small businesses adversely affected by the COVID-19 Congress considers proposals to assist small businesses adversely affected by the COVID-19
pandemic. pandemic.
Many Members of Congress argued during the 111th Congress that the SBA should be provided Many Members of Congress argued during the 111th Congress that the SBA should be provided
additional resources to assist small businesses in acquiring capital necessary to start, continue, or additional resources to assist small businesses in acquiring capital necessary to start, continue, or
expand operations with the expectation that in so doing small businesses will create jobs. Others expand operations with the expectation that in so doing small businesses will create jobs. Others
worried about the long-term adverse economic effects of spending programs that increase the worried about the long-term adverse economic effects of spending programs that increase the
federal deficit. They advocated business tax reduction, reform of financial credit market federal deficit. They advocated business tax reduction, reform of financial credit market
regulation, and federal fiscal restraint as the best means to help small businesses further economic regulation, and federal fiscal restraint as the best means to help small businesses further economic
growth and job creation. growth and job creation.
Given the coronavirus’s widespread adverse economic impact, including productivity losses, Given the coronavirus’s widespread adverse economic impact, including productivity losses,
supply chain disruptions, labor dislocation, and financial pressure on businesses and households, supply chain disruptions, labor dislocation, and financial pressure on businesses and households,
there has been relatively little concern expressed about federal fiscal restraint during the current there has been relatively little concern expressed about federal fiscal restraint during the current
pandemic. The debate has been primarily over which specific policies would have the greatest pandemic. The debate has been primarily over which specific policies would have the greatest
impact and which types of small businesses and small business owners should be helped the most. impact and which types of small businesses and small business owners should be helped the most.
As mentioned, many of the enhancements to the SBA’s capital access programs that were made As mentioned, many of the enhancements to the SBA’s capital access programs that were made
during the 111th Congress, such as increasing loan limits, providing fee subsidies, increasing loan during the 111th Congress, such as increasing loan limits, providing fee subsidies, increasing loan
guaranty percentages, and expanding eligibility criteria are being considered again. These guaranty percentages, and expanding eligibility criteria are being considered again. These
changes had a demonstrated impact on small business lending during and immediately following changes had a demonstrated impact on small business lending during and immediately following
the Great Recession. SBA lending increased. For example, the SBA’s OIG found that SBA 7(a) the Great Recession. SBA lending increased. For example, the SBA’s OIG found that SBA 7(a)
loan approvals increased 39% and 504/CDC loan approval increased 73% from March to July loan approvals increased 39% and 504/CDC loan approval increased 73% from March to July
2009, largely due to ARRA’s fee reductions and increased loan guarantee percentages. Lending 2009, largely due to ARRA’s fee reductions and increased loan guarantee percentages. Lending
volume remained below pre-recession levels, but was much higher than before the fee reductions volume remained below pre-recession levels, but was much higher than before the fee reductions
and increase in the loan guarantee percentage were implemented. and increase in the loan guarantee percentage were implemented.
The OIG also noted that the increased loan volume “may be impacting Agency staffing The OIG also noted that the increased loan volume “may be impacting Agency staffing
requirements and program risk.... Without adequate training and supervision, the increased requirements and program risk.... Without adequate training and supervision, the increased
demands on loan center staff could impact the quality of Agency loan reviews.”99 demands on loan center staff could impact the quality of Agency loan reviews.”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 loan volume steadily increasing With loan volume steadily increasing for the past six quarters, the U.S. Small Business 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 2010.100 Act of 2010.100
The data demonstrate that ARRA and the Small Business Jobs Act of 2010 helped small The data demonstrate that ARRA and the Small Business Jobs Act of 2010 helped small
businesses access capital. However, because the SBA primarily gathers data on program output businesses access capital. However, because the SBA primarily gathers data on program output

99 SBA, OIG, 99 SBA, OIG, Review of the Recovery Act’s Impact on SBA Lending, ROM 10-02, November 25, 2009, p. 4, at , 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. 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,” 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-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. 2012-reach-second-largest-total-ever-3025-billion-second-only-fy-2011.
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(e.g., loan volume, number of small businesses served, default rates) as opposed to program (e.g., loan volume, number of small businesses served, default rates) as opposed to program
outcomes (e.g., small business solvency, job creation, wealth generation) it is difficult to know outcomes (e.g., small business solvency, job creation, wealth generation) it is difficult to know
how effective these programs were in assisting small businesses or if other approaches might how effective these programs were in assisting small businesses or if other approaches might
have produced better (or different) results. have produced better (or different) results.
Among the lessons learned from earlier small business stimulus packages is that additional Among the lessons learned from earlier small business stimulus packages is that additional
funding for the SBA OIG to conduct oversight of the SBA’s implementation of stimulus changes funding for the SBA OIG to conduct oversight of the SBA’s implementation of stimulus changes
could help Congress in its oversight responsibilities. Additional funding for the SBA OIG to could help Congress in its oversight responsibilities. Additional funding for the SBA OIG to
conduct investigations of potentially fraudulent behaviors by borrowers and lenders could also conduct investigations of potentially fraudulent behaviors by borrowers and lenders could also
prove useful in deterring fraud, waste, and abuse.101 In addition, requiring the SBA to periodically prove useful in deterring fraud, waste, and abuse.101 In addition, requiring the SBA to periodically
report to Congress and on its website both output and outcome performance data could help report to Congress and on its website both output and outcome performance data could help
Congress in its oversight responsibilities and assure the public that the taxpayer’s dollars are Congress in its oversight responsibilities and assure the public that the taxpayer’s dollars are
being spent both efficiently and effectively. being spent both efficiently and effectively.
SBA Entrepreneurial Development Programs102
Overview
The SBA has provided technical and managerial assistance to small businesses since it began The SBA has provided technical and managerial assistance to small businesses since it began
operations in 1953. Initially, the SBA provided its own small business management and technical operations in 1953. Initially, the SBA provided its own small business management and technical
assistance training programs. Over time, the SBA has relied increasingly on third parties to assistance training programs. Over time, the SBA has relied increasingly on third parties to
provide that training. provide that training.
Congressional interest in the SBA’s management and technical assistance training programs has Congressional interest in the SBA’s management and technical assistance training programs has
increased in recent years, primarily because these programs are viewed as a means to assist small increased in recent years, primarily because these programs are viewed as a means to assist small
businesses create and retain jobs. In FY2022, these programs received $256.6 million in businesses create and retain jobs. In FY2022, these programs received $256.6 million in
appropriations. These funds support about 14,000 resource partners, including 62 lead small appropriations. These funds support about 14,000 resource partners, including 62 lead small
business development centers (SBDCs) and nearly 900 SBDC local outreach locations, 146 business development centers (SBDCs) and nearly 900 SBDC local outreach locations, 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.103 SCORE.103
The SBA reports that nearly a million aspiring entrepreneurs and small business owners receive The SBA reports that nearly a million aspiring entrepreneurs and small business owners receive
mentoring and training from an SBA-supported resource partner each year. Most of this training mentoring and training from an SBA-supported resource partner each year. Most of this training
is free, and some is offered at low cost.104 is free, and some is offered at low cost.104

101 P.L. 116-136, the CARES Act, provided the SBA’s OIG $25 million in additional funding for its oversight 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 activities. On April 3, 2020, the SBA’s OIG issued its first CARES Act-related report, “White Paper: Risk Awareness
and Lessons Learned from Prior Audits of Economic Stimulus Loans.” For a list of the SBA OIG’s oversight reports on and Lessons Learned from Prior Audits of Economic Stimulus Loans.” For a list of the SBA OIG’s oversight reports on
SBA’s credit and capital programs, including COVID-19-related relief programs, see https://www.sba.gov/document?SBA’s credit and capital programs, including COVID-19-related relief programs, see https://www.sba.gov/document?
sortBy=Effective%20Date&search=&documentType=Report&program=Credit/Capital&documentActivity=Audit/sortBy=Effective%20Date&search=&documentType=Report&program=Credit/Capital&documentActivity=Audit/
evaluation&office=7392&page=1. evaluation&office=7392&page=1.
102 For additional information and analysis, see CRS Report R41352, 102 For additional information and analysis, see CRS Report R41352, Small Business Management and Technical
Assistance Training Programs, by Robert Jay Dilger. , by Robert Jay Dilger.
103 Other SBA entrepreneurial development programs include the following: the Microloan Technical Assistance 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 Program; the Program for Investment in Microentrepreneurs (PRIME), Veterans Programs (including Veterans
Business Outreach Centers, Boots to Business, Veteran Women Igniting the Spirit of Entrepreneurship [VWISE], Business Outreach Centers, Boots to Business, Veteran Women Igniting the Spirit of Entrepreneurship [VWISE],
Entrepreneurship Bootcamp for Veterans with Disabilities, and Boots to Business: Reboot), the Native American Entrepreneurship Bootcamp for Veterans with Disabilities, and Boots to Business: Reboot), the Native American
Outreach Program, the Entrepreneurial Development Initiative (Regional Innovation Clusters), the Entrepreneurship Outreach Program, the Entrepreneurial Development Initiative (Regional Innovation Clusters), the Entrepreneurship
Education Initiative, the Growth Accelerators Initiative, and the 7(j) Technical Assistance Program. Education Initiative, the Growth Accelerators Initiative, and the 7(j) Technical Assistance Program.
104 SBA, 104 SBA, FY2021 Congressional Budget Justification and FY2019 Annual Performance Report, p. 18. , p. 18.
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Small Business Development Centers
SBDCs provide free or low-cost assistance to small businesses using programs customized to SBDCs provide free or low-cost assistance to small businesses using programs customized to
local conditions. SBDCs support small businesses in marketing and business strategy, finance, local conditions. SBDCs support small businesses in marketing and business strategy, finance,
technology transfer, government contracting, management, manufacturing, engineering, sales, technology transfer, government contracting, management, manufacturing, engineering, sales,
accounting, exporting, and other topics. SBDCs are funded by SBA grants and matching funds accounting, exporting, and other topics. SBDCs are funded by SBA grants and matching funds
equal to the grant amount. equal to the grant amount.
SBDC funding is allocated on a pro rata basis among the states (including the District of SBDC funding is allocated on a pro rata basis among the states (including the District of
Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, and American Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, and American
Samoa) by a statutory formula “based on the percentage of the population of each State, as Samoa) by a statutory formula “based on the percentage of the population of each State, as
compared to the population of the United States.”105 If, as is currently the case, SBDC funding 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 exceeds $90 million, the minimum funding level is “the sum of $500,000, plus a percentage of
$500,000 equal to the percentage amount by which the amount made available exceeds $90 $500,000 equal to the percentage amount by which the amount made available exceeds $90
million.”106 million.”106
There are 62 lead SBDC service centers, one located in each state (four in Texas and six in There are 62 lead SBDC service centers, one located in each state (four in Texas and six in
California), the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and American California), the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and American
Samoa. These centers manage more than 900 SBDC outreach locations. SBDCs were Samoa. These centers manage more than 900 SBDC outreach locations. SBDCs were
appropriated $135.0 million in FY2020, $136.0 million in FY2021, and $138.0 million in appropriated $135.0 million in FY2020, $136.0 million in FY2021, and $138.0 million in
FY2022. The SBA also was provided an additional $192.0 million in supplemental funding for FY2022. The SBA also was provided an additional $192.0 million in supplemental funding for
SBDC grants in FY2020 under the CARES Act.107 SBDC grants in FY2020 under the CARES Act.107
In FY2021, SBDCs provided training and counseling to 643,144 unique SBDC clients, and In FY2021, SBDCs provided training and counseling to 643,144 unique SBDC clients, and
22,589 new businesses were started largely as a result of SBDC training and counseling.108 22,589 new businesses were started largely as a result of SBDC training and counseling.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, low-income, veteran, and Act, 1992) to address the perceived disadvantages faced by women, low-income, veteran, and
minority entrepreneurs and business owners gaining access to capital to start or expand their minority entrepreneurs and business owners gaining access to capital to start or expand their
business. The program became operational in 1992. Initially, the SBA’s Microloan program was business. The program became operational in 1992. Initially, the SBA’s Microloan program was
authorized as a five-year demonstration project. It was made permanent, subject to authorized as a five-year demonstration project. It was made permanent, subject to
reauthorization, by P.L. 105-135, the Small Business Reauthorization Act of 1997. reauthorization, by P.L. 105-135, the Small Business Reauthorization Act of 1997.
The SBA’s Microloan Technical Assistance Program is affiliated with the SBA’s Microloan The SBA’s Microloan Technical Assistance Program is affiliated with the SBA’s Microloan
lending program but receives a separate appropriation. This program provides grants to lending 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.109 There are currently 140 active Microloan intermediaries borrowers and prospective borrowers.109 There are currently 140 active Microloan intermediaries
serving 49 states, the District of Columbia, and Puerto Rico.110 serving 49 states, the District of Columbia, and Puerto Rico.110

105 15 U.S.C. §648(a)(4)(C). 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. 106 15 U.S.C. §648(a)(4)(C) and P.L. 106-554, the Consolidated Appropriations Act, 2001.
107 The CARES Act also provides $25 million for SBA resource partners, including SBDCs, to establish a centralized 107 The CARES Act also provides $25 million for SBA resource partners, including SBDCs, to establish a centralized
hub for COVID-19 information, which includes an online platform that consolidates resources and information across hub for COVID-19 information, which includes an online platform that consolidates resources and information across
multiple federal agencies and training program to education resource partner counselors. multiple federal agencies and training program to education resource partner counselors.
108 SBA, 108 SBA, FY2023 Congressional Budget Justification FY2021 Annual Performance Report, p. 82. , p. 82.
109 For further analysis of the SBA’s Microloan program, see CRS Report R41057, 109 For further analysis of the SBA’s Microloan program, see CRS Report R41057, Small Business Administration
Microloan Program, by Robert Jay Dilger. , by Robert Jay Dilger.
110 SBA, 110 SBA, FY2023 Congressional Budget Justification FY2021 Annual Performance Report, p. 36. For a list of , p. 36. For a list of
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Under the Microloan program, intermediaries are eligible to receive a Microloan technical Under the Microloan program, intermediaries are eligible to receive a Microloan technical
assistance grant “of not more than 25% of the total outstanding balance of loans made to it.”111 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 Grant funds may be used only to provide marketing, management, and technical assistance to
Microloan borrowers, and no more than 50% of the funds may be used to provide such assistance Microloan borrowers, and no more than 50% of the funds may be used to provide such assistance
to prospective Microloan borrowers and no more than 50% of the funds may be awarded to third to prospective Microloan borrowers and no more than 50% of the funds may be awarded to third
parties to provide that technical assistance. Grant funds also may be used to attend required parties to provide that technical assistance. Grant funds also may be used to attend required
training.112 training.112
In most instances, intermediaries must contribute, solely from nonfederal sources, an amount In most instances, intermediaries must contribute, solely from nonfederal sources, an amount
equal to 25% of the grant amount.113 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 In an effort to assist small businesses adversely affected by COVID-19, P.L. 116-260, the
Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, Title III of Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, Title III of
the Consolidated Appropriations Act of 2021), waived the Microloan Technical Assistance the Consolidated Appropriations Act of 2021), waived the Microloan Technical Assistance
Program’s matching requirement and the limitations on the use of those funds to provide training Program’s matching requirement and the limitations on the use of those funds to provide training
to prospective borrowers and on contracts to third parties to provide that training in FY2021. to prospective borrowers and on contracts to third parties to provide that training in FY2021.
The SBA does not require Microloan borrowers to participate in the Microloan Technical The SBA does not require Microloan borrowers to participate in the Microloan Technical
Assistance Program. However, intermediaries typically require Microloan borrowers to Assistance Program. However, intermediaries typically require Microloan borrowers to
participate in the training program as a condition of the receipt of a microloan. Combining loan participate in the training program as a condition of the receipt of a microloan. Combining loan
and intensive management and technical assistance training is one of the Microloan program’s and intensive management and technical assistance training is one of the Microloan program’s
distinguishing features.114 distinguishing features.114
The SBA was provided $34.5 million for Microloan technical assistance grants in FY2020, $85.0 The SBA was provided $34.5 million for Microloan technical assistance grants in FY2020, $85.0
million in FY2021 ($35.0 million in the Consolidated Appropriations Act, 2021 and an additional million in FY2021 ($35.0 million in the Consolidated Appropriations Act, 2021 and an additional
$50.0 million in P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and $50.0 million in P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and
Venues Act), and $37.0 million in FY2022. Venues Act), and $37.0 million in FY2022.
Women’s Business Centers
The WBC Renewable Grant Program was initially established by P.L. 100-533, the Women’s The WBC Renewable Grant Program was initially established by P.L. 100-533, the Women’s
Business Ownership Act of 1988, as the Women’s Business Demonstration Pilot Program, Business Ownership Act of 1988, as the Women’s Business Demonstration Pilot Program,
targeting the needs of socially and economically disadvantaged women. The act directed the SBA targeting the needs of socially and economically disadvantaged women. The act directed the SBA
to provide financial assistance to private, nonprofit organizations to conduct demonstration to provide financial assistance to private, nonprofit organizations to conduct demonstration
projects giving financial, management, and marketing assistance to small businesses, including projects giving financial, management, and marketing assistance to small businesses, including
start-up businesses, owned and controlled by women. The WBC program was expanded and start-up businesses, owned and controlled by women. The WBC program was expanded and

Microloan intermediaries by state, see SBA, “List of Lenders,” at https://www.sba.gov/partners/lenders/microloan-Microloan intermediaries by state, see SBA, “List of Lenders,” at https://www.sba.gov/partners/lenders/microloan-
program/list-lenders. program/list-lenders.
111 15 U.S.C. §636(m)(4)(A). 111 15 U.S.C. §636(m)(4)(A).
112 13 C.F.R. §120.712. 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 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. 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 located in or owned by residents of an 114 Intermediaries that make at least 25% of their loans to small businesses located in or owned by residents of an
Economically Distressed Area (defined as having 40% or more of its residents with an annual income that is at or (defined as having 40% or more of its residents with an annual income that is at or
below the poverty level), or have a portfolio of loans made under the program that averages not more than $10,000 below the poverty level), or have a portfolio of loans made under the program that averages not more than $10,000
during the period of the intermediary’s participation in the program are eligible to receive an additional training grant during the period of the intermediary’s participation in the program are eligible to receive an additional training grant
equal to 5% of the total outstanding balance of loans made to the intermediary. Intermediaries are not required to make equal to 5% of the total outstanding balance of loans made to the intermediary. Intermediaries are not required to make
a matching contribution as a condition of receiving these additional grant funds. See 13 C.F.R. §120.712; and 15 U.S.C. a matching contribution as a condition of receiving these additional grant funds. See 13 C.F.R. §120.712; and 15 U.S.C.
§636(m)(4)(C)(i). §636(m)(4)(C)(i).
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provided permanent legislative status by P.L. 109-108, the Science, State, Justice, Commerce, and provided permanent legislative status by P.L. 109-108, the Science, State, Justice, Commerce, and
Related Agencies Appropriations Act, 2006.115 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. Since the program’s inception, the SBA has awarded WBCs a grant of up to $150,000 per year.
WBC initial grants are currently awarded for up to five years, consisting of a base period of 12 WBC initial grants are currently awarded for up to five years, consisting of a base period of 12
months from the date of the award and four 12-month option periods.116 The SBA determines if 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 availability of funds, and the recipient organization’s compliance with program authority, the availability of funds, and the recipient organization’s compliance with
federal law, SBA regulations, and the terms and conditions specified in a cooperative agreement. federal law, SBA regulations, and the terms and conditions specified in a cooperative agreement.
WBCs that successfully complete the initial five-year grant period may apply for an unlimited WBCs that successfully complete the initial five-year grant period may apply for an unlimited
number of three-year funding intervals.117 number of three-year funding intervals.117
During their initial five-year grant period, WBCs are required to provide a nonfederal match of During their initial five-year grant period, WBCs are required to provide a nonfederal match of
one nonfederal dollar for each two federal dollars in years one and two (1:2), and one nonfederal one nonfederal dollar for each two federal dollars in years one and two (1:2), and one nonfederal
dollar for each federal dollar in years three, four, and five (1:1). After the initial five-year grant dollar for each federal dollar in years three, four, and five (1:1). After the initial five-year grant
period, the matching requirement in subsequent three-year funding intervals is not more than 50% period, the matching requirement in subsequent three-year funding intervals is not more than 50%
of federal funding (1:1).118 The nonfederal match may consist of cash, in-kind, and program of federal funding (1:1).118 The nonfederal match may consist of cash, in-kind, and program
income.119 income.119
In an effort to assist small businesses adversely affected by COVID-19, the CARES Act waived In an effort to assist small businesses adversely affected by COVID-19, the CARES Act waived
the WBC matching requirement for three months following enactment (March 27, 2020). P.L. the WBC matching requirement for three months following enactment (March 27, 2020). P.L.
116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division
N, Title III of the Consolidated Appropriations Act of 2021), reactivated this waiver, made it 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 146 WBCs located throughout the states and territories.120 In FY2021, WBCs Today, there are 146 WBCs located throughout the states and territories.120 In FY2021, WBCs
provided technical assistance training and counseling services to 87,957 unique WBC clients, and provided technical assistance training and counseling services to 87,957 unique WBC clients, and
3,301 new businesses were started largely as a result of WBC training and counseling.121 3,301 new businesses were started largely as a result of WBC training and counseling.121

115 P.L. 105-135, the Small Business Reauthorization Act of 1997, is sometimes referenced as providing the WBC 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 program permanent statutory authorization because it provided authorization for the program in any year that it
received appropriations. received appropriations.
116 P.L. 105-135, the Small Business Reauthorization Act of 1997, authorized the SBA to award grants to WBCs for up 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 to five years—one base year and four option years. P.L. 106-165, the Women’s Business Centers Sustainability Act of
1999, provided WBCs that had completed the initial five-year grant an opportunity to apply for an additional five-year 1999, provided WBCs that had completed the initial five-year grant an opportunity to apply for an additional five-year
sustainability grant. Thus, the act allowed successful WBCs to receive SBA funding for a total of 10 years. Because the sustainability grant. Thus, the act allowed successful WBCs to receive SBA funding for a total of 10 years. Because the
program has permitted permanent three-year funding intervals since 2007, the sustainability grants would be phased out program has permitted permanent three-year funding intervals since 2007, the sustainability grants would be phased out
by FY2012, leaving the initial five-year grants with the continuous three-year option. See SBA, by FY2012, leaving the initial five-year grants with the continuous three-year option. See SBA, FY2012 Congressional
Budget Justification and FY2010 Annual Performance Report, p. 49, at https://www.sba.gov/sites/default/files/, p. 49, at https://www.sba.gov/sites/default/files/
aboutsbaarticle/FINAL%20FY%202012%20CBJ%20FY%202010%20APR_0.pdf. aboutsbaarticle/FINAL%20FY%202012%20CBJ%20FY%202010%20APR_0.pdf.
117 P.L. 110-28, the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations 117 P.L. 110-28, the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations
Act, 2007, allowed WBCs that successfully completed the initial five-year grant to apply for an unlimited number of Act, 2007, allowed WBCs that successfully completed the initial five-year grant to apply for an unlimited number of
three-year funding renewals. three-year funding renewals.
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 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
grant. grant.
119 P.L. 105-135 specified that not more than one-half of the nonfederal sector matching assistance may be in the form 119 P.L. 105-135 specified that not more than one-half of the nonfederal sector matching assistance may be in the form
of in-kind contributions that are budget line items only, including office equipment and office space. of in-kind contributions that are budget line items only, including office equipment and office space.
120 SBA, “SBA Administrator Announces Five New Women’s Business Centers To be Operated by Minority Serving 120 SBA, “SBA Administrator Announces Five New Women’s Business 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-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, “Women’s Business Centers Directory,” at womens-business-centers-be-operated-minority-serving; and SBA, “Women’s Business Centers Directory,” at
https://www.sba.gov/tools/local-assistance/wbc. https://www.sba.gov/tools/local-assistance/wbc.
121 SBA, 121 SBA, FY2023 Congressional Budget Justification FY2021 Annual Performance Report, p. 84. , p. 84.
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The SBA was provided $22.5 million for WBC grants in FY2020, $23.0 million in FY2021, and 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 $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 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 SCORE was established on October 5, 1964, by then-SBA Administrator Eugene P. Foley as a
national, volunteer organization, uniting more than 50 independent nonprofit organizations into a national, volunteer organization, uniting more than 50 independent nonprofit organizations into a
single, national nonprofit organization. single, national nonprofit organization.
The SBA currently provides grants to SCORE to provide in-person mentoring, online training, The SBA currently provides grants to SCORE to provide in-person mentoring, online training,
and “nearly 9,000 local training workshops annually” to small businesses.123 SCORE’s more than and “nearly 9,000 local training workshops annually” to small businesses.123 SCORE’s more than
250 chapters are located throughout the United States and partner with more than 10,000 250 chapters are located throughout the United States and partner with more than 10,000
volunteer counselors, who are working or retired business owners, executives and corporate volunteer counselors, who are working or retired business owners, executives and corporate
leaders, to provide management and training assistance to small businesses “at no charge or at leaders, to provide management and training assistance to small businesses “at no charge or at
very low cost.”124 very low cost.”124
In FY2021, SCORE provided technical assistance training and counseling services to 145,838 In FY2021, SCORE provided technical assistance training and counseling services to 145,838
unique SCORE clients, and 3,064 new businesses were started largely as a result of SCORE unique SCORE clients, and 3,064 new businesses were started largely as a result of SCORE
training and counseling.125 training and counseling.125
The SBA was provided $11.7 million for SCORE grants in FY2020, $12.2 million in FY2021, The SBA was provided $11.7 million for SCORE grants in FY2020, $12.2 million in FY2021,
and $14.0 million in FY2022. 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 additional $24 immediately following the Great Recession. For example, ARRA provided an additional $24
million for Microloan technical assistance grants. The Small Business Jobs Act of 2010 provided million for Microloan technical assistance grants. The Small Business Jobs Act of 2010 provided
SBDCs an additional $50 million and temporarily waived SBDC, Microloan technical assistance, SBDCs an additional $50 million and temporarily waived SBDC, Microloan technical assistance,
and WBC matching requirements. and WBC matching requirements.
Similar proposals were made to address the COVID-19 pandemic. For example, during the 116th Similar proposals were made to address the COVID-19 pandemic. For example, during the 116th
Congress, the CARES Act appropriated an additional $265 million for SBA entrepreneurial Congress, the CARES Act appropriated an additional $265 million for SBA entrepreneurial
development programs ($192 million for SBDCs, $48 million for WBCs, and $25 million for development programs ($192 million for SBDCs, $48 million for WBCs, and $25 million for
SBA resource partners to provide online information and training). The act also waived SBDC SBA resource partners to provide online information and training). The act also waived SBDC
and WBC matching requirements. P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, and WBC matching requirements. P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses,
Nonprofits, and Venues Act (Division N, Title III of the Consolidated Appropriations Act of Nonprofits, and Venues Act (Division N, Title III of the Consolidated Appropriations Act of
2021), appropriated an additional $50 million for Microloan technical assistance grants, and 2021), appropriated an additional $50 million 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 million for a Congress, P.L. 117-2, the American Rescue Plan Act of 2021, appropriated $100 million for a
community navigator pilot grant program to improve small business access to COVID-19-related community navigator pilot grant program to improve small business access to COVID-19-related

122 The CARES Act also provides $25 million for SBA resource partners, including WBCs, to establish a centralized 122 The CARES Act also provides $25 million for SBA resource partners, including WBCs, to establish a centralized
hub for COVID-19 information, which includes an online platform that consolidates resources and information across hub for COVID-19 information, which includes an online platform that consolidates resources and information across
multiple federal agencies and training programs to educate resource partner counselors. multiple federal agencies and training programs to educate resource partner counselors.
123 SBA, 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.
124 SCORE (Service Corps of Retired Executives), “About SCORE,” Washington, DC, at https://www.score.org/about- 124 SCORE (Service Corps of Retired Executives), “About SCORE,” Washington, DC, at https://www.score.org/about-
score. score.
125 SBA, 125 SBA, FY2023 Congressional Budget Justification FY2021 Annual Performance Report, p. 85. , p. 85.
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assistance programs and $75 million for outreach and education programs. All SBA resource 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. 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 Congress could require the SBA’s resource partners to report to the SBA both output and
outcome performance data for these grants and to require the SBA to report that information to outcome performance data for these grants and to require the SBA to report that information to
Congress and make that information available to the public on the SBA website. Congress and make that information available to the public on the SBA website.
SBA Contracting Programs126
Overview
Federal agencies are required to facilitate the maximum participation of small businesses as prime Federal agencies are required to facilitate the maximum participation of small businesses as prime
contractors, subcontractors, and suppliers. For example, federal agencies are generally required to contractors, subcontractors, and suppliers. For example, federal agencies are generally required to
reserve contracts that have an anticipated value greater than the micro-purchase threshold reserve contracts that have an anticipated value greater than the micro-purchase threshold
(currently $10,000), but not greater than the simplified acquisition threshold (currently $250,000) (currently $10,000), but not greater than the simplified acquisition threshold (currently $250,000)
exclusively for small businesses unless the contracting officer is unable to obtain offers from two exclusively for small businesses unless the contracting officer is unable to obtain offers from two
or more small businesses that are competitive with market prices and the quality and delivery of or more small businesses that are competitive with market prices and the quality and delivery of
the goods or services being purchased.127 the goods or services being purchased.127
Several SBA programs assist small businesses in obtaining and performing federal contracts and Several SBA programs assist small businesses in obtaining and performing federal contracts and
subcontracts. These include various prime contracting programs, subcontracting programs, and subcontracts. These include various prime contracting programs, subcontracting programs, and
other assistance (e.g., contracting technical training assistance and oversight of the federal small other assistance (e.g., contracting technical training assistance and oversight of the federal small
business goaling program and the Surety Bond Guarantee program).128 business goaling program and the Surety Bond Guarantee program).128
8(a) 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 socially and economically disadvantaged, businesses owned and controlled by persons who are socially and economically disadvantaged,
have good character, and demonstrate a potential for success.130 have good character, and demonstrate a potential for success.130
Although the 8(a) Program was originally established in the 1980s for the benefit of Although the 8(a) Program was originally established in the 1980s for the benefit of
disadvantaged individuals, Congress expanded the program to include small businesses owned by disadvantaged individuals, Congress expanded the program to include small businesses owned by
four disadvantaged groups. Small businesses owned by Alaska Native Corporations (ANCs), four disadvantaged groups. Small businesses owned by Alaska Native Corporations (ANCs),
Community Development Corporations (CDCs), Indian tribes, and Native Hawaiian Community Development Corporations (CDCs), Indian tribes, and Native Hawaiian
Organizations (NHOs) are also eligible to participate in the 8(a) Program under somewhat Organizations (NHOs) are also eligible to participate in the 8(a) Program under somewhat
different requirements. different requirements.

126 For additional information and analysis concerning SBA contracting programs, see CRS Report R45576, 126 For additional information and analysis concerning SBA contracting programs, see CRS Report R45576, An
Overview of Small Business Contracting, by Robert Jay Dilger. , by Robert Jay Dilger.
127 15 U.S.C. §644(j)(1). Certain regulations implementing this provision of the Small Business Act effectively narrows 127 15 U.S.C. §644(j)(1). Certain regulations implementing this provision of the Small Business Act effectively narrows
its scope. For example, certain small business contracts awarded or performed overseas are not necessarily required to its scope. For example, certain small business contracts awarded or performed overseas are not necessarily required to
be set aside for small businesses, and the small business provisions contained in Part 19 of the Federal Acquisition be set aside for small businesses, and the small business provisions contained in Part 19 of the Federal Acquisition
Regulation (FAR) generally do not apply to blanket purchase agreements and orders placed against Federal Supply Regulation (FAR) generally do not apply to blanket purchase agreements and orders placed against Federal Supply
Schedule contracts. Schedule contracts.
128 For additional information and analysis concerning the SBA’s Surety Bond Program, see CRS Report R42037, 128 For additional information and analysis concerning the SBA’s Surety Bond Program, see CRS Report R42037, SBA
Surety Bond Guarantee Program, by Robert Jay Dilger. , by Robert Jay Dilger.
129 For additional information and analysis concerning the 8(a) Program, see CRS Report R44844, 129 For additional information and analysis concerning the 8(a) Program, see CRS Report R44844, SBA’s “8(a)
Program”: Overview, History, and Current Issues, by Robert Jay Dilger. , by Robert Jay Dilger.
130 Section 8(a) of the Small Business Act, P.L. 85-536, as amended, can be found at 15 U.S.C. §637(a). Regulations 130 Section 8(a) of the Small Business Act, P.L. 85-536, as amended, can be found at 15 U.S.C. §637(a). Regulations
are in 13 C.F.R. §124. are in 13 C.F.R. §124.
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Federal agencies are authorized to award contracts for goods or services, or to perform 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 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 the function of executing contracts to the procuring agencies and often does so. Once the SBA has
accepted a contract for the 8(a) Program, the contract is awarded through either a restricted accepted a contract for the 8(a) Program, the contract is awarded through either a restricted
competition limited to just 8(a) participants (a set aside) or on a sole source basis, with the competition limited to just 8(a) participants (a set aside) or on a sole source basis, with the
contract amount generally determining the acquisition method used. contract amount generally determining the acquisition method used.
For individually owned small businesses, when the contract’s anticipated total value, including For individually owned small businesses, when the contract’s anticipated total value, including
any options, does not exceed $4.5 million ($7.5 million for manufacturing contracts), the contract any options, does not exceed $4.5 million ($7.5 million for manufacturing contracts), the contract
is normally awarded without competition (as a sole source award). In contrast, when the is normally awarded without competition (as a sole source award). In contrast, when the
contract’s anticipated value exceeds these thresholds, the contract generally must be awarded via contract’s anticipated value exceeds these thresholds, the contract generally must be awarded via
a set aside with competition limited to 8(a) firms so long as there is a reasonable expectation that a set aside with competition limited to 8(a) firms so long as there is a reasonable expectation that
at least two eligible and responsible 8(a) firms will submit offers and the award can be made at at least two eligible and responsible 8(a) firms will submit offers and the award can be made at
fair market price.131 fair market price.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 million ($7 million for 8(a) set asides and may receive sole source awards valued at less than $4 million ($7 million
for manufacturing contracts). However, firms owned by ANCs and Indian tribes can also receive for manufacturing contracts). However, firms owned by ANCs and Indian tribes can also receive
sole source awards in excess of $4.5 million ($7.5 million for manufacturing contracts) even sole source awards in excess of $4.5 million ($7.5 million for manufacturing contracts) even
when contracting officers reasonably expect that at least two eligible and responsible 8(a) firms when contracting officers reasonably expect that at least two eligible and responsible 8(a) firms
will submit offers and the award can be made at fair market price.132 NHO-owned firms may will submit offers and the award can be made at fair market price.132 NHO-owned firms may
receive sole source awards from the Department of Defense under the same conditions.133 receive sole source awards from the Department of Defense under the same conditions.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 small disadvantaged businesses. least 5% of their federal contracting dollars to small disadvantaged businesses.
In FY2020, the federal government awarded $34.0 billion to 8(a) firms. In FY2020, the federal government awarded $34.0 billion to 8(a) firms.
Historically Underutilized Business Zone Program134
The SBA oversees the Historically Underutilized Business Zones (HUBZones) Program. The The SBA oversees the Historically Underutilized Business Zones (HUBZones) Program. The
program assists small businesses located in HUBZone-designated areas through set asides, sole program assists small businesses located in HUBZone-designated areas through set asides, sole
source awards (so long as the award can be made at a fair and reasonable price, and the source awards (so long as the award can be made at a fair and reasonable price, and the
anticipated total value of the contract, including any options, does not exceed $4.5 million, or anticipated total value of the contract, including any options, does not exceed $4.5 million, or
$7.5 million for manufacturing contracts) and price evaluation preferences (of up to 10%) in full $7.5 million for manufacturing contracts) and price evaluation preferences (of up to 10%) in full
and open competitions.135 The HUBZone program targets assistance to small businesses located and open competitions.135 The HUBZone program targets assistance to small businesses located
in areas with low income, high poverty, or high unemployment.136 To be certified as a HUBZone in areas with low income, high poverty, or high unemployment.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 131 15 U.S.C. §637(a)(1)(D)(ii); and SBA, “Conforming Statutory Amendments and Technical Corrections to Small
Business Government Contracting Regulations,” 83Business Government Contracting Regulations,” 83 Federal Register 12849, March 26, 2018. 12849, March 26, 2018.
132 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. 132 P.L. 100-656, §602(a), 102 Stat. 3887-88 (November 15, 1988) (codified at 15 U.S.C. §637 note); and 48 C.F.R.
§19.805-1(b)(2). §19.805-1(b)(2).
133 DOD’s authority to make sole source awards to NHO-owned firms of contracts valued at more than $4 million ($7 133 DOD’s authority to make sole source awards to NHO-owned firms of contracts valued at more than $4 million ($7
million for manufacturing contracts) even if contracting officers reasonably expect that offers will be received from at million for manufacturing contracts) even if contracting officers reasonably expect that offers will be received from at
least two responsible small businesses existed on a temporary basis in 2004-2006 and became permanent in 2006. See least two responsible small businesses existed on a temporary basis in 2004-2006 and became permanent in 2006. See
P.L. 109-148, Department of Defense, Emergency Supplemental Appropriations to Address Hurricanes in the Gulf of P.L. 109-148, Department of Defense, Emergency Supplemental Appropriations to Address Hurricanes in the Gulf of
Mexico, and Pandemic Influenza Act of 2006, §8020, 119 Stat. 2702-03 (December 30, 2005); 48 C.F.R. §219.805-Mexico, and Pandemic Influenza Act of 2006, §8020, 119 Stat. 2702-03 (December 30, 2005); 48 C.F.R. §219.805-
1(b)(2)(A)-(B). 1(b)(2)(A)-(B).
134 For additional information and analysis, see CRS Report R41268, 134 For additional information and analysis, see CRS Report R41268, Small Business Administration HUBZone
Program, by Robert Jay Dilger. , by Robert Jay Dilger.
135 15 U.S.C. §657a(b)(2-3); and SBA, “Conforming Statutory Amendments and Technical Corrections to Small 135 15 U.S.C. §657a(b)(2-3); and SBA, “Conforming Statutory Amendments and Technical Corrections to Small
Business Government Contracting Regulations,” 83Business Government Contracting Regulations,” 83 Federal Register 12849, March 26, 2018. 12849, March 26, 2018.
136 For specific criteria, see 15 U.S.C. §632(p)(4); and 13 C.F.R. §126.103. 136 For specific criteria, see 15 U.S.C. §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 small business, at least 35% of the small business’s employees must generally reside in a
HUBZone. HUBZone.
The HUBZone contracting program is designed to help federal agencies achieve their statutory The HUBZone contracting program is designed to help federal agencies achieve their statutory
goal of awarding at least 3% of their federal contracting dollars to HUBZone small businesses. goal of awarding at least 3% of their federal contracting dollars to HUBZone small businesses.
In FY2020, the federal government awarded $13.6 billion to HUBZone-certified small In FY2020, the federal government awarded $13.6 billion to HUBZone-certified small
businesses. businesses.
Service-Disabled Veteran-Owned Small Business Program
The SBA oversees the Service-Disabled Veteran-Owned Small Business (SDVOSB) Program. The SBA oversees the Service-Disabled Veteran-Owned Small Business (SDVOSB) Program.
The program allows agencies to set aside contracts for SDVOSBs. Federal agencies may award The program allows agencies to set aside contracts for SDVOSBs. Federal agencies may award
sole source contracts to SDVOSBs so long as the award can be made at a fair and reasonable sole source contracts to SDVOSBs so long as the award can be made at a fair and reasonable
price, and the anticipated total value of the contract, including any options, does not exceed $4 price, and the anticipated total value of the contract, including any options, does not exceed $4
million ($7 million for manufacturing contracts).137 For purposes of this program, veterans with million ($7 million for manufacturing contracts).137 For purposes of this program, veterans with
service-related disabilities are defined as they are under the statutes governing veterans affairs.138 service-related disabilities are defined as they are under the statutes governing veterans affairs.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 billion to SDVOSBs. In FY2020, the federal government awarded $26.1 billion to SDVOSBs.
Women-Owned Small Business Program
The SBA oversees the Women-Owned Small Businesses (WOSB) Program. Under this program, The SBA oversees the Women-Owned Small Businesses (WOSB) Program. Under this program,
federal contracting officers may set aside federal contracts (or orders) for WOSBs and federal contracting officers may set aside federal contracts (or orders) for WOSBs and
Economically Disadvantaged Women-Owned Small Businesses (EDWOSBs) in industries in Economically Disadvantaged Women-Owned Small Businesses (EDWOSBs) in industries in
which the SBA determines WOSBs are substantially underrepresented in federal procurement. which the SBA determines WOSBs are substantially underrepresented in federal procurement.
Federal contracting officers can also set aside federal contracts for EDWOSBs exclusively in Federal contracting officers can also set aside federal contracts for EDWOSBs exclusively in
industries in which the SBA determines WOSBs are underrepresented in federal procurement. industries in which the SBA determines WOSBs are underrepresented in federal procurement.
The WOSB Program is designed to help federal agencies achieve their statutory goal of awarding The WOSB Program is designed to help federal agencies achieve their statutory goal of awarding
at least 5% of their federal contracting dollars to WOSBs. at least 5% of their federal contracting dollars to WOSBs.
Federal agencies may award sole source contracts to WOSBs so long as the award can be made at Federal agencies may award sole source contracts to WOSBs so long as the award can be made at
a fair and reasonable price, and the anticipated total value of the contract, including any options, a fair and reasonable price, and the anticipated total value of the contract, including any options,
does not exceed $4.5 million ($7 million for manufacturing contracts).139 does not exceed $4.5 million ($7 million for manufacturing contracts).139
In FY2020, the federal government awarded $27.2 billion to WOSBs. In FY2020, the federal government awarded $27.2 billion to WOSBs.

137 15 U.S.C. §657f(a-b); and SBA, “Conforming Statutory Amendments and Technical Corrections to Small Business 137 15 U.S.C. §657f(a-b); and SBA, “Conforming Statutory Amendments and Technical Corrections to Small Business
Government Contracting Regulations,” 83Government Contracting Regulations,” 83 Federal Register 12849, March 26, 2018. 12849, March 26, 2018.
138 38 U.S.C. §8127(f). Veteran-owned small businesses and service-disabled veteran-owned small businesses are 138 38 U.S.C. §8127(f). Veteran-owned small businesses and service-disabled veteran-owned small businesses are
eligible for separate preferences in procurements conducted by the Department of Veterans Affairs under the authority eligible for separate preferences in procurements conducted by the Department of Veterans Affairs under the authority
of P.L. 109-461, the Veterans Benefits, Health Care, and Information Technology Act of 2006, as amended by P.L. of P.L. 109-461, the Veterans Benefits, Health Care, and Information Technology Act of 2006, as amended by P.L.
110-389, the Veterans’ Benefits Improvements Act of 2008. 110-389, the Veterans’ Benefits Improvements Act of 2008.
139 15 U.S.C. §637(m); and SBA, “Conforming Statutory Amendments and Technical Corrections to Small Business 139 15 U.S.C. §637(m); and SBA, “Conforming Statutory Amendments and Technical Corrections to Small Business
Government Contracting Regulations,” 83Government Contracting Regulations,” 83 Federal Register 12849, March 26, 2018. 12849, March 26, 2018.
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SBA Surety Bond Program140
The SBA’s Surety Bond Guarantee Program has been operational since April 1971.141 It is 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 designed to increase small business’ access to federal, state, and local government contracting, as
well as private sector contracting, by guaranteeing bid, performance, payment, and specified well as private sector contracting, by guaranteeing bid, performance, payment, and specified
ancillary bonds “on contracts … for small and emerging contractors who cannot obtain bonding ancillary bonds “on contracts … for small and emerging contractors who cannot obtain bonding
through regular commercial channels.”142 The program guarantees individual contracts of up to through regular commercial channels.”142 The program guarantees individual contracts of up to
$6.5 million, and up to $10 million for federal contracts if a federal contracting officer certifies $6.5 million, and up to $10 million for federal contracts if a federal contracting officer certifies
that such a guarantee is necessary. The $6.5 million limit is periodically adjusted for inflation.143 that such a guarantee is necessary. The $6.5 million limit is periodically adjusted for inflation.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 guaranteed 10,577 bid and final surety bonds (a payment bond, performance In FY2020, the SBA 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
billion.144 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 small that the project is completed. Surety bonds encourage project owners to contract with small
businesses that may not have the credit history or prior experience of larger businesses and may businesses that may not have the credit history or prior experience of larger businesses and may
be at greater risk of failing to comply with the contract’s terms and conditions. be at greater risk of failing to comply with the contract’s terms and conditions.
Surety bonds are important to small businesses interested in competing for federal contracts Surety bonds are important to small businesses interested in competing for federal contracts
because the federal government requires prime contractors—prior to the award of a federal because the federal government requires prime contractors—prior to the award of a federal
contract exceeding $150,000 for the construction, alteration, or repair of any building or public contract exceeding $150,000 for the construction, alteration, or repair of any building or public
work of the United States—to furnish a performance bond issued by a surety satisfactory to the work of the United States—to furnish a performance bond issued by a surety satisfactory to the
contracting officer in an amount that the officer considers adequate to protect the government. contracting officer in an amount that the officer considers adequate to protect the government.
Current Issues, Debates, and Lessons Learned
Congress included enhancements for small business contracting in both ARRA (increased funding Congress included enhancements for small business contracting in both ARRA (increased funding
and higher maximum bond amounts for the SBA Surety Bond program) and the Small Business and higher maximum bond amounts for the SBA Surety Bond program) and the Small Business
Jobs Act of 2010 (new restrictions on the consolidation or bundling of contracts that make it more Jobs Act of 2010 (new restrictions on the consolidation or bundling of contracts that make it more
difficult for small businesses to be awarded the contract). The CARES Act authorizes federal difficult for 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, 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. , 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, 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, Housing, and Urban Affairs, Small Business Legislation - 1974, hearing on S. 3137 and S. 3138, 93rd Cong., 2nd sess., , hearing on S. 3137 and S. 3138, 93rd Cong., 2nd sess.,
March 13, 1974 (Washington, DC: GPO, 1974), p. 19. March 13, 1974 (Washington, DC: GPO, 1974), p. 19.
142 SBA, “FY2016 Congressional Budget Justification and FY2014 Annual Performance Report,” p. 44, at 142 SBA, “FY2016 Congressional Budget Justification and FY2014 Annual Performance Report,” p. 44, at
https://www.sba.gov/sites/default/files/1-FY%202016%20CBJ%20FY%202014%20APR.PDF. An ancillary bond, https://www.sba.gov/sites/default/files/1-FY%202016%20CBJ%20FY%202014%20APR.PDF. An ancillary bond,
which ensures that requirements integral to the contract, but not directly performance related, are performed, is eligible which ensures that requirements integral to the contract, but not directly performance related, are performed, is eligible
if it is incidental and essential to a contract for which SBA has guaranteed a final bond. A reclamation bond is eligible if it is incidental and essential to a contract for which SBA has guaranteed a final bond. A reclamation bond is eligible
if it is issued to reclaim an abandoned mine site and for a project undertaken for a specific period of time. if it is issued to reclaim an abandoned mine site and for a project undertaken for a specific period of time.
143 P.L. 112-239, the National Defense Authorization Act for Fiscal Year 2013, increased the program’s guarantee limit 143 P.L. 112-239, the National Defense Authorization Act for Fiscal Year 2013, increased the program’s guarantee limit
from $2 million to $6.5 million, and up to $10 million for a federal contract if certified. The act also includes a from $2 million to $6.5 million, and up to $10 million for a federal contract if certified. The act also includes a
provision to increase the $6.5 million limit periodically for inflation “by striking ‘does not exceed’ and all that follows provision to increase the $6.5 million limit periodically for inflation “by striking ‘does not exceed’ and all that follows
through the period at the end, and inserting ‘does not exceed $6,500,000,’ as adjusted for inflation in accordance with through the period at the end, and inserting ‘does not exceed $6,500,000,’ as adjusted for inflation in accordance with
Section 1908 of title 41, United States Code.” That section of the Section 1908 of title 41, United States Code.” That section of the U.S. Code provides for an inflation adjustment on provides for an inflation adjustment on
October 1 of each year evenly divisible by five. October 1 of each year evenly divisible by five.
144 SBA, 144 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 agencies to modify a contract’s terms and conditions to reimburse contractors—at the minimum
billing rate not to exceed an average of 40 hours per week—for any paid leave (including sick billing rate not to exceed an average of 40 hours per week—for any paid leave (including sick
leave) the contractor provides to keep its employees or subcontractors in a ready state through leave) the contractor provides to keep its employees or subcontractors in a ready state through
September 30, 2020. Eligible contractors are those whose employees or subcontractors cannot September 30, 2020. Eligible contractors are those whose employees or subcontractors cannot
perform work on a federally approved site due to facility closures or other restrictions because of perform work on a federally approved site due to facility closures or other restrictions because of
COVID-19 and cannot telework because their job duties cannot be performed remotely. COVID-19 and cannot telework because their job duties cannot be performed remotely.
Concluding Observations
In response to the Great Recession, Congress took a number of actions to enhance small In response to the Great Recession, Congress took a number of actions to enhance small
businesses’ access to capital, management and training programs, and contracting opportunities. businesses’ access to capital, management and training programs, and contracting opportunities.
The goal then, as it is now, was to provide small businesses with the resources necessary to The goal then, as it is now, was to provide small businesses with the resources necessary to
survive the economic downturn and retain or create jobs. Some of the CARES Act’s provisions survive the economic downturn and retain or create jobs. Some of the CARES Act’s provisions
(e.g., fee waivers, increased loan limits, and increased guarantee percentages) were used in (e.g., fee waivers, increased loan limits, and increased guarantee percentages) were used in
legislation passed during the 111th Congress to address the severe economic slowdown during and legislation passed during the 111th Congress to address the severe economic slowdown during and
immediately following the Great Recession (2007-2009). The main difference between that immediately following the Great Recession (2007-2009). The main difference between that
legislation and the CARES Act is that the CARES Act includes loan deferrals, loan forgiveness, legislation and the CARES Act is that the CARES Act includes loan deferrals, loan forgiveness,
and greatly expanded eligibility, including, for the first time, specified types of nonprofit and greatly expanded eligibility, including, for the first time, specified types of nonprofit
organizations. organizations.
The CARES Act’s inclusion of loan deferral and forgiveness is, at least partly, due to the unique The CARES Act’s inclusion of loan deferral and forgiveness is, at least partly, due to the unique
economic dislocations and reduction in consumer spending resulting from individuals and economic dislocations and reduction in consumer spending resulting from individuals and
households engaging in physical distancing to avoid COVID-19 infection. households engaging in physical distancing to avoid COVID-19 infection.
As mentioned, because COVID-19’s adverse economic impact is so widespread, including As mentioned, because COVID-19’s adverse economic impact is so widespread, including
productivity losses, supply chain disruptions, labor dislocation, and financial pressure on productivity losses, supply chain disruptions, labor dislocation, and financial pressure on
businesses and households, there has been relatively little concern expressed about federal fiscal businesses and households, there has been relatively little concern expressed about federal fiscal
restraint during the current pandemic. The debate has been primarily over which specific policies restraint during the current pandemic. The debate has been primarily over which specific policies
would have the greatest impact and which types of small businesses and small business owners would have the greatest impact and which types of small businesses and small business owners
should be helped the most. should be helped the most.
Among the lessons learned from the 111th Congress is the potential benefits that can be derived Among the lessons learned from the 111th Congress is the potential benefits that can be derived
from providing additional funding for the SBA’s Office of Inspector General and the Government from providing additional funding for the SBA’s Office of Inspector General and the Government
Accountability Office. GAO and the SBA’s OIG can provide Congress information that could Accountability Office. GAO and the SBA’s OIG can provide Congress information that could
prove useful as Congress engages in congressional oversight of the SBA’s administration of the prove useful as Congress engages in congressional oversight of the SBA’s administration of the
CARES Act, provide an early warning if unforeseen administrative problems should arise, and, CARES Act, provide an early warning if unforeseen administrative problems should arise, and,
through investigations and audits, serve as a deterrent to fraud. through investigations and audits, serve as a deterrent to fraud.
The CARES Act addressed this issue by providing the SBA’s OIG $25 million for its The CARES Act addressed this issue by providing the SBA’s OIG $25 million for its
investigative functions. Also, P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, investigative functions. Also, 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 Nonprofits, and Venues Act (Division N, Title III of the Consolidated Appropriations Act of
2021), provided the SBA OIG an additional $20 million to prevent waste, fraud, and abuse in the 2021), provided the SBA OIG an additional $20 million to prevent waste, fraud, and abuse in the
awarding of EIDL Targeted advance payment grants. The act also provided the SBA $50 million awarding of EIDL Targeted advance payment grants. The act also provided the SBA $50 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 million for SBA’s Office of Inspector General for Act of 2021, appropriated an additional $25 million 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 could also promote transparency and assist Congress in performing its oversight legislation 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 SBA to report this information directly to both Congress and the public by posting that the SBA to report this information directly to both Congress and the public by posting that
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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 small businesses. confidence in the SBA’s efforts to assist small businesses.
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Appendix. Major Provisions of the CARES Act, the
Paycheck Protection Program and Health Care
Enhancement 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 small businesses and other organizations adversely rate not to exceed 4% to assist small businesses and other organizations adversely
affected by the Coronavirus Disease 2019 (COVID-19). The SBA announced that affected by the Coronavirus Disease 2019 (COVID-19). The SBA announced that
PPP loans will have a two-year term at a 1% interest rate; PPP loans will have a two-year term at a 1% interest rate;
 defined a covered loan as a loan made to an eligible recipient from February 15,  defined a covered loan as a loan made to an eligible recipient from February 15,
2020, through June 30, 2020; 2020, through June 30, 2020;
 waived the up-front loan guarantee fee and annual servicing fee, the no credit  waived 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;
 expanded eligibility for a covered loan to include 7(a) eligible businesses and any  expanded eligibility for a covered loan to include 7(a) eligible businesses and any
business, 501(c)(3) nonprofit organization, 501(c)(19) veteran’s organization, or business, 501(c)(3) nonprofit organization, 501(c)(19) veteran’s organization, or
tribal business not currently eligible that has not more than 500 employees or, if tribal business not currently eligible that has not more than 500 employees or, if
applicable, the SBA’s size standard in number of employees for the industry in applicable, the SBA’s size standard in number of employees for the industry in
which they operate. Sole proprietors, independent contractors, and eligible self-which they operate. Sole proprietors, independent contractors, and eligible self-
employed individuals were also eligible to receive a covered loan;145 employed individuals were also eligible to receive a covered loan;145
 allowed borrowers to refinance Economic Injury Disaster Loans (EIDLs) made  allowed borrowers to refinance Economic Injury Disaster Loans (EIDLs) made
on or after January 31, 2020, as part of a covered loan; on or after January 31, 2020, as part of a covered loan;
 increased the maximum loan amount for a covered loan to the lesser of (1) 2.5  increased the maximum loan amount for a covered loan to the lesser of (1) 2.5
times the average total monthly payments by the applicant for payroll costs times the average total monthly payments by the applicant for payroll costs
incurred during the one-year period before the date on which the loan is made incurred during the one-year period before the date on which the loan is made
plus the outstanding balance of any EIDL made on or after January 31, 2020, that plus the outstanding balance of any EIDL made on or after January 31, 2020, that
is refinanced as part of a covered loan, or (2) $10 million; is refinanced as part of a covered loan, or (2) $10 million;
 specified that covered loans are nonrecourse (meaning that the SBA cannot  specified 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)
except to the extent that the covered loan proceeds are used for nonauthorized except to the extent that the covered loan proceeds are used for nonauthorized
purposes; purposes;
 allowed covered loans to be used for payroll costs, costs related to the  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 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 employed on a 145 For purposes of determining not more than 500 employees, the term employee includes individuals employed on a
full-time, part-time, or other basis. Also, special eligibility considerations are provided for certain businesses and full-time, part-time, or other basis. Also, special eligibility considerations are provided for certain businesses and
organizations. For example, businesses operating in NAICS Sector 72 (Accommodation and Food Services industry) organizations. For example, businesses operating in NAICS Sector 72 (Accommodation and Food Services industry)
that employ not more than 500 employees per physical location are also eligible for a covered loan. Affiliation rules are that employ not more than 500 employees per physical location are also eligible for a covered loan. Affiliation rules are
also waived for: (1) NAICS Sector 72 businesses, (2) franchises, and (3) SBIC-owned businesses. In other words, these also waived for: (1) NAICS Sector 72 businesses, (2) franchises, and (3) SBIC-owned businesses. In other words, these
businesses would not be denied a covered loan solely because they employ more than 500 employees across multiple businesses would not be denied a covered loan solely because they employ more than 500 employees across multiple
businesses under common ownership. businesses under common ownership.
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family leave, and insurance premiums, employee salaries, commissions, or family leave, and insurance premiums, employee salaries, commissions, or
similar compensations, mortgage payments, rent, utilities, and interest on any similar compensations, mortgage payments, rent, utilities, and interest on any
other debt obligations that were incurred before the covered period; other debt obligations that were incurred before the covered period;
 expanded lender delegated loan approval authority for making covered loans to  expanded lender delegated loan approval authority for making covered loans to
all 7(a) lenders to expedite PPP loan processing; all 7(a) lenders to expedite PPP loan processing;
 required lenders, when evaluating borrower eligibility for a covered loan, to  required lenders, when evaluating borrower eligibility for a covered loan, to
consider whether the borrower was in operation on February 15, 2020, had consider whether the borrower was in operation on February 15, 2020, had
employees for whom the borrower paid salaries and payroll taxes, and paid employees for whom the borrower paid salaries and payroll taxes, and paid
independent contractors; independent contractors;
 required borrowers to, among other acknowledgements,  required borrowers to, among other acknowledgements,
 make a good faith certification that the covered loan is needed because of the  make a good faith certification that the covered loan is needed because of the
uncertainty of current economic conditions and to support ongoing uncertainty of current economic conditions and to support ongoing
operations, and operations, and
 acknowledge that the funds will be used to retain workers, maintain payroll,  acknowledge that the funds will be used to retain workers, maintain payroll,
or make mortgage payments, lease payments, and utility payments; or make mortgage payments, lease payments, and utility payments;
 required lenders to provide “impacted borrowers” adversely affected by COVID-  required lenders to provide “impacted borrowers” adversely affected by COVID-
19 “complete payment deferment relief”146 on a covered PPP loan for not less 19 “complete payment deferment relief”146 on a covered PPP loan for not less
than six months and not more than one year if the borrower was in operation on than six months and not more than one year if the borrower was in operation on
February 15, 2020, and has an application for a covered loan approved or February 15, 2020, and has an application for a covered loan approved or
pending approval on or after the date of enactment. The SBA announced that pending approval on or after the date of enactment. The SBA announced that
covered loan payments will be deferred for six months. However, interest covered loan payments will be deferred for six months. However, interest
continued to accrue on these loans during the six-month deferment;147 continued to accrue on these loans during the six-month deferment;147
 presumed that each eligible recipient that applies for a PPP loan is an impacted  presumed 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 announced that the deferment relief on covered more than one year. The SBA announced that the deferment relief on covered
loans will be for six months; loans will be for six months;
 provided for the forgiveness of covered loan amounts equal to the amount the  provided for the forgiveness of covered loan amounts equal to the amount the
borrower spent during an 8-week period after the loan’s origination date on borrower spent during an 8-week period after the loan’s origination date on
payroll costs, interest payment on any mortgage incurred prior to February 15, payroll costs, interest payment on any mortgage incurred prior to February 15,
2020, payment of rent on any lease in force prior to February 15, 2020, and 2020, payment of rent on any lease in force prior to February 15, 2020, and
payment on any utility for which service began before February 15, 2020. The payment on any utility for which service began before February 15, 2020. The
amount of loan forgiveness cannot exceed the covered loan’s principal amount. amount of loan forgiveness cannot exceed the covered loan’s principal amount.
The forgiveness is reduced proportionally by formulas related to the borrower’s The forgiveness is reduced proportionally by formulas related to the borrower’s
retention of full-time equivalent employees compared to the borrower’s choice of retention of full-time equivalent employees compared to the borrower’s choice of
either (1) the period beginning on February 15, 2019, and ending on June 30, either (1) the period beginning on February 15, 2019, and ending on June 30,
2019, or (2) January 1, 2020, and February 29, 2020; and by the amount of any 2019, or (2) January 1, 2020, and February 29, 2020; and by the amount of any
reduction in pay of any employee beyond 25% of their salary or wages during the reduction in pay of any employee beyond 25% of their salary or wages during the
most recent full quarter before the covered period.148 Borrowers that re-hire 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 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. 146 According to the bill text, “complete deferment relief” includes payment of principal, interest, and fees.
147 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program,” 85147 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program,” 85 Federal Register 20813, 20813,
April 15, 2020. April 15, 2020.
148 For the purposes of the reduction formula, reductions in employees with wages or salary at an annualized rate of pay 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 more than $100,000 are not taken into account. Businesses may also receive forgiveness amounts for additional wages
paid to tipped employees. paid to tipped employees.
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beginning of the period. Cancelled debt resulting from loan forgiveness is beginning of the period. Cancelled debt resulting from loan forgiveness is
included in the borrower’s taxable federal income; included in the borrower’s taxable federal income;
 The SBA announced that due to likely high subscription, at least 75% of the  The SBA announced that due to likely high subscription, at least 75% of the
forgiven loan amount must be used for payroll;149 forgiven loan amount must be used for payroll;149
 required the SBA to pay the principal, interest, and any associated fees that are  required 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 received six months of payment by the SBA beginning with already on deferment received six months of payment by the SBA beginning with
the first payment after the deferral period. Loans made up until six months after the first payment after the deferral period. Loans made up until six months after
enactment also received a full six months of SBA loan payments; enactment also received a full six months of SBA loan payments;
 required federal banking agencies or the National Credit Union Administration  required 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;
 increased the SBA’s lending authorization under Section 7(a) of the Small  increased the SBA’s lending authorization under Section 7(a) of the Small
Business Act from $30 billion to $349 billion during the covered period; Business Act from $30 billion to $349 billion during the covered period;
 increased the SBAExpress loan limit from $350,000 to $1 million (reverted to  increased the SBAExpress loan limit from $350,000 to $1 million (reverted to
$350,000 on January 1, 2021); $350,000 on January 1, 2021);
 permanently eliminated the zero subsidy requirement to waive SBAExpress loan  permanently eliminated the zero subsidy requirement to waive SBAExpress loan
fees for veterans; fees for veterans;
 appropriated $349 billion for loan guarantees and subsidies (remaining available  appropriated $349 billion for loan guarantees and subsidies (remaining available
through FY2021), $675 million for the SBA’s salaries and expenses account, $25 through FY2021), $675 million for the SBA’s salaries and expenses account, $25
million for the SBA’s Office of Inspector General (OIG), $562 million for million for the SBA’s Office of Inspector General (OIG), $562 million for
disaster loans, $265 million for entrepreneurial development programs ($192 disaster loans, $265 million for entrepreneurial development programs ($192
million for SBDCs, $48 million for WBCs, and $25 million for SBA resource million for SBDCs, $48 million for WBCs, and $25 million for SBA resource
partners to provide online information and training), $17 billion for subsidies for partners to provide online information and training), $17 billion for subsidies for
certain loan payments, and $10 million for the Department of Commerce’s certain loan payments, and $10 million for the Department of Commerce’s
Minority Business Development Agency; Minority Business Development Agency;
 allowed the period of use of FY2018 and FY2019 grant awards made under the  allowed 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;
 reimbursed (up to the grant amount received) STEP award recipients for financial  reimbursed (up to the grant amount received) STEP award recipients for financial
losses relating to a foreign trade mission or a trade show exhibition that was losses relating to a foreign trade mission or a trade show exhibition that was
cancelled solely due to a public health emergency declared due to COVID-19; cancelled solely due to a public health emergency declared due to COVID-19;
 waived SBDC and WBC matching requirements;  waived SBDC and WBC matching requirements;
 required federal agencies to continue to pay small business contractors and revise  required federal agencies to continue to pay small business contractors and revise
delivery schedules, holding small contractors harmless for being unable to delivery schedules, holding small contractors harmless for being unable to
perform a contract due to COVID-19 caused interruptions until September 2021; perform a contract due to COVID-19 caused interruptions until September 2021;
 required federal agencies to promptly pay small business prime contractors and  required federal agencies to promptly pay small business prime contractors and
requires prime contractors to promptly pay small business subcontractors within requires prime contractors to promptly pay small business subcontractors within
15 days, notwithstanding any other provision of law or regulation, for the 15 days, notwithstanding any other provision of law or regulation, for the
duration of the President invoking the Defense Production Act in response to duration of the President invoking the Defense Production Act in response to
COVID-19; and COVID-19; and
 provided SBA Emergency Injury Disaster Loan (EIDL) enhancements during the  provided SBA Emergency Injury Disaster Loan (EIDL) enhancements during the
covered period of January 31, 2020, through December 31, 2020, including covered period of January 31, 2020, through December 31, 2020, including

149 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program,” 85149 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program,” 85 Federal Register 20813- 20813-
20814, April 15, 2020. 20814, April 15, 2020.
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 expanding eligibility beyond currently eligible small businesses, private  expanding eligibility beyond currently eligible small businesses, private
nonprofit organizations, and small agricultural cooperatives, to include nonprofit organizations, and small agricultural cooperatives, to include
startups, cooperatives, and eligible ESOPs (employee stock ownership plans) startups, cooperatives, and eligible ESOPs (employee stock ownership plans)
with not more than 500 employees, sole proprietors, and independent with not more than 500 employees, sole proprietors, and independent
contractors; contractors;
 authorizing the SBA Administrator, in response to economic injuries caused  authorizing the SBA Administrator, in response to economic injuries caused
by COVID-19, to by COVID-19, to
 waive the no credit available elsewhere requirement,  waive the no credit available elsewhere requirement,
 approve an applicant based solely on their credit score,  approve an applicant based solely on their credit score,
 not require applicants to submit a tax return or tax return transcript for  not require applicants to submit a tax return or tax return transcript for
approval, approval,
 waive any rules related to the personal guarantee on advances and loans  waive any rules related to the personal guarantee on advances and loans
of not more than $200,000, of not more than $200,000,
 waive the requirement that the applicant needs to be in business for the  waive the requirement that the applicant needs to be in business for the
one-year period before the disaster declaration, except that no waiver one-year period before the disaster declaration, except that no waiver
may be made for a business that was not in operation on January 31, may be made for a business that was not in operation on January 31,
2020; 2020;
 authorizing the SBA Administrator, through December 31, 2020, to provide  authorizing the SBA Administrator, through December 31, 2020, to provide
up to $10,000 as an advance payment in the amount requested within three up to $10,000 as an advance payment in the amount requested within three
days after receiving an EIDL application from an eligible entity. Applicants days after receiving an EIDL application from an eligible entity. Applicants
are not required to repay the advance payment, even if subsequently denied are not required to repay the advance payment, even if subsequently denied
an EIDL loan. The funds may be used for any eligible EIDL expense, an EIDL loan. The funds may be used for any eligible EIDL expense,
including, among other expenses, providing paid sick leave to employees including, among other expenses, providing paid sick leave to employees
unable to work due to COVID-19, maintaining payroll to retain employees, unable to work due to COVID-19, maintaining payroll to retain employees,
and meeting increased costs to obtain materials due to supply chain and meeting increased costs to obtain materials due to supply chain
disruptions. The SBA limited EIDL-advance payments to $1,000 per disruptions. The SBA limited EIDL-advance payments to $1,000 per
employee, up to a maximum of $10,000; and employee, up to a maximum of $10,000; and
 appropriating an additional $10 billion for EIDL assistance.  appropriating an additional $10 billion for EIDL assistance.
The Paycheck Protection Program and Health Care Enhancement
Act (P.L. 116-139)
 increased the SBA’s lending authorization under Section 7(a) of the Small  increased the SBA’s lending authorization under Section 7(a) of the Small
Business Act from $349 billion during the covered period to $659 billion; Business Act from $349 billion during the covered period to $659 billion;
 required that no less than $30 billion of this authorization amount be set aside for  required that no less than $30 billion of this authorization amount be set aside for
loans issued by insured depository institutions and credit unions with loans issued by insured depository institutions and credit unions with
consolidated assets of $10 billion to $50 billion; consolidated assets of $10 billion to $50 billion;
 required that no less than $30 billion of this authorization amount be set aside for  required that no less than $30 billion of this authorization amount be set aside for
loans issued by community financial institutions (including community loans issued by community financial institutions (including community
development financial institutions (CDFIs), minority depository institutions, development financial institutions (CDFIs), minority depository institutions,
SBA-certified development companies, and SBA microloan intermediaries), and SBA-certified development companies, and SBA microloan intermediaries), and
insured depository institutions and credit unions with consolidated assets less insured depository institutions and credit unions with consolidated assets less
than $10 billion; than $10 billion;
 increased the PPP appropriation amount from $349 billion to $670.335 billion;  increased the PPP appropriation amount from $349 billion to $670.335 billion;
 appropriated an additional $50 billion for EIDL loans;  appropriated an additional $50 billion for EIDL loans;
 appropriated an additional $10 billion for Emergency EIDL grants;  appropriated an additional $10 billion for Emergency EIDL grants;
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 appropriated an additional $2.1 billion for the SBA’s salaries and expenses  appropriated an additional $2.1 billion for the SBA’s salaries and expenses
account (to remain available until September 30, 2021); and account (to remain available until September 30, 2021); and
 provided agricultural enterprises eligibility for Emergency EIDL grants and  provided agricultural enterprises eligibility 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)
 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 enactment date (June 5,  provided 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;
 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;150 utility payments;150
 provided borrowers a “safe harbor” from the loan forgiveness rehiring  provided borrowers a “safe harbor” from the loan forgiveness rehiring
requirement if the borrower is unable to rehire an individual who was an requirement if the borrower is unable to rehire an individual who was an
employee of the recipient on or before February 15, 2020, or if the borrower can employee of the recipient on or before February 15, 2020, or if the borrower can
demonstrate an inability to hire similarly qualified employees on or before demonstrate an inability to hire similarly qualified employees on or before
December 31, 2020; December 31, 2020;
 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; the date of enactment;
 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; and end of the borrower’s loan forgiveness covered period; and
 eliminated the exception in the CARES Act preventing taxpayers who receive  eliminated the exception in the CARES Act preventing taxpayers who receive
PPP loan forgiveness from delaying the payment of employer payroll taxes.151 PPP loan forgiveness from delaying the payment of employer payroll taxes.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 150 If a borrower uses less than 60% of the PPP loan amount for payroll costs during the forgiveness covered
period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60% of the loan period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60% of the loan
forgiveness amount having been used for payroll costs. forgiveness amount having been used for payroll costs.
151 See FAQs 3 and 4 in IRS, “Deferral of Employment Tax Deposits and Payments Through December 31, 2020,” at 151 See FAQs 3 and 4 in IRS, “Deferral of Employment Tax Deposits and Payments Through December 31, 2020,” at
https://www.irs.gov/newsroom/deferral-of-employment-tax-deposits-and-payments-through-december-31-2020. https://www.irs.gov/newsroom/deferral-of-employment-tax-deposits-and-payments-through-december-31-2020.
Congressional Research Service Congressional Research Service
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COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options

Author Information Bruce R. Lindsay R. Corinne Blackford Specialist in American National Government Analyst in Small Business and Economic Development Policy Adam G. Levin Analyst in Economic Development Policy

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