Small Business: Access to Capital and Job Creation

March 4, 2010 – July 14, 2022 R40985

Small Business: Access to Capital and Job
Creation
Updated July 14, 2022
Congressional Research Service
https://crsreports.congress.gov
R40985

Small Business: Access to Capital and Job Creation

Summary
The U.S. Small Business Administration (SBA) administers several programs to support small
businesses, including loan guaranty and venture capital programs to enhance small business
access to capital; contracting programs to increase small business opportunities in federal
contracting; direct loan programs for businesses, homeowners, and renters to assist their recovery
from natural disasters; and small business management and technical assistance training programs
to assist business formation and expansion.
Congressional interest in these programs has always been high, primarily because small
businesses are viewed as a means to stimulate economic activity and create jobs, but it has
become especially acute in the wake of the Coronavirus Disease 2019 (COVID-19) pandemic’s
widespread adverse economic impact on the national economy.
This report provides a brief description of the SBA’s access to capital programs and includes
congressional action to assist small businesses during and immediately following the Great
Recession (2007-2009) and during the COVID-19 pandemic, including the following:
 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 subsidize SBA fees and increase the 7(a) loan guaranty program’s
maximum loan guaranty percentage to 90%.
 P.L. 111-240, the Small Business Jobs Act of 2010, authorized numerous changes
to the SBA’s loan guaranty and contracting programs; provided $510 million to
continue the SBA’s fee subsidies and 90% maximum loan guaranty percentage
through December 31, 2010; and provided about $12 billion in tax relief for
small businesses.
 P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act (CARES
Act), among other provisions, created a new $349 billion (later increased to
$813.7 billion) Paycheck Protection Program (PPP) to provide forgivable, low-
interest loans to assist small businesses, small 501(c)(3) nonprofit organizations,
and small 501(c)(19) veterans organizations that have been adversely affected by
COVID-19. The loans were originally available through June 30, 2020, and were
later made available through May 31, 2021.
When the national economy is doing well, congressional debate typically involves the extent to
which the federal government should provide the SBA additional resources to assist small
businesses in acquiring capital necessary to start, continue, or expand operations and create jobs.
Those opposing providing additional resources typically worry about the long-term adverse
economic effects of spending programs that increase the federal deficit. They generally advocate
business tax reduction, reform of financial credit market regulation, and federal fiscal restraint as
the best means to assist small business economic growth and job creation.
During and immediately following recessions, concerns about fiscal constraint are typically
superseded by the perceived need to help small businesses access the capital necessary to create
or retain jobs. During these times of economic distress, congressional debate tends to focus on
finding the means to provide additional SBA assistance to small businesses as quickly and
efficiently as possible.
This report addresses a core issue facing the 117th Congress: What, if any, additional action
should the federal government take to enhance small business access to capital?
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Small Business: Access to Capital and Job Creation

Small Business Access to Capital
One of the primary reasons the Small Business Administration (SBA) was created in 1953 was
“to preserve free competitive enterprise” by assisting small businesses and, by doing so, prevent
large businesses from forming oligarchies and monopolies that can control the supply of goods
and services and the prices paid for those goods and services. The idea was that the preservation
and expansion of full and free competition “is basic not only to the economic well-being but to
the security of this Nation.”1 The perceived by-product of full and free competition was a more
efficient and robust economy that creates and retains jobs.
To achieve these goals, the SBA administers several programs to support small businesses
needing access to capital, including venture capital programs to provide “long-term loans and
equity capital to small businesses, especially those with potential for substantial job growth and
economic impact”2 and loan guaranty programs to encourage lenders to provide loans to small
businesses “that might not otherwise obtain financing on reasonable terms and conditions.”3
Three of the most used SBA business loan programs are
 the 7(a) loan guarantee program (loans totaling $36.8 billion in FY2021),4
 the 504/CDC loan guarantee program (loans totaling $8.3 billion in FY2021),5
and
 the Microloan direct lending program (loans totaling $49.5 million in FY2021 to
Microloan intermediaries and $74.6 million from the Microloan intermediaries to
Microloan borrowers).6
In addition, the SBA’s Paycheck Protection Program (PPP) accepted applications—with some
interruptions—from April 3, 2020, through August 8, 2020, and then from January 11, 2021,
through May 31, 2021. The SBA approved about $800 billion in PPP loans to assist small
businesses negatively affected by the Coronavirus Disease 2019 (COVID-19) pandemic. Under
specified conditions (e.g., at least 60% of the loan proceeds must be used for payroll), these loans
may be forgiven by the SBA.7
Historically, one of the justifications presented for funding the SBA’s access to capital programs,
other than promoting a full and free competitive economic system, has been that small businesses

1 15 U.S.C. §631.
2 U.S. Small Business Administration (SBA), Fiscal Year 2014 Congressional Budget Justification and FY2012 Annual
Performance Report, p. 58, at https://www.sba.gov/sites/default/files/files/1-508-Compliant-FY-2014-
CBJ%20FY%202012%20APR.pdf.
3 SBA, Fiscal Year 2010 Congressional Budget Justification, p. 30, at https://www.sba.gov/sites/default/files/
aboutsbaarticle/Congressional_Budget_Justification_2010.pdf.
4 For additional information and analysis concerning the 7(a) loan guarantee program and its subcomponents (such as
the SBAExpress, Community Advantage Loan, and International Loan programs), see CRS Report R41146, Small
Business Administration 7(a) Loan Guaranty Program, by Robert Jay Dilger.
5 For additional information and analysis concerning the 504/CDC loan guarantee program, see CRS Report R41184,
Small Business Administration 504/CDC Loan Guaranty Program, by Robert Jay Dilger.
6 For additional information and analysis concerning the Microloan program, see CRS Report R41057, Small Business
Administration Microloan Program, by Robert Jay Dilger.
7 For additional information and analysis of the Paycheck Protection Program (PPP), see CRS Report R46284, COVID-
19 Relief Assistance to Small Businesses: Issues and Policy Options, by Robert Jay Dilger and Bruce R. Lindsay.
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can be at a disadvantage, compared with other businesses, when trying to obtain sufficient capital
and credit.8 As an economist explained
Growing firms need resources, but many small firms may have a hard time obtaining loans
because they are young and have little credit history. Lenders may also be reluctant to lend
to small firms with innovative products because it might be difficult to collect enough
reliable information to correctly estimate the risk for such products. If it’s true that the
lending process leaves worthy projects unfunded, some suggest that it would be good to
fix this “market failure” with government programs aimed at improving small businesses’
access to credit.9
Congressional interest in the SBA’s programs has always been high, primarily because small
businesses are viewed as a means to stimulate economic activity and create jobs, but it has
become especially acute in the wake of the Coronavirus Disease 2019 (COVID-19) pandemic’s
widespread adverse economic impact on the national economy.10
Economists generally do not view job creation as a justification for providing federal assistance to
small businesses. They argue that in the long term such assistance will likely reallocate jobs
within the economy, not increase them. In their view, jobs arise primarily from the size of the
labor force, which depends largely on population, demographics, and factors that affect the choice
of home versus market production (e.g., the entry of women in the workforce). However,
economic theory does suggest that increased federal spending may result in additional jobs in the
short term.
For example, the SBA reported in September 2010 that the $730 million in additional funding
provided to the agency by P.L. 111-5, the American Recovery and Reinvestment Act of 2009
(ARRA), created or retained 785,955 jobs.11 Also, a study by economists at the Massachusetts
Institute of Technology found that the SBA’s Paycheck Protection Program (PPP), created by P.L.
116-136, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), “increased
aggregate U.S. employment by 1.4 million to 3.2 million jobs through the first week of June
2020.”12 Perhaps indicative of the methodological challenges in determining PPP’s impact on
employment, other estimates range from a self-reported high of 51 million jobs saved by PPP
recipients to a positive, but imprecise effect on employment by economists at the National Bureau
of Economic Research.13

8 Proponents of providing federal funding for the SBA’s loan guarantee programs also argue that small business can
promote competitive markets. See P.L. 83-163, §2(a), as amended; and 15 U.S.C. §631a.
9 Veronique de Rugy, Why the Small Business Administration’s Loan Programs Should Be Abolished, American
Enterprise Institute for Public Policy Research, AEI Working Paper #126, April 13, 2006, at http://www.aei.org/wp-
content/uploads/2011/10/20060414_wp126.pdf. Also, see U.S. Government Accountability Office, Small Business
Administration: 7(a) Loan Program Needs Additional Performance Measures, GAO-08-226T, November 1, 2007, pp.
3, 9-11, at http://www.gao.gov/new.items/d08226t.pdf.
10 For further information and analysis concerning the role of small businesses in job creation, see CRS Report R41523,
Small Business Administration and Job Creation, by Robert Jay Dilger. For further information and analysis
concerning programs enacted to assist small businesses during the Coronavirus Disease 2019 (COVID-19) pandemic,
see CRS Report R46284, COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options, by Robert Jay
Dilger, Bruce R. Lindsay, and Sean Lowry.
11 SBA, “FY2009/2010 Final—Recovery Program Performance Report, September 2010,” September 2010, at
https://www.sba.gov/sites/default/files/2018-06/perform_report_9_2010.pdf.
12 David Autor, David Cho, Leland D. Crane, Mita Goldar, Byron Lutz, Joshua Montes, William B. Peterman, David
Ratner, Daniel Villar and Ahu Yildirmaz, “An Evaluation of the Paycheck Protection Program Using Administrative
Payroll Microdata,” July 22, 2020, pp. 3, 4, at http://economics.mit.edu/files/20094.
13 Ashley D. Bell, SBA southeast regional administrator, “PPP Save Over 51 Million Jobs,” at https://www.sba.gov/
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During good economic times, congressional debate about the SBA typically involves the extent to
which the federal government should provide the SBA additional resources to assist small
businesses in acquiring capital necessary to start, continue, or expand operations and create jobs.
Those opposing providing additional resources to the SBA typically worry about the long-term
adverse economic effects of spending programs that increase the federal deficit. They generally
advocate business tax reduction, reform of financial credit market regulation, and federal fiscal
restraint as the best means to assist small business economic growth and job creation.14
During and immediately following recessions, concerns about fiscal constraint are typically
superseded by the perceived need to help small businesses access the capital necessary to create
or retain jobs. During these times of economic distress, congressional debate tends to focus on
finding ways to provide additional SBA assistance to small businesses as quickly and efficiently
as possible. For example, the SBA, which normally is appropriated somewhat less than $1 billion
annually, received supplemental appropriations totaling $760.9 billion in FY2020 and $378.5
billion in FY2021 to assist small businesses adversely affected by the COVID-19 pandemic.15
When determining how to best help small businesses access capital, Congress has recognized that
the small business lending environment has two key features: the willingness of lenders to offer
loans (the supply) and the willingness of small businesses to seek loans (the demand). For
example, during economic downturns, lenders tend to tighten loan underwriting standards (e.g.,
the minimum requirements concerning the applicant’s credit history, the extent of available
collateral, the business’s past and projected cash flow, and the extent of the owner’s previous
business experience) in anticipation that the risk of small businesses defaulting on loans will
increase during recessionary times. This reduces the supply of small business loans. The demand
for small business loans also tends to fall during recessionary times because many small business
borrowers worry about their ability to repay new loans, particularly if the business’s revenue is in
decline.
Congress also recognizes that there are different ways to address small business loan supply and
demand issues. For example, temporarily increasing SBA loan guaranty percentages encourages
lenders to offer (supply) small business loans because the higher guaranty percentages shift
lending risk from the lender to the federal government (the taxpayer). In contrast, temporarily
providing SBA fee waivers encourages small business borrowers to seek (demand) new loans
because the cost of securing SBA loans is reduced.
This report addresses a core issue facing the 117th Congress: What, if any, additional action
should the federal government take to enhance small business access to capital? It provides an
assessment of the supply and demand for small business loans, and discusses recently enacted

about-sba/sba-newsroom/press-releases-media-advisories/ppp-save-over-51-million-jobs; SBA, “Paycheck Protection
Program (PPP) Report, Approvals through 06/30/2020,” p. 4, at https://www.sba.gov/sites/default/files/2020-07/
PPP%20Results%20-%20Sunday%20FINAL.pdf; and Alexander W. Bartik, Zoe B. Cullen, Edward L. Glaeser,
Michael Luca, Christopher T. Stanton, and Adi Sunderam, “The Targeting and Impact of Paycheck Protection Program
Loans to Small Businesses,” National Bureau of Economic Research, Working Paper 27623, July 2020, p. 3, at
https://www.nber.org/papers/w27623.
14 See Susan Eckerly, “NFIB Responds to President’s Small Business Lending Initiatives,” Washington, DC, October
21, 2009; and National Federation of Independent Business (NFIB), “Government Spending,” Washington, DC, at
https://www.nfib.com/content/issues/economy/government-spending-small-businesses-have-a-bottom-line-
government-should-too-49051/.
15 For additional information and analysis of the SBA’s budget, see CRS Report R43846, Small Business
Administration (SBA) Funding: Overview and Recent Trends, by Robert Jay Dilger.
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laws designed to enhance small business access to capital by increasing the supply of small
business loans, the demand for small business loans, or both.
The Supply and Demand for Private-Sector
Small Business Loans
Federal Reserve Board: Surveys of Senior Loan Officers
For many years, the SBA’s Office of Advocacy’s economists have used the Federal Reserve
Board’s quarterly survey of senior loan officers to assess the supply and demand of the small
business lending environment.16 The survey includes a question concerning the senior loan
officer’s bank’s credit standards for small business loans: “Over the past three months, how have
your bank’s credit standards for approving applications for C&I [commercial and industrial] loans
or credit lines—other than those to be used to finance mergers and acquisitions—for small firms
(annual sales of less than $50 million) changed?” The senior loan officers are asked to indicate if
their bank’s credit standards have “Tightened considerably,” “Tightened somewhat,” “Remained
basically unchanged,” “Eased somewhat,” or “Eased considerably.” Subtracting the percentage of
respondents reporting “Eased somewhat” and “Eased considerably” from the percentage of
respondents reporting “Tightened considerably” and “Tightened somewhat” provides an
indication of the market’s supply of small business loans.
As shown in Figure 1, senior loan officers reported that they have generally tightened their small
business loan credit standards during recessions and eased their loan credit standards during
periods of economic recovery and expansion.17
The survey also includes a question concerning the demand for small business loans: “Apart from
normal seasonal variation, how has demand for C&I loans changed over the past three months for
small firms (annual sales of less than $50 million)?” Senior loan officers are asked to indicate if
demand was “Substantially stronger,” “Moderately stronger,” “About the same,” “Moderately
weaker,” or “Substantially weaker.” Subtracting the percentage of respondents reporting
“Moderately weaker” and “Substantially weaker” from the percentage of respondents reporting
“Substantially stronger” and “Moderately stronger” indicates the market’s demand for small
business loans.
As shown in Figure 1, senior loan officers reported that the demand for small business loans
generally declined during and immediately following recessions and increased during periods of
economic recovery and expansion.

16 SBA, Office of Advocacy, “Small Business Economic Bulletin: November 2021,” at https://advocacy.sba.gov/
category/research/facts-about-small-businesses/economic-bulletins/.
17 The Great Recession began in December 2007 and ended in June 2009. The 2020 recession began in February 2020
and ended in April 2020.
The National Bureau of Economic Research (NBER), an independent, nonprofit research group, is generally used as
the source for determining the start and end dates for recessions in the United States. The NBER
does not define recession as two consecutive quarters of declining real Gross Domestic Product
(GDP), which is a popular metric used by the media. Rather NBER uses a broader definition of
recession as a period where there is a significant decline in economic activity that spreads across
the economy. NBER uses a number of indicators to measure economic activity, including real
GDP, economy-wide employment, real sales, and industrial production.
See CRS In Focus IF10411, Introduction to U.S. Economy: The Business Cycle and Growth, by Lida R. Weinstock.
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Figure 1. Small Business Lending Environment, 2008-2022
(senior loan officers’ survey responses)

Sources: Federal Reserve Board, “Senior Loan Officer Opinion Survey on Bank Lending Practices,” at
https://www.federalreserve.gov/data/sloos.htm; and Brian Headd, “Forum Seeks Solutions To Thaw Frozen Small
Business Credit,” The Small Business Advocate, vol. 28, no. 10 (December 2009), p. 3, at https://www.sba.gov/sites/
default/files/The%20Small%20Business%20Advocate%20-%20December%202009.pdf.
SBA Lending
Table 1 shows selected financial statistics for the SBA from FY2007 to FY2021. It provides an
overview of the extent of the SBA’s various programs to enhance small business access to capital.
The first column reports the total amount of SBA-approved 7(a) loans, 504/CDC loans, and loans
to Microloan intermediaries from FY2007 to FY2021. Each year, 7% to 10% of 7(a) and
504/CDC approved loans are subsequently canceled for a variety of reasons, typically by the
borrower (e.g., the borrower found funding elsewhere, sold the business, etc.).
The second column indicates the net amount, after cancellations and returns, of SBA-approved
Paycheck Protection Program (PPP) loans in FY2020 and FY2021. PPP lending volume was
unprecedented. Largely due to the PPP, the SBA’s total lending amount in FY2020 exceeded the
total amount provided from all of the SBA’s lending programs combined over the previous 29
years.
The third column reports the contract value of bonds guaranteed under the SBA’s surety bond
guarantee program.18 A surety bond is a three-party instrument between a surety (someone who
agrees to be responsible for the debt or obligation of another), a contractor, and a project owner.

18 For further information and analysis of the SBA’s surety bond guarantee program, see CRS Report R42037, SBA
Surety Bond Guarantee Program, by Robert Jay Dilger.
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The agreement binds the 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 that the project is completed. It is designed to reduce the risk of
contracting with small businesses that may not have the credit history or prior experience of
larger businesses. The SBA does not issue surety bonds. Instead, it provides and manages surety
bond guarantees for qualified small and emerging businesses through its Surety Bond Guarantee
(SBG) Program. The SBA reimburses a participating surety (within specified limits) for losses
incurred due to a contractor’s default on a bond.19
Table 1. Selected Small Business Administration Financial Statistics, FY2007-FY2021
(millions of $)
7(a),
Paycheck
504/CDC, and
Protection
Microloan
Program Net
Surety Bond
7(a) Secondary Market
Unpaid
Fiscal
Amount
Amount
Guarantee
Guarantee Program
Principal Loan
Year
Approveda
Approvedb
Contract Value Outstanding Principal
Balancec
2021
$45,203
$277,700
$6,800
$36,300
$713,196
2020
$28,816
$525,012
$7,190
$33,700
$835,996
2019
$28,676
—
$6,480
$33,900
$143,516
2018
$30,668
—
$6,490
$33,400
$141,719
2017
$30,977
—
$6,031
$32,400
$131,483
2016
$29,374
—
$5,724
$28,200
$124,011
2015
$28,327
—
$6,348
$25,200
$118,767
2014
$23,764
—
$6,413
$22,500
$114,450
2013
$23,442
—
$6,151
$20,500
$109,771
2012
$22,676
—
$3,917
$19,200
$104,446
2011
$20,912
—
$3,607
$17,600
$99,705
2010
$14,484
—
$4,000
$15,500
$93,594
2009
$10,862
—
$2,760
$14,700
$90,477
2008
$15,295
—
$2,450
$14,900
$88,244
2007
$18,191
—
$2,250
NA
$84,506
Sources: U.S. Small Business Administration, “WDS Lending Report, Amount, FY2019: Disbursements by
Program and Cohort,” provided by the Office of Congressional and Legislative Affairs, October 18, 2018; U.S.
Small Business Administration, “WDS Lending Report, Amount and Count, Summary, FY2019: Disbursements by
Program and Cohort,” provided by the Office of Congressional and Legislative Affairs, October 18, 2019; U.S.
Small Business Administration, “PPP data: Program reports,” at https://www.sba.gov/funding-programs/loans/
covid-19-relief-options/paycheck-protection-program/ppp-data#section-header-8; U.S. Small Business
Administration, Agency Financial Report [various fiscal years] (contract value of surety bonds guaranteed and 7(a)
secondary market guarantee program outstanding principal); and U.S. Small Business Administration, “Unpaid
Principal Balance by Program,” at https://www.sba.gov/document/report—small-business-administration-loan-
program-performance.
a. In recent years, the SBA has guaranteed about 84%-87% of the loan amount approved.
b. The PPP net amount approved takes into account PPP loan cancellations and/or returned loans. The PPP
gross amount approved was $578,463 bil ion in 2020 and $287,306 bil ion in 2021.

19 SBA, “Surety Bonds,” at https://www.sba.gov/category/navigation-structure/loans-grants/bonds/surety-bonds.
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c. Includes unpaid principal loan balance for disaster loans: $3.6 bil ion in FY2005, $6.8 bil ion in FY2006, $9.0
bil ion in FY2007, $8.6 bil ion in FY2008, $8.4 bil ion in FY2009, $7.9 bil ion in FY2010, $7.5 bil ion in
FY2011, $7.2 bil ion in FY2012, $7.2 bil ion in FY2013, $6.8 bil ion in FY2014, $6.3 bil ion in FY2015, $6.0
bil ion in FY2016, $6.2 bil ion in FY2017, $9.0 bil ion in FY2018, $9.6 bil ion in FY2019, $185.4 bil ion in
FY2020, and $249.2 bil ion in FY2021.
The fourth column shows the outstanding principal balance for the SBA’s 7(a) secondary market
guarantee program, which is discussed later in this report. The final column reports the SBA’s
outstanding principal balance of loans that have not been charged off as of the end of the fiscal
year. It provides a measure of the SBA’s scope of lending.
As shown in Table 1, the amount of SBA-approved 7(a), 504/CDC, and Microloans declined
during and immediately following the Great Recession (which officially began in December 2007
and ended in June 2009); increased, but remained below pre-recession levels in FY2010;
generally exceeded pre-recession levels from FY2011 to FY2019; and increased exponentially
during FY2020, remaining at historically high levels in FY2021.
The decline in the SBA loan approvals during and immediately following the Great Recession
was, at least in part, due to the following three interrelated factors:
 the supply of small business loans fell as many lending institutions become
increasingly reluctant to lend to small businesses, even with an SBA loan
guarantee, as loan defaults increased due to the recession;
 the supply of small business loans fell as the secondary market for small business
loans, as with other secondary markets, began to contract in October 2008,
reached its nadir in January 2009, and then began a relatively prolonged
recovery.20 The SBA estimates that about half of SBA lenders resell the SBA’s
loans through the secondary market to obtain additional capital to make
additional loans; and
 the demand for small business loans declined as many small business owners
(and entrepreneurs considering starting a new small business) became more risk
adverse during the recession.
SBA loan approvals began to increase following the Great Recession as the economy and
secondary lending markets slowly recovered and, as will be discussed, small business owners
took advantage of American Recovery and Reinvestment Act’s (ARRA’s) temporary fee waivers
for the SBA’s 7(a) and 504/CDC loan guaranty programs. ARRA also encouraged lenders to

20 In a secondary market, loans are pooled together and packaged as securities for sale to investors. This practice makes
more capital available by allowing lending institutions to remove existing loans from their balance sheets, freeing them
to make new loans. When secondary credit markets constrict, lenders tend to become both less willing and less able to
supply small business loans. The Federal Reserve Bank of New York, using authority provided under §13(3) of the
Federal Reserve Act, created the Term Asset-Backed Securities Loan Facility (TALF) on March 3, 2009, to stabilize
secondary credit markets by lending up to $200 billion to eligible owners of certain AAA-rated asset backed securities
(ABS) backed by newly and recently originated auto loans, credit card loans, student loans, and SBA-guaranteed small
business loans. The initial TALF subscription took place on March 19, 2009, and the last one took place in June 2010.
There were 23 monthly ABS and Commercial Mortgage Backed Securities (CMBS) subscriptions. TALF supported
about $58 billion of ABS and $12 billion of CMBS. See Federal Reserve Bank of New York, “Term Asset-Backed
Securities Loan Facility: Terms and Conditions,” New York, NY, at http://www.newyorkfed.org/markets/
talf_terms.html; Federal Reserve Bank of New York, “New York Fed releases revised TALF Master Loan and Security
Agreement and appendices,” press release, New York, NY, at http://www.federalreserve.gov/newsevents/press/
monetary/20090303a.htm; and U.S. Department of the Treasury, “Secretary of the Treasury Timothy F. Geithner,
Written Testimony Congressional Oversight Panel,” press release, June 22, 2010, at http://cop.senate.gov/documents/
testimony-062210-geithner.pdf.
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resume lending at pre-recession levels by temporarily increasing the 7(a) program’s maximum
loan guaranty percentage to 90%.21
As mentioned, the amount of SBA-approved loans continued at or above pre-recession levels
from FY2011 to FY2019 and increased exponentially in FY2020, largely due to the PPP.
Laws Designed to Enhance the Supply of Small
Business Loans
Largely in response to the housing bubble’s bursting in 2007 and the resultant contraction of
financial credit markets, which started in 2008 and reached its nadir in early 2009, Congress
passed and President Obama signed into law (on October 3, 2008) the Troubled Asset Relief
Program (TARP; P.L. 110-343) to “restore liquidity and stability to the financial system of the
United States.” TARP was authorized to purchase or insure up to $700 billion in troubled assets
from banks and other financial institutions.22 The Department of the Treasury subsequently
disbursed $389 billion in TARP funds, including $337 million to purchase SBA 7(a) loan
guaranty program securities in an attempt to increase the supply of small business loans by
reducing the contraction of the secondary loan market for SBA loans.23 The authority to make
new TARP commitments expired on October 3, 2010.
As shown in Figure 1, as the Great Recession deepened, lenders continued to tighten
underwriting standards, making it more difficult for small business owners to qualify for loans.
ARRA (P.L. 111-5), enacted on February 17, 2009, included several provisions to address this
supply problem.24 Several of these provisions were later used as a template when Congress
considered how best to address COVID-19’s negative economic impact on small businesses.
For example, ARRA
 authorized the SBA to establish a temporary secondary market guarantee
authority to provide a federal guarantee for pools of first lien 504/CDC program
loans that are to be sold to third-party investors. The 504/CDC First Mortgage
Loan Pooling program became operational in June 2010 and was scheduled to

21 SBA, “Recovery Act Changes to SBA Loan Programs Sparked Major Mid-Year Turn-Around in Volume,” October
1, 2009; and Nancy Waitz, “U.S. stimulus funds run out for lower SBA loan fees,” Reuters News, November 24, 2009,
at http://www.reuters.com/article/companyNewsAndPR/idUSN2431964620091125.
22 TARP’s purchase authority was later reduced from $700 billion to $475 billion by P.L. 111-203, the Dodd-Frank
Wall Street Reform and Consumer Protection Act. For further analysis, see CRS Report R41427, Troubled Asset Relief
Program (TARP): Implementation and Status, by Baird Webel.
23 U.S. Department of the Treasury, Troubled Assets Relief Program Monthly 105(a) Report—November 2010,
December 10, 2010, pp. 2-4, at https://fraser.stlouisfed.org/docs/historical/fct/treasury/
treasury_tarp_105areport_20101130.pdf. On March 16, 2009, President Obama announced that the Department of the
Treasury would use TARP funds to purchase up to $15 billion of SBA-guaranteed loans to “immediately unfreeze the
secondary market for SBA loans and increase the liquidity of community banks.” The plan was deferred after it met
resistance from lenders. Some lenders objected to TARP’s requirement that participating lenders comply with
executive compensation limits and issue warrants to the federal government. Smaller community banks objected to the
program’s paperwork requirements, such as the provision of a small business lending plan and quarterly reports. See
The White House, “Remarks by the President to Small Business Owners, Community Leaders, and Members of
Congress,” March 16, 2009.
24 For further analysis, see CRS Report R40728, Small Business Tax Benefits and the American Recovery and
Reinvestment Act of 2009, by Gary Guenther; and CRS Report R41385, Small Business Legislation During the 111th
Congress, by Robert Jay Dilger and Gary Guenther (out of print; available to congressional clients upon request).
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end on February 16, 2011, or until $3 billion in new pools are created, whichever
occurred first.25 As will be discussed, the Small Business Jobs Act of 2010
extended the program;26
 authorized the SBA to make below market interest rate direct loans to SBA-
designated “Systemically Important Secondary Market (SISM) Broker-Dealers”
to purchase SBA-guaranteed loans from commercial lenders, assemble them into
pools, and sell them to investors in the secondary loan market. The SBA
established the Direct Loan Program for Systemically Important Secondary
Market Broker-Dealers on November 19, 2009;27
 provided $255 million for a temporary, two-year small business stabilization
program to guarantee loans of $35,000 or less to small businesses for qualified
debt consolidation, later named the America’s Recovery Capital (ARC) Loan
program (the program ceased issuing new loan guarantees on September 30,
2010); $15 million for the SBA’s surety bond program, and temporarily
increased the maximum bond amount from $2 million to $5 million, and up to
$10 million under certain conditions (the higher maximum bond amounts ended
on September 30, 2010); $6 million for the SBA’s Microloan program’s lending
program and $24 million for the Microloan program’s technical assistance
program; and increased the funds (“leverage”) available to SBA-licensed Small
Business Investment Companies (SBICs) to no more than 300% of the
company’s private capital or $150,000,000, whichever is less;
 authorized the SBA to guarantee 504/CDC loans used to refinance business
expansion projects as long as the existing indebtedness did not exceed 50% of the
project cost of the expansion and the borrower met specified requirements; and
 temporarily increased the 7(a) program’s maximum loan guaranty percentage
from up to 85% of loans of $150,000 or less and up to 75% of loans exceeding
$150,000 to 90% for all regular 7(a) loans through September 30, 2010, or when
appropriated funding for the subsidies and loan modification was exhausted. This
increase was later extended through January 3, 2011.28
As shown in Figure 1, although the Great Recession officially ended in June 2009, lenders
continued to impose relatively high underwriting standards for small business loans through 2011,
restricting the supply of small business loans. To address the continuing supply problem, P.L.

25 SBA, “SBA Creates Secondary Market Guarantee Program for 504 First Mortgage Loan Pools,” October 28, 2009;
U.S. Government Accountability Office, Recovery Act: Project Selection and Starts Are Influenced by Certain Federal
Requirements and Other Factors, GAO-10-383, February 10, 2010, p. 23, at http://www.gao.gov/new.items/
d10383.pdf; and SBA, “New First Mortgage Loan Poolers Will Jump-Start Secondary Market for SBA 504 Loans,
Make Credit More Available,” June 24, 2010, at https://www.sba.gov/content/new-first-mortgage-loan-poolers-will-
jump-start-secondary-market-sba-504-loans-make-credit.
26 SBA, “The American Recovery and Reinvestment Act of 2009: Secondary Market First Lien Position 504 Loan Pool
Guarantee,” 74 Federal Register 56087, October 30, 2009; and SBA, “New First Mortgage Loan Poolers Will Jump-
Start Secondary Market for SBA 504 Loans, Make Credit More Available, June 24, 2010, at https://www.sba.gov/
content/new-first-mortgage-loan-poolers-will-jump-start-secondary-market-sba-504-loans-make-credit.
27 SBA, “American Recovery and Reinvestment Act: Loan Program for Systemically Important SBA Secondary
Market Broker-Dealers,” 74 Federal Register 59891, November 19, 2009.
28 SBA, “Jobs Act Supported More Than $12 Billion in SBA Lending to Small Businesses in Just Three Months,”
January 3, 2011, at https://www.sba.gov/content/jobs-act-supported-more-12-billion-sba-lending-small-businesses-just-
three-months.
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111-240, the Small Business Jobs Act of 2010, enacted on September 27, 2010, included several
provisions designed to enhance the supply of loans to small businesses. For example, the act
 authorized the Secretary of the Treasury to establish a $30 billion Small Business
Lending Fund (SBLF) to encourage community banks to provide small business
loans ($4 billion was issued) and a $1.5 billion State Small Business Credit
Initiative (SSBCI) to provide funding to participating states with small business
capital access programs;29
 extended the SBA’s secondary market guarantee authority from two years after
the date of ARRA’s enactment to two years after the date of the program’s first
sale of a pool of first lien position 504/CDC loans to a third-party investor (which
took place on September 24, 2010);30
 authorized $22.5 million for a temporary, three-year Small Business Intermediary
Lending Pilot Program to provide direct loans to intermediaries which provide
loans to small business startups, newly established small businesses, and growing
small businesses. On August 4, 2011, the SBA announced the first 20 community
lenders which were selected to participate in the program;31
 authorized $15 million in additional funding for the SBA’s 7(a) loan guaranty
program;
 increased the loan guarantee limits for the SBA’s 7(a) program from $2 million
to $5 million, and for the 504/CDC program from $1.5 million to $5 million for
“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
$5.5 million for manufacturers;
 increased the SBA’s Microloan program’s loan limit for borrowers from $35,000
to $50,000 and for microlender intermediaries after their first year in the program
from $3.5 million to $5 million;32
 temporarily increased for one year the SBA 7(a) Express Program’s loan limit
from $350,000 to $1 million (the temporary increase expired on September 26,
2011);
 required the SBA to establish an on-line lending platform listing all SBA lenders
and information concerning their loan rates; and
 authorized the SBA to temporarily guarantee for two years, under specified
circumstances, 504/CDC loans that refinance existing business debt even if the
project does not involve the expansion of the business.

29 For further analysis of the Small Business Lending Fund, see CRS Report R42045, The Small Business Lending
Fund, by Robert Jay Dilger. For a further analysis of the State Small Business Credit Initiative, see CRS Report
R42581, State Small Business Credit Initiative: Implementation and Funding Issues, by Robert Jay Dilger.
30 SBA, Office of Congressional and Legislative Affairs, correspondence with the author, January 4, 2010.
31 SBA, “Small Businesses Have New Non-Profit Sources for SBA-financed Loans,” August 4, 2011, at
https://www.sba.gov/content/small-businesses-have-new-non-profit-sources-sba-financed-loans.
32 The act also temporarily allowed the SBA to waive, in whole or in part, for successive fiscal years, the nonfederal
share requirement for loans to the Microloan program’s intermediaries and for grants made to Microloan intermediaries
for small business marketing, management, and technical assistance under specified circumstances (e.g., the economic
conditions affecting the intermediary). See, the Small Business Jobs Act of 2010, §1401. Matching Requirements
Under Small Business Programs.
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For additional details concerning the Small Business Jobs Act of 2010, see Table A-1 in the
Appendix.
As the economy slowly recovered and the supply of small business loans improved, Congress
continued to monitor the small business lending environment. In recognition of the internet’s
growing use and the appearance of online, nontraditional lending entities that could provide
another avenue for increasing the supply of small business loans, Congress passed and President
Obama signed into law (on April 5, 2012) P.L. 112-106, the Jumpstart Our Business Startups Act
(JOBS Act). The act established “a regulatory structure for startups and small businesses to raise
capital through securities offerings using the Internet through crowdfunding.”33 The JOBS Act’s
crowdfunding provisions “were intended to help provide startups and small businesses with
capital by making relatively low dollar offerings of securities, featuring relatively low dollar
investments by the ‘crowd,’ less costly.”34
On November 16, 2015, the Securities and Exchange Commission (SEC) published a final rule,
effective May 16, 2016, to implement the JOBS Act’s crowdfunding provisions (e.g., the SEC
established limits on the amount of money an issuer can raise and individual investors can invest
over a 12-month period under the crowdfunding exemption to the securities laws,35 imposed
disclosure requirements on the issuer’s business and securities offering, and created a regulatory
framework for the broker-dealers and funding portals that facilitate the crowdfunding
transactions).36
During subsequent Congresses, several laws were enacted that included provisions to increase the
supply of small business loans, including the following:
 P.L. 113-76, the Consolidated Appropriations Act, 2014, enacted on January 17,
2014, included a provision increasing the annual authorization amount for the
SBA’s Small Business Investment Company (SBIC) program to $4 billion from
$3 billion. The SBIC program provides privately owned and managed SBA-
licensed SBICs loans at favorable rates (called leverage), and, in exchange, the
SBICs provide equity capital to small businesses in various ways, including by
purchasing small business equity securities (e.g., stock, stock options, warrants),
making loans to small businesses, purchasing debt securities from small
businesses, and providing small businesses, subject to limitations, a guarantee of
their monetary obligations to creditors not associated with the SBIC.37

33 Securities and Exchange Commission, “Crowdfunding,” 80 Federal Register 71388, November 16, 2015.
34 Ibid.
35 The rule will “... Permit a company to raise a maximum aggregate amount of $1 million through crowdfunding
offerings in a 12-month period; Permit individual investors, over a 12-month period, to invest in the aggregate across
all crowdfunding offerings up to: If either their annual income or net worth is less than $100,000, than the greater of:
$2,000 or 5% of the lesser of their annual income or net worth. If both their annual income and net worth are equal to
or more than $100,000, 10% of the lesser of their annual income or net worth; and During the 12-month period, the
aggregate amount of securities sold to an investor through all crowdfunding offerings may not exceed $100,000. See
Securities and Exchange Commission, press release, “SEC Adopts Rules to Permit Crowdfunding,” October 30, 2015,
at http://www.sec.gov/news/pressrelease/2015-249.html.
36 Ibid.
37 13 C.F.R. §107.820. Later, P.L. 114-113, the Consolidated Appropriations Act, 2016, also increased the supply of
SBIC financings by increasing the SBIC program’s family of funds limit (the maximum amount of outstanding
leverage allowed for two or more SBIC licenses under common control) to $350 million from $225 million. P.L. 115-
187, the Small Business Investment Opportunity Act of 2017, also increased the supply of SBIC financings by
increasing the maximum amount of outstanding leverage allowed for individual SBICs to $175 million from $150
million.
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 Congress also routinely increased the supply of 7(a) loans by increasing the 7(a)
loan guaranty program’s authorization limit in the annual appropriations act,
from $18.75 billion (in disbursements) in FY2015 to $30 billion (in
disbursements) in FY2019 and FY2020.38
As shown in Figure 1, as the COVID-19 pandemic intensified, lenders began to tighten
underwriting standards in 2020, primarily in anticipation of a recession. As the economy
contracted sharply—primarily due to state and local government-mandated business shutdowns,
travel restrictions, and restrictions on social gathering—Congress took unprecedented actions to
increase the supply of small business loans.
During the 116th Congress
 P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act (CARES
Act), enacted on March 27, 2020, among other provisions, provided $349 billion
(later increased to $813.7 billion) to support SBA’s Section 7(a) lending
programs and create a new Paycheck Protection Program (PPP). About $800
billion in potentially forgivable PPP loans were approved in 2020 and 2021. As
mentioned, that loan approval amount is more than the amount the SBA had
approved in all of its loan programs, including disaster loans, during the 29 years
prior to the pandemic (from October 1, 1991, through December 31, 2019, the
SBA approved $509.9 billion in loans).39 For additional details concerning the
CARES Act, see Table A-2 in the Appendix.
 P.L. 116-260, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and
Venues Act (Division N, Title III of the Consolidated Appropriations Act of
2021), enacted on December 27, 2020, among other provisions, restarted the
acceptance of PPP loan applications that had ended on August 8, 2020, increased
the program’s authorization amount to $806.45 billion, and authorized second-
draw PPP loans of up to $2 million. The act also increased the 7(a) loan guaranty
program’s authorization limit from $30 billion to $75 billion in FY2021 and
appropriated $15.0 billion (later increased to $16.25 billion) for a SBA shuttered
venue operators grant (SVOG) program to provide grants to venue operators,
theatrical producers, museums, and other performance organizations adversely
affected by COVID-19.40 The provision of SBA grants, as opposed to loans, to
small businesses was unprecedented, reflecting the degree of congressional

38 P.L. 114-38, the Veterans Entrepreneurship Act of 2015, increased the 7(a) loan guaranty program’s FY2015
authorization limit of $18.75 billion (on disbursements) to $23.5 billion. The 7(a) loan guaranty program’s
authorization limit was subsequently increased to $26.5 billion for FY2016 (P.L. 114-113, the Consolidated
Appropriations Act, 2016), $27.5 billion for FY2017 (P.L. 115-31, the Consolidated Appropriations Act, 2017), $29.0
billion for FY2018 (P.L. 115-141, the Consolidated Appropriations Act, 2018), and $30.0 billion for FY2019 and
FY2020 (P.L. 116-6, the Consolidated Appropriations Act, 2019, and P.L. 116-93, the Consolidated Appropriations
Act, 2020).
39 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/
report-small-business-administration-loan-program-performance.
40 For additional information and analysis of the Shuttered Venue Operators Grant (SVOG) program, see CRS Report
R46689, SBA Shuttered Venue Operators Grant Program (SVOG), by Robert Jay Dilger.
The 7(a) loan guaranty program’s authorization limit reverted back to $30 billion for FY2022 under continuing
appropriations acts for 2022. See P.L. 117-43, the Extending Government Funding and Delivering Emergency
Assistance Act, and P.L. 117-70, the Further Extending Government Funding Act.
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concern about COVID-19’s negative impact on the small business lending
environment.
During the 117th Congress
 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, including $28.6 billion for a restaurant
revitalization grant program and an additional $1.25 billion for the SVOG grant
program.41
 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 June 30, 2021.
Laws Designed to Enhance the Demand for Small
Business Loans
As shown in Figure 1, the demand for small business loans declined during and immediately
following the Great Recession. To address this, ARRA provided the SBA $375 million to
subsidize fees for the SBA’s 7(a) and 504/CDC loan guaranty programs and to increase the 7(a)
program’s maximum loan guaranty percentage from up to 85% of loans of $150,000 or less and
up to 75% of loans exceeding $150,000 to 90% for all regular 7(a) loans through September 30,
2010, or when appropriated funding for the subsidies and loan modification was exhausted. The
fee subsidies and loan modification were subsequently extended six times and ended on January
3, 2011.42 The fee subsidies were designed to increase the demand for SBA loans by reducing
loan costs.
ARRA also included 11 tax relief provisions that benefited small businesses in a broad range of
industries.43 By reducing costs, it could be argued that providing tax relief for small businesses

41 For additional information and analysis of the Restaurant Revitalization Fund, see CRS In Focus IF11819, SBA
Restaurant Revitalization Fund Grants, by Robert Jay Dilger.
42 P.L. 111-118, the Department of Defense Appropriations Act, 2010, provided the SBA $125 million to continue the
fee subsides 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 subsides 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
for other purposes, provided the SBA authority to reprogram $40 million in previously appropriated funds to continue
the fee subsides 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 subsides and 90% maximum loan
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 subsides and 90% maximum loan
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
provided under the Small Business Jobs Act of 2010 to continue the SBA’s fee subsides and 90% maximum loan
guaranty percentage through March 4, 2011, or until available funding was exhausted, which occurred on January 3,
2011.
Also, see SBA, “Jobs Act Supported More Than $12 Billion in SBA Lending to Small Businesses in Just Three
Months,” January 3, 2011, at https://www.sba.gov/content/jobs-act-supported-more-12-billion-sba-lending-small-
businesses-just-three-months.
43 For further information and analysis of ARRA’s small business tax provisions, see CRS Report R40728, Small
Business Tax Benefits and the American Recovery and Reinvestment Act of 2009, by Gary Guenther.
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may lead to increased demand for small business loans because small business owners have
additional resources available to invest in their business.
As shown in Figure 1, although the Great Recession officially ended in June 2009, the demand
for small business loans remained at relatively low levels through 2011. The Small Business Jobs
Act of 2010 (P.L. 111-240) addressed this by including several provisions to increase the demand
for SBA loans. For example, the act
 provided $505 million (plus an additional $5 million for related administrative
expenses) to continue the SBA’s fee waivers (and the increase in the 7(a)
program’s maximum loan guaranty percentage to 90%) from the act’s date of
enactment (September 27, 2010) through December 31, 2010;
 required the SBA to establish an alternative size standard for the SBA’s 7(a) and
504/CDC loan guaranty programs that uses maximum net worth and average net
income as an alternative to the use of industry standards. It also 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 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. These changes were designed to increase the
demand for small business loans by increasing the number of small businesses
that are eligible for SBA assistance; and44
 provided small businesses with about $12 billion in tax relief.45 As mentioned, by
reducing costs, it could be argued that providing tax relief for small businesses
may lead to increased demand for small business loans because small business
owners would have additional resources available to invest in their business.
As the economy improved, Congress continued to monitor the small business lending
environment and, from time-to-time, subsequently adopted legislation to increase the demand for
small business loans. For example, P.L. 114-38, the Veterans Entrepreneurship Act of 2015,
enacted on July 28, 2015, authorized and made permanent the Obama Administration’s waiver of
the up-front, one-time loan guaranty fee for veteran loans under the SBAExpress loan guaranty
program beginning on or after October 1, 2015, except during any upcoming fiscal year for which
the President’s budget, submitted to Congress, includes a credit subsidy cost for the 7(a) program,
in its entirety, that is above zero.46 This fee waiver is designed to encourage veterans to apply for
a small business loan.
This fee was waived administratively the latter half of FY2014 and during FY2015, and was
waived statutorily from FY2016 through FY2019. During the 116th Congress, P.L. 116-136 (the
CARES Act), permanently eliminated the zero subsidy requirement.
As shown in Figure 1, the demand for small business loans declined in 2020 and 2021, primarily
due to the COVID-19 pandemic.

44 For further analysis, see CRS Report R40860, Small Business Size Standards: A Historical Analysis of Contemporary
Issues, by Robert Jay Dilger.
45 For further information and analysis of the Small Business Jobs Act of 2010’s tax provisions, see CRS Report
R41385, Small Business Legislation During the 111th Congress, by Robert Jay Dilger and Gary Guenther (out of print;
available to congressional clients upon request).
46 U.S. Congress, House Committee on Small Business, Veterans Entrepreneurship Act of 2015, report to accompany
H.R. 2499, 114th Cong., 1st sess., June 25, 2015, (Washington: GPO, 2015), p. 9.
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The CARES Act and succeeding small business relief legislation enacted during the 116th and
117th Congresses addressed this issue by approving an unprecedented $800 billion in PPP loans
that may be forgiven under specified purposes (such as using at least 60% of the proceeds for
payroll costs); waiving SBA fees; relaxing PPP underwriting standards; making COVID-19-
related economic losses an eligible expense for the Economic Injury Disaster Loan (EIDL)
program; deferring PPP and EIDL loan payments; providing grant programs for restaurants and
shuttered venue operators; and approving debt relief payments for 7(a), 504/CDC, and Microloan
borrowers.47
Discussion
As mentioned, during relatively good economic times, congressional debate concerning the SBA
typically involves the extent to which the SBA should be provided additional resources to assist
small businesses in accessing capital as a means to create jobs and promote national economic
growth. Those opposing these efforts typically worry about the long-term adverse economic
effects of spending programs that increase the federal deficit. They also point to surveys of small
business firms conducted by the National Federation of Independent Business (NFIB), which
suggest that during relatively good economic times small business owners consistently place
financing issues near the bottom of their most pressing concerns.48 Instead of increasing federal
funding for the SBA, opponents tend to advocate for small business tax reduction, reform of
financial credit market regulation, and federal fiscal restraint as the best means to assist small
businesses and foster increased levels of economic growth and job creation.49
As mentioned, during and immediately following recessions, concerns about fiscal restraint are
typically superseded by the perceived need to provide additional SBA assistance as quickly and
efficiently as possible. For example, during the 111th Congress, ARRA and the Small Business
Jobs Act of 2010 were designed to address disruptions to the credit markets during the Great
Recession (2007-2009) and the difficulties small businesses had in recovering from that
recession. During the 116th and 117th Congresses, the CARES Act and subsequent economic relief
acts (e.g., the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act and the
American Rescue Plan) were designed to address the widespread economic disruptions caused by
the COVID-19 pandemic, which included forced shutdowns of many small businesses across the
country, disruptions to supply chains, significantly reduced foot traffic at many firms due to social
distancing, and reduced consumer demand as unemployment levels increased significantly,
leading many consumers to reduce spending.
The SBA PPP lending program is unique in several respects. First, it is, by far, the largest SBA
lending program in the agency’s history. Second, the PPP provides loans to nonprofit
organizations, expanding the SBA’s impact beyond small businesses. Third, by waiving

47 See CRS Report R46284, COVID-19 Relief Assistance to Small Businesses: Issues and Policy Options, by Robert
Jay Dilger, Bruce R. Lindsay, and Sean Lowry; and CRS Report R46397, SBA Paycheck Protection Program (PPP)
Loan Forgiveness: In Brief, by Robert Jay Dilger and Sean Lowry.
48 Bruce D. Phillips and Holly Wade, Small Business Problems and Priorities (Washington, DC: NFIB Research
Foundation, June 2008), p. 5, at http://www.nfib.com/Portals/0/ProblemsAndPriorities08.pdf; Holly Wade, Small
Business Problems and Priorities (Washington, DC: NFIB Research Foundation, August 2012), pp. 2, 5, 14, at
https://www.nfib.com/Portals/0/PDF/AllUsers/research/studies/small-business-problems-priorities-2012-nfib.pdf; and
Holly Wade, Small Business Problems and Priorities (Washington, DC: NFIB Research Foundation, August 2016), at
https://www.nfib.com/assets/NFIB-Problems-and-Priorities-2016.pdf.
49 Susan Eckerly, “NFIB Responds to President’s Small Business Lending Initiatives,” Washington, DC, October 21,
2009; and NFIB, “Government Spending,” Washington, DC, at https://www.nfib.com/content/issues/economy/
government-spending-small-businesses-have-a-bottom-line-government-should-too-49051/.
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affiliation rules in specified circumstances (e.g., for NAICS Code 72, accommodation and food
services industries), the PPP assists businesses that otherwise would not be eligible for SBA
assistance because of their size. Fourth, PPP loan payments are not only deferred for up to 16
months, but the loan can be forgiven, in whole or in part, if the borrower uses the proceeds in a
prescribed manner (at least 60% on payroll, with the remainder on mortgage interest, rent or
utilities, subject to reductions based on employment and wage retention over either an eight-week
period or a 24-week period depending on when the loan was originated).
Although Congress, as a whole, has not passed legislation to require the SBA to resume direct
lending for general business purposes, there have been proposals over the years, especially during
and immediately following rescissions, to require the SBA to exercise its statutory authority to
make direct business loans. For example, the House-passed version of the Build Back Better Act
includes a $1.96 billion SBA small dollar direct lending program.50
The SBA limited the eligibility for direct business loans in 1984, 1994, and 1996 as a means to
reduce costs. Until 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 individuals with low income or located in an
area of high unemployment, owned by Vietnam-era or disabled veterans, owned by the
handicapped or certain organizations employing them, or certified under the minority small
business capital ownership development program. Microloan program intermediaries were also
eligible.51 On October 1, 1994, SBA direct loan eligibility was limited to Microloan program
intermediaries and to small businesses owned by 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 issued under the Disabled Assistance Loan program took
place in FY1998.52 The SBA currently offers direct business loans only to Microloan program
intermediaries.
Advocates for a small business direct lending program have argued that such a program would
provide “rapid access to much-needed capital without having to face the administrative delays
posed by the current Small Business Administration lending process.”53 Advocates of a temporary
SBA direct lending program argued that such a program was necessary during periods of
economic difficulty because
In prosperous times, small businesses are able to shop around to different lenders to find
the best available terms and conditions for a loan. But in times of economic downturns,
those same lenders aren’t as willing to lend to small businesses. More than ever during

50 For additional information about the SBA provisions in the House-passed version of the Build Back Better Act, see
CRS In Focus IF11980, Build Back Better Act: Small Business Administration Sections, by Robert Jay Dilger and
Anthony A. Cilluffo.
51 U.S. Congress, House Committee on Small Business, Summary of Activities, 103rd Cong., 2nd sess., January 2, 1995,
H.Rept. 103-885 (Washington: GPO, 1995), p. 8; and 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: GPO, 1994), p. 20.
52 U.S. Congress, House Committee on Small Business, Summary of Activities, 105rd Cong., 2nd sess., January 2, 1999,
H.Rept. 105-849 (Washington: GPO, 1999), p. 8.
53 Dan Gerstein, “Big Stimulus For Small Business, A new direct lending program would benefit millions,”
Forbes.com, January 14, 2009; Sharon McLoone, “Landrieu: Small Business to Benefit from Economic Plan,” The
Washington Post, February 6, 2009; George Dooley, “ASTA Renews Call For SBA Direct Lending Program,”
American Society of Travel Agents, Washington, DC, February 18, 2009; and Anne Kim, Ryan McConaghy, and Tess
Stovall, “Federal Direct Loans to Small Businesses,” Third Way Idea Brief, Washington, DC, April 2009.
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these times, it’s the government’s responsibility to step in to help small businesses access
the loans they need to keep their businesses running and workers employed.54
Opponents of a small business direct lending program argue that the SBA’s mission is to augment
the private sector by guaranteeing loans, not compete with it by providing direct loans to small
businesses.55 They also argue that these loans hold greater risk than most; otherwise the private
sector would accept them. They worry that SBA defaults may increase, resulting in added
expense, either to taxpayers in the form of additional appropriations or to other small business
borrowers in the form of higher fees, to cover the defaults.56 They argue that the SBA stopped
offering direct loans in 1995, primarily because the subsidy rate was “10 to 15 times higher than
that of our guaranty programs.”57 They also assert that providing direct loans to small businesses
might invite corruption. They note that the Reconstruction Finance Corporation (RFC), the SBA’s
predecessor, made direct loans to business and was accused of awarding loans based on the
applicant’s political connections or personal ties with RFC loan officers.58 Opponents also argue
that the SBA does not have the human, physical, and technical resources to make direct loans.
SBA Funding
As shown in Table 2, the SBA’s appropriations have varied significantly since FY2005, ranging
from $571.8 million in FY2007 to over $761.9 billion in FY2020.59 Much of this volatility is due
to significant variation in supplemental appropriations for (1) disaster assistance, typically to
address damages caused by major hurricanes, and (2) SBA program enhancements to help small
businesses access capital during and immediately following recessions. These funds were
provided to help small businesses sustain operations and retain employees.
The SBA’s appropriations are separated into four categories in Table 2 (disaster assistance,
disaster assistance supplemental, business loan credit subsidies, and other programs) because the
need for disaster assistance is largely beyond congressional control and expenditures for business
loan credit subsidies tend to vary with changes in the national economy, and, for FY2020 and
FY2021, for PPP loan forgiveness. As a result, it could be argued that comparisons of SBA
appropriations over time can be made more meaningful if those comparisons include
appropriations for all four categories of spending.

54 Anne Kim, Ryan McConaghy, and Tess Stovall, “Federal Direct Loans to Small Businesses,” Third Way Idea Brief,
Washington, DC, April 2009.
55 Sue Malone, Myth: The SBA will make direct loans under the stimulus bill, Strategies For Small Business, Danville,
CA, March 12, 2009.
56 Representative Jeff Flake, “Providing for Consideration of H.R. 3854, Small Business Financing and Investment Act
of 2009,” House debate, Congressional Record, daily edition, vol. 155, no. 159 (October 29, 2009), pp. H12070, H
12072.
57 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: GPO, 1994),
p. 20.
58 Representative Jeff Flake, “Providing for Consideration of H.R. 3854, Small Business Financing and Investment Act
of 2009,” House debate, Congressional Record, daily edition, vol. 155, no. 159 (October 29, 2009), pp. H12070, H
12072.
59 Program costs and expenditures typically differ from new budget authority provided by appropriations due to the
carryover of budget authority either from the previous fiscal year or into the next fiscal year or to program transfers.
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Table 2. Small Business Administration Appropriations, FY2005-FY2022
(millions of $)
Disaster
Business
Disaster
Assistance
Loan Credit
Other
Fiscal Year
Assistance Supplemental
Subsidies
Programs
Appropriation
2022 request
$178.0
$0.0
$6.0
$811.5
$995.5
2021
$168.1
$35,460.0
$297,145.0
$46,723.7
$379,496.7
2020
$177.1
$70,582.0
$687,439.0
$3,782.4
$761,980.5
2019
$10.0
$0.0
$4.0
$701.4
$715.4
2018
$0.0
$1,659.0
$3.4
$697.4
$2,359.8
2017
$186.0
$450.0
$4.3
$696.5
$1,336.8
2016
$186.9
$0.0
$3.3
$680.8
$871.0
2015
$186.9
$0.0
$47.5
$653.2
$887.6
2014
$191.9
$0.0
$111.6
$625.4
$928.9
2013
$111.2
$740.0
$319.7
$583.6
$1,754.5a
2012
$117.3
$0.0
$210.8
$590.7
$918.8
2011
$45.4
$0.0
$82.8
$601.5
$729.7b
2010
$78.2
$0.0
$83.0
$1,625.3c
$1,786.5
2009
$0.0d
$0.0
$8.5e
$1,336.7f
$1,345.2
2008
$0.0
$1,052.8
$2.0
$579.9
$1,634.7
2007
$114.9
$0.0
$1.3
$455.6
$571.8g
2006
$0.0
$1,700.0
$1.3
$532.1
$2,233.4h
2005
$111.8
$929.0
$1.4
$498.0
$1,540.2i
Sources: P.L. 106-113, the Consolidated Appropriations Act, 2000; P.L. 106-554, the Consolidated
Appropriations Act, 2001; P.L. 107-206, the 2002 Supplemental Appropriations Act for Further Recovery From
and Response to Terrorist Attacks on the United States; U.S. Smal Business Administration (SBA),
Congressional Budget Justification, [FY2002-FY2009]; U.S. Small Business Administration, Congressional Budget
Justification, [FY2010-FY2021], at https://www.sba.gov/document/report—congressional-budget-justification-
annual-performance-report; P.L. 115-31, the Consolidated Appropriations Act, 2017; P.L. 115-56, the Continuing
Appropriations Act, 2018 and Supplemental Appropriations for Disaster Relief Requirements Act, 2017; P.L. 115-
123, the Bipartisan Budget Act of 2018; P.L. 115-141, the Consolidated Appropriations Act, 2018; P.L. 116-6, the
Consolidated Appropriations Act, 2019; P.L. 116-93, the Consolidated Appropriations Act, 2020; P.L. 116-136,
the Coronavirus Aid, Relief, and Economic Security Act (CARES Act); P.L. 116-139, the Paycheck Protection
Program and Health Care Enhancement Act; P.L. 116-260, the Consolidated Appropriations Act, 2021; and P.L.
117-2, the American Rescue Plan Act of 2021.
Notes:
a. Implementation of P.L. 112-25 and P.L. 113-6 imposed a federal government-wide sequestration process and
a required 0.2% across-the-board rescission in FY2013. The SBA’s FY2013 appropriation was reduced by
$92.681 mil ion under sequestration and $2.091 mil ion by the rescission. Prior to these reductions, the
SBA’s FY2013 appropriation was $897.3 mil ion for disaster assistance, $337.3 mil ion for loan credit
subsidies, $615.7 mil ion for other programs, and $1,850.3 mil ion in total.
b. The SBA’s FY2011 appropriation of $731.201 mil ion ($45.5 mil ion for SBA disaster assistance, $83.0
mil ion for business loan subsidies, and $602.7 mil ion for other SBA programs) was reduced to $729.738
mil ion by a 0.2% across-the-board rescission imposed on most appropriations accounts by P.L. 112-10.
c. The initial appropriation for other programs in FY2010 was $662.8 mil ion. An additional $962.5 mil ion was
provided: $775.0 mil ion in temporary funding for 7(a) and 504/Certified Development Company (CDC)
loan guaranty program fee subsidies and loan modifications and $187.5 mil ion for other SBA programs. P.L.
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111-118 provided $125 mil ion; P.L. 111-144 provided $60 mil ion; P.L. 111-157 provided $80 mil ion; and
P.L. 111-240 provided $510 mil ion to provide temporary fee subsidies for the SBA’s 7(a) and 504/CDC
loan guaranty programs and to temporarily increase the 7(a) program’s maximum loan guaranty percentage
from up to 85% of loans of $150,000 or less and up to 75% of loans exceeding $150,000 to 90% for all 7(a)
loans. P.L. 111-240 extended the subsidies and 90% loan guaranty through December 31, 2010, and
provided $187.5 mil ion for other SBA programs that remained available through FY2011. Also, P.L. 111-150
authorized the SBA to use $40 mil ion in previously appropriated funds for fee subsidies and the 7(a) loan
modification.
d. SBA disaster assistance funding in FY2009 was carried over from the previous fiscal year.
e. The initial appropriation for business loan credit subsidies in FY2009 was $2.5 mil ion for direct (Microloan)
lending. P.L. 111-5 provided another $6 mil ion for credit subsidies for the Microloan program to remain
available through September 30, 2010.
f.
The initial appropriation for other programs in FY2009 was $612.7 mil ion. P.L. 111-5 provided $6 mil ion
for Microloan credit subsidies and $724 mil ion for other SBA programs, including $375 mil ion for loan fee
subsidies and loan modifications for the 7(a) and 504/CDC programs and $255 mil ion for a new, temporary
small business stabilization program, later named the America’s Recovery Capital (ARC) Loan program.
g. Includes reductions by P.L. 109-108 and P.L. 110-5, which rescinded $13.5 mil ion of unobligated balances
from the SBA ($6.192 mil ion from unobligated disaster assistance administrative expenses, $5.031 mil ion
from unobligated balances in the (7a) general business loan guaranty program, and $2.323 mil ion from
unobligated balances in the direct loans program).
h. Includes reductions by P.L. 109-148, which imposed a rescission of 1.0% on federal agencies, resulting in a
reduction of $6.992 mil ion from the SBA ($0.017 mil ion from business loan subsidies, $5.160 mil ion from
salaries and expenses, $1.600 from business loan administration, $0.178 mil ion from the OIG, and $0.037
mil ion from the surety bond program).
i.
Includes reductions by P.L. 108-447, which imposed a 0.8% rescission on federal agencies, resulting in a
reduction of $8.277 mil ion from the SBA ($1.395 mil ion from disaster assistance, $0.019 mil ion from
business loan subsidies, $4.951 mil ion from salaries and expenses, $1.692 from business loan administration,
$0.181 mil ion from the OIG, and $0.039 mil ion from the surety bond program).
Concluding Observations
Congress continuously monitors the state of small business lending and has passed legislation to
address perceived market failures, typically in an incremental, piecemeal manner during
relatively good economic times and, as mentioned, through major legislative packages during and
immediately following recessions.
In FY2020 and FY2021, Congress provided the SBA unprecedented funding (including
supplemental appropriations totaling $760.9 billion in FY2020 and $378.5 billion in FY2021) to
assist small businesses and nonprofit organizations adversely affected by COVID-19. Now that
the PPP is no longer accepting applications and the EIDL program continues to approve loans at
unprecedented levels (over $210 billion from March 30, 2020 through June 9, 2021),
congressional attention has begun to shift toward the oversight of the SBA’s administration of
these programs, and efforts to deter waste, fraud, and abuse.
For example, congressional hearings have been held on the SBA’s administration of the PPP and
EIDL programs and the SBA Office of Inspector General (OIG) has issued several reports
indicating that PPP, EIDL, and other COVID-19-related SBA program assistance was provided to
ineligible or potentially fraudulent borrowers and recipients.60 In addition, the efficacy of the

60 U.S. Congress, Senate Committee on Small Business and Entrepreneurship, “Implementation of Title I of the
CARES Act,” 116th Congress, 2nd Session, June 10, 2020, at https://www.sbc.senate.gov/public/index.cfm/hearings?
ID=C0E44E40-CC47-469C-9404-BE3EB4020AA0; U.S. Congress, House Committee on Small Business,
Subcommittee on Innovation and Workforce Development, “Paycheck Protection Program: An Examination of Loan
Forgiveness, SBA Legacy Systems, and Inaccurate Data,” 116th Congress, 2nd Session, September 24, 2020, at
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CARES Act’s SBA programs on small business job retention, job creation, and survivability is
also likely to be an issue of increased congressional attention in the coming months. As
mentioned, initial studies of the PPP’s impact on small business employment have produced
mixed results, with some studies finding a significant positive impact on employment and others
finding much smaller positive impacts.
During the 117th Congress, Congress is likely to consider what, if any, additional action the
federal government should take to enhance small business access to capital. Two not necessarily
mutually exclusive options are readily apparent.
First, Congress could adopt a wait-and-see strategy that focuses on congressional oversight of the
PPP, EIDL, and other programmatic changes to the SBA’s programs that have been enacted.
Advocates of this approach could argue that small business credit markets are generally stable
and, if the COVID-19 pandemic moderates, the demand for SBA’s lending could return to
normal, or near normal. Therefore, it could be argued that evaluating the impact of the recent
expansion of SBA programs and monitoring the severity of the COVID-19 pandemic should take
place before taking further congressional action to improve small business access to capital.
Second, Congress could consider additional changes to the SBA’s programs in an effort to further
enhance small business access to capital, such as considering a direct lending program, providing
additional funding for SBA fee subsidies and loan modifications, modifying and expanding the
Microloan program, or providing additional rounds of PPP lending or Restaurant Revitalization
Fund grants. Advocates of this approach could argue that, although small business credit markets
have generally remained stable, the adverse economic impact of the COVID-19 pandemic has
been so severe, and could continue for months, that providing additional assistance for small
businesses is necessary to help create and retain jobs and prevent many small businesses from
shutting down permanently.

https://smallbusiness.house.gov/calendar/eventsingle.aspx?EventID=3431; U.S. Congress, House Committee on Small
Business, Subcommittee on Investigations, Oversight, and Regulations, “Preventing Fraud and Abuse of PPP and
EIDL: An Update with the SBA Office of Inspector General and the Government Accountability Office,” 116th
Congress, 2nd Session, October 1, 2020, at https://smallbusiness.house.gov/calendar/eventsingle.aspx?EventID=3440;
SBA, Office of Inspector General (OIG), “Serious Concerns of Potential Fraud in Economic Injury Disaster Loan
Program Pertaining to the Response to COVID-19,” Report Number 20-16, July 28, 2020, p. 2, at https://www.sba.gov/
document/report-20-16-serious-concerns-potential-fraud-eidl-program-pertaining-response-covid-19; and SBA, OIG,
“Inspection of SBA’s Implementation of the Paycheck Protection Program,” Report Number 21-07, January 14, 2021,
at https://www.sba.gov/document/report-21-07-inspection-sbas-implementation-paycheck-protection-program.
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Appendix. Selected Provisions in the Small
Business Jobs Act of 2010 and the CARES Act
Table A-1. Selected Provisions, the Small Business Jobs Act of 2010
Issue/Program
The Small Business Jobs Act of 2010
SBA 7(a) Program
Increased the 7(a) Program’s loan limit from $2 mil ion to
$5 mil ion.
SBA 504 Program
Increased the 504/CDC Program’s loan limits from
$1.5 mil ion to $5 mil ion for “regular” borrowers, from
$2 mil ion to $5 mil ion if the loan proceeds are directed
toward one or more specified public policy goals, and
from $4 mil ion to $5.5 mil ion for manufacturers; and
temporarily expanded for two years the eligibility for low-
interest refinancing under the SBA’s 504/CDC program
for qualified debt.
SBA Express Program
Temporarily increased for one year the Express Program’s
loan limit from $350,000 to $1 mil ion (expired on
September 26, 2011).
SBA Microloan Program
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 first
year in the program from $3.5 mil ion to $5 mil ion.
Temporary SBA fee subsidies and loan modifications
Temporarily increased the SBA’s guaranty on 7(a) loans to
90% and provided for the elimination of selected fees on
the SBA’s 7(a) and 504 loans through December 31, 2010.
SBA secondary market
Extended the SBA’s secondary market lending authority
under ARRA from 2 years from enactment to 2 years
from the first sale of a pool of first lien position 504 loans
guaranteed under this authority investor (which took
place on September 24, 2010).
SBA size standards
Authorized the SBA to establish an alternative size
standard for the SBA’s 7(a) and 504 programs that would
use maximum tangible net worth and average net income;
and to established an interim alternative size standard of
not more than $15 mil ion in tangible net worth and not
more than $2 mil ion in average net income for the two
ful fiscal years before the date of the application.
SBA International Trade Finance Program
Increased the International Trade Finance Program’s loan
limit from $1.75 mil ion, of which not more than
$1.25 mil ion may be used for working capital, supplies, or
financings, to $4.5 mil ion.
State Trade and Export Promotion Grant Program
Established an associate administrator for the SBA’s Office
of International Trade and a state trade and export
promotion grant program.
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Issue/Program
The Small Business Jobs Act of 2010
Federal contracting
Imposed contract bundling accountability measures
directing federal agencies to include in each solicitation for
any contract award above the agency’s substantial
bundling threshold a provision soliciting bids by small
business teams and joint ventures;
required federal agencies to publish on its website its
policy on contract bundling and consolidation, as well as a
rationale for any bundled contract solicited or awarded;
repealed the small business competitiveness
demonstration program; and
provided parity among the small business contracting
programs (including striking “shall” and inserting “may” in
15 U.S.C. 657a(b)(2)(B), which refers to the agency’s
discretion to provide contracting preference to HUBZone
small businesses).
Small Business Lending Fund
Authorized the U.S. Treasury to make up to $30 bil ion of
capital investments ($4 bil ion was issued);
CBO estimated the program would raise $1.1 bil ion over
10 years.
State Small Business Credit Initiative Program
authorized $1.5 bil ion for the State Small Business Credit
Initiative Program.
SBA Intermediary Lending Pilot Program
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
each year totaling not more than $20 mil ion. The
intermediaries, in turn, would be allowed to make loans to
new or growing small businesses, not to exceed $200,000
per business.
Capital gains taxation
Temporarily raised to 100% the exclusion of gains on
certain small business stock from enactment to end of
calendar year.
Limitation on penalties for failure to disclose
Placed limitations on the penalty for failure to disclose
reportable transactions
reportable transactions based on resulting tax benefits.
Deduction for start-up expenditures
Increased the deduction for qualified start-up
expenditures from $5,000 to $10,000 in 2010, and the
phaseout threshold from $50,000 to $60,000 for 2010.
Business carry back
Allowed general business credits of eligible small
businesses for 2010 to be carried back 5 years.
Alternative Minimum Tax
Exempted general business credits of eligible small
businesses in 2010 from the alternative minimum tax.
Recognition period for built-In gains tax
Allowed a temporary reduction in the recognition period
for built-in gains tax.
Expensing and Section 179 property
Increased expensing limitations for 2010 and 2011; and
allowed certain real property to be treated as Section 179
property.
Depreciation
Allowed additional first-year depreciation for 50% of the
basis of certain qualified property.
Deduction for health insurance costs
Allowed the deduction for health insurance costs in
computing self-employment taxes in 2010.
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Issue/Program
The Small Business Jobs Act of 2010
Deduction for cellular telephones
Removed cellular telephones and similar
telecommunications equipment from listed property so
their cost can be deducted or depreciated like other
business property.
Crude tall oil
Made crude tall oil ineligible for the cellulosic biofuel
producer credit.
Section 561 of the Hiring Incentives to Restore
Increased the percentage under Section 561 of the Hiring
Employment Act
Incentives to Restore Employment Act by 36 percentage
points.
Rental income reporting
Required taxpayers that receive rental income from
leasing real property to file information returns to the IRS
and to service providers that report receiving payments of
$600 or more during the tax year for rental property
expenses (repealed by P.L. 112-9, the Comprehensive
1099 Taxpayer Protection and Repayment of Exchange
Subsidy Overpayments Act of 2011).
Penalties for failing to file information returns to the
Increased the penalties for failing to file information
IRS
returns to the IRS and to payees in a timely manner.
Department of the Treasury authority to apply a
Expanded the Department of the Treasury’s authority to
continuous levy on federal contractors
apply a continuous levy to government payments to
federal contractors that owe the IRS for unpaid taxes to
include payments for property such as a new office
building. Current law allows the levy to be applied to
payments for goods and services only.
Predictive modeling to identify Medicaid waste,
Authorized the use of predictive modeling to identify and
fraud, and abuse
prevent waste, fraud, and abuse in the Medicare fee-for-
service program.
Roth Retirement Accounts
Allowed participants in government Section 457 plans to
treat elective deferrals as Roth contributions; and
allowed rol overs from elective deferral plans to
designated Roth accounts.
Nonqualified annuities
Allowed holders of nonqualified annuities (i.e., annuity
contracts held outside of a tax-qualified retirement plan
or IRA) to elect to receive a portion of the contract in the
form of a stream of annuity contracts, leaving the
remainder of the contract to accumulate income on a tax-
deferred basis.
Source: P.L. 111-240, the Small Business Jobs Act of 2010.
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Table A-2. Selected Provisions, the Coronavirus Aid, Relief, and Economic Security
Act (CARES Act) as amended
Program
Cares Act (as amended)
Paycheck Protection Program
Provides forgivable 1% loans with a 100% SBA loan
guarantee, relaxed underwriting standards, and a loan
term of two years if approved prior to June 5, 2020, or
five years if approved on or after June 5, 2020, to 7(a)
eligible businesses and any business, 501(c)(3) nonprofit
organization, 501(c)(19) veteran’s organization, or tribal
business not currently 7(a) eligible that has not more
than 500 employees or, if applicable, the SBA’s size
standard in number of employees for the industry in
which they operate. Applicants must certify that they
have been adversely affected by the COVID-19
pandemic. Loan payments are deferred for up to 16
months (initially six months). Loans may be forgiven in
whole or in part depending on the use of the loan
proceeds for payrol (at least 60% for ful forgiveness),
mortgage interest, rent, and utilities and the retention
of employees and employee salaries. PPP loan
applications were accepted starting on April 3, 2020,
and ended on August 8, 2020 (original end date was
June 30, 2020). The maximum loan amount was the
lesser of (1) 2.5 times the average total monthly
payments by the applicant for payrol costs incurred
during the one-year period before the date on which
the loan is made plus the outstanding balance of any
Economic Injury Disaster Loan (EIDL) made on or after
January 31, 2020, that was refinanced as part of the PPP
loan, or (2) $10 mil ion. The SBA was authorized to
provide up to $659 bil ion in PPP loans ($349 bil ion
initially). Just over 5.2 mil ion PPP loans, totaling $525
bil ion, were disbursed.
SBA Loan Debt Relief
Appropriated $17 bil ion 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 status for a six-month period starting on the
next payment due. Loans that are already on deferment
wil receive six months of payment by the SBA
beginning with the first payment after the deferral
period. Loans made up until six months after enactment
(until September 27, 2020) also receive a ful six
months of SBA loan payments.
SBAExpress Veteran’s Fee Waiver
Permanently eliminates the zero subsidy requirement
to waive SBAExpress loan fees for veterans.
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Economic Injury Disaster Loans (EIDL)
From January 31, 2020, through December 31, 2020,
expands EIDL eligibility beyond currently eligible small
businesses, private nonprofit organizations, and small
agricultural cooperatives, to include startups,
cooperatives, and eligible ESOPs (employee stock
ownership plans) with not more than 500 employees,
sole proprietors, and independent contractors.
Authorizes the SBA Administrator to relax
underwriting standards, waive the personal guarantee
requirement on EIDL advances and loans of not more
than $200,000, and 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 business that was not in
operation on January 31, 2020. An additional $50 billion
in EIDL credit subsidy was subsequently provided to
support up to $350 bil ion in EIDL lending. As of
October 18, 2020, more than 3.6 mil ion COVID-19-
related EIDL loans were approved, totaling nearly $192
bil ion.

Source: P.L. 116-136, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), as amended by P.L.
116-139, the Paycheck Protection Program and Health Care Enhancement Act, and P.L. 116-147, to extend the
authority for commitments for the paycheck protection program.

Author Information

Robert Jay Dilger
Anthony A. Cilluffo
Senior Specialist in American National Government Analyst in Public Finance

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