SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

September 14, 2023 R47694

SBA as a Vehicle for Crisis Relief: Lessons from September 14, 2023
the COVID-19 Pandemic
Adam G. Levin,
The Coronavirus Disease 2019 (COVID-19) pandemic and associated responses caused
Coordinator
significant financial damage to many small businesses. To help address this, Congress authorized
Analyst in Economic
new financial relief programs, administered by the U.S. Small Business Administration (SBA).
Development Policy
These programs made or guaranteed loans and grants directly to small businesses. SBA’s

pandemic relief programs included:
Anthony A. Cilluffo
Analyst in Public Finance
• the Paycheck Protection Program (PPP), which offered forgivable loans (fully

guaranteed by SBA) up to $10 million for small businesses and nonprofits to continue
Bruce R. Lindsay
paying their employees;
Specialist in American
• COVID Economic Injury Disaster Loans (EIDLs), which offered an expanded version
National Government
of one of SBA’s existing disaster loan programs;

• Emergency EIDL Advances, which offered COVID EIDL applicants $1,000 per

employee, up to $10,000, for use while SBA processed EIDL applications, and which
did not require repayment;
• Targeted EIDL Advances and Supplemental Targeted EIDL Advance, which offered $10,000 and $5,000
payments, respectively, to COVID EIDL applicants in low-income areas, and which did not require
repayment;
• Section 1112 payments, which offered debt relief to small businesses that held pre-pandemic SBA loans;
• the Shuttered Venue Operators Grant (SVOG) program, which offered up to $10 million for operators of
live performance venues affected by the pandemic; and
• the Restaurant Revitalization Fund (RRF), which offered restaurant and bar owners up to $5 million per
permanent physical location to address the pandemic’s impacts.
Congress appropriated hundreds of billions of dollars in FY2020 and FY2021 for SBA to implement its pandemic relief
programs. This significantly increased SBA’s appropriations and responsibilities. SBA’s FY2019 appropriation was $715
million; SBA’s FY2020 appropriation was $762 billion, an over one-thousand-fold increase. In one day—April 10, 2020—
SBA received over 4.5 million COVID EIDL applications. Pre-pandemic, SBA received an average of 65,000 disaster loan
applications (through SBA’s non-COVID EIDL program as well as other types of disaster loans) annually. Congress also
authorized SBA to provide relief in ways it had not done previously. SVOG and RRF represented the first time SBA gave
grants directly to businesses.
SBA’s pandemic relief programs required the agency to increase its capacities. SBA roughly doubled its staff from FY2019
to FY2021, and hired large numbers of contractors. SBA also had to scale up its grantmaking capacity, which was an area in
which SBA had notably less staff than its loan making and evaluation activities. Despite these challenges, SBA disbursed
large amounts of money to small businesses in a relatively short time frame. In doing so, SBA expedited program
implementation and fund distribution, though this speed may have come at the expense of program integrity. In 2023, SBA’s
Office of Inspector General (OIG) found that SBA disbursed over $200 billion in potentially fraudulent COVID EIDLs,
Targeted and Supplemental Targeted EIDL Advances, and PPP loans—about 17% of funds distributed in those programs.
SBA’s pandemic relief programs are closed to new applications. However, Congress may still consider certain issues related
to SBA’s role in the pandemic, either in relation to potential future scenarios requiring rapid financial relief or ongoing
oversight concerns. Those issues include:
• Balancing quick relief with internal controls. SBA lowered certain internal controls, such as reducing the
usual number of application reviewers, in an effort to set up large new programs and quickly provide funds
to small businesses.
• Monitoring SBA’s capacity to administer and oversee its pandemic relief programs. Although the
programs are closed to new applicants, SBA still has many loans with sizeable outstanding balances to
process. SBA OIG continues to provide program oversight and investigate fraud.
Congressional Research Service

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

• Implementing an anti-fraud framework at SBA. SBA did not have a centralized entity for fraud
prevention and detection in its pandemic relief programs until two years after the first programs began.
Congress may want to monitor this entity as it develops and consider whether to further define its
responsibilities in statute.
• Preexisting SBA challenges exacerbated by the pandemic. SBA’s pandemic relief programs brought
certain preexisting issues to light anew, including staffing and training concerns, as well as grants
management challenges.
Congressional Research Service

link to page 6 link to page 7 SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

Introduction
Congress authorized several new and expanded financial relief programs to address the impacts
of the coronavirus disease 2019 (COVID-19) pandemic on small businesses. The U.S. Small
Business Administration (SBA), which typically assists small business by making and
guaranteeing loans, operating contracting preference programs, and coordinating technical
assistance, implemented these programs.
SBA’s pandemic relief programs represented a significant increase in the agency’s
responsibilities. After rescissions, Congress appropriated almost $987 billion for SBA’s pandemic
relief programs over the course of approximately one year. From FY2019 to FY2020, SBA’s
appropriations increased from $715 million to $762 billion, a more than one-thousand-fold
increase.1 SBA’s pandemic relief programs required the agency to outpace, over the course of
about 18 months, SBA’s entire cumulative output since its 1953 founding. For example, by the
end of July 2020, SBA had approved about 3.2 million applications for COVID Economic Injury
Disaster Loans (EIDLs), an expanded version of the agency’s normal disaster loan program, for
$169.3 billion. Prior to 2020, SBA had approved about 2.2 million disaster loans (including
EIDLs and a few other types of loans) for $66.7 billion over the course of its entire history.2
Though they were enacted in different pieces of legislation, the SBA’s pandemic relief programs
included:
• the Paycheck Protection Program (PPP);
• COVID Economic Injury Disaster Loans (EIDLs);
• Emergency EIDL Advances;
• Targeted EIDL Advances and Supplemental Targeted EIDL Advances;
• Section 1112 payments for debt relief;
• the Shuttered Venue Operators Grant (SVOG) program; and
• the Restaurant Revitalization Fund (RRF).
Table 1 presents appropriations for SBA’s pandemic relief programs by the law containing the
appropriations.
Table 1. SBA Pandemic Relief Program Appropriations by Law
Dollars in Millions
Program
P.L. 116-136
P.L. 116-139
P.L. 116-260a
P.L. 117-2
Total
PPP
349,000
321,335
284,450
7,250
962,035
COVID EIDL
562
50,000
—
460
51,022
Emergency EIDL
10,000
10,000
—
—
20,000
Advance
Targeted EIDL
—
—
20,000
15,000
35,000
Advance

1 For more information, see CRS Report R43846, Small Business Administration (SBA) Funding: Overview and Recent
Trends, by Robert Jay Dilger, R. Corinne Blackford, and Anthony A. Cilluffo.
2 SBA Office of Inspector General (OIG), Follow-Up Inspection of SBA’s Internal Controls to Prevent COVID-19
EIDLs to Ineligible Applicants, September 29, 2022, p. 2, https://www.sba.gov/document/report-22-22-follow-
inspection-sbas-internal-controls-prevent-covid-19-eidls-ineligible-applicants.
Congressional Research Service

1

link to page 7 SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

Program
P.L. 116-136
P.L. 116-139
P.L. 116-260a
P.L. 117-2
Total
Section 1112
17,000
—
3,500
—
20,500
payments
SVOG
—
—
15,000
1,250
16,250
RRF
—
—
—
28,600
28,600
Total Before
376,562
381,335
322,950
52,560
1,133,407
Rescissions
Rescissions
—
—
(146,500)
—
(146,500)
Total After
376,562
381,335
176,450
52,560
986,907
Rescissions
Source: CRS analysis of various appropriations laws.
Notes: P.L. 116-136 is the Coronavirus Aid, Relief, and Economic Security (CARES) Act; P.L. 116-139 is the
Paycheck Protection Program and Health Care Enhancement Act; P.L. 116-260 is the Economic Aid to Hard-Hit
Small Businesses, Nonprofits, and Venues Act (Division N, Title III of the Consolidated Appropriations Act of
2021); P.L. 117-2 is the American Rescue Plan Act of 2021.
a. As noted, P.L. 116-260 included a rescission of $146.5 bil ion from the account that was used to fund both
PPP and Section 1112 payments. Congress did not allocate the rescission between PPP and Section 1112
payments. Therefore, the appropriations shown in the table for PPP and Section 1112 payments do not
reflect the rescission. While the funds in that account were used for both programs, it is likely that the
rescission mostly affected PPP appropriations.
SBA took a number of steps to manage its increased workload, comply with the requirements of
various statutory provisions, and quickly distribute funds to small businesses. Those included
hiring new staff and contractors, detailing existing SBA employees to work on the new programs,
and issuing regulations for certain programs less than a week after Congress authorized them. In
general, SBA was able to stand up and implement its pandemic relief programs in a matter of
days, weeks, or months, and to distribute funds quickly. However, in some cases, the measures
SBA took to do so included reducing certain internal controls, which may have contributed to
making some of the programs more susceptible to fraud, waste, and abuse.
This report provides an overview of SBA’s pandemic relief programs, examines SBA’s capacity
and experience in implementing the programs, and presents related policy considerations. The
appendices provide greater detail on each of SBA’s pandemic relief programs.
Internal Controls
This report uses the term “internal controls.” This refers to the policies and procedures in place at a federal
agency (in this case, SBA) to ensure that the agency meets the requirements of any program statutes, regulations,
and guidelines, and to guard against fraud, waste, and abuse. For example, one internal control that SBA commonly
uses for some of its loan programs is its “rule of two,” whereby at least two SBA personnel are required to
approve a loan application before the agency gives its official approval.
SBA’s Pandemic Relief Programs
This section provides brief overviews of each of SBA’s pandemic relief programs, including their
authorizing statute and the amount of funds distributed. The appendices provide more detailed
information on each of the programs.
Congressional Research Service

2

link to page 27 SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

Paycheck Protection Program (PPP)
PPP was one of the largest economic relief programs in U.S. history.3 Congress authorized PPP in
the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136). Between April
3, 2020, and May 31, 2021, SBA approved more than 11.8 million PPP loans totaling over $799.8
billion.4 Notably, PPP loans could be completely forgiven—including accrued interest—provided
that the funds were used for eligible purposes and the employer maintained pre-COVID-19 levels
of employment and wages. SBA has forgiven all or part of at least 10.5 million PPP loans, with a
total forgiveness amount of $755.7 billion.5
There were two types, or “draws”, of PPP loans. First-draw PPP loans were the only loans made
during 2020 and continued into 2021. All borrowers who met PPP eligibility requirements could
get a first-draw loan. During 2021, second-draw PPP loans were available to borrowers who
already received and exhausted their first-draw PPP loan, met a smaller entity size standard, and
who could document significant continuing revenue losses during the pandemic compared with
before the pandemic. Most requirements related to calculating loan amounts, eligible uses for
forgiveness, and the forgiveness process were the same for first- and second-draw PPP loans.
See Appendix A for more details on PPP.
SBA COVID Economic Injury Disaster Loans (EIDLs)
SBA has been a major source of federal disaster assistance since the agency’s creation in 1953.
Through SBA’s Office of Capital Access (OCA), the SBA Disaster Loan program offers direct,
low-interest, long-term loans for physical and economic damages to businesses to help repair,
rebuild, and recover from economic losses after a declared disaster. SBA provides two types of
disaster loans to businesses and nonprofit organizations: (1) Physical Disaster Business Loans
(which were not provided for COVID-19) and (2) EIDLs.6
SBA EIDLs are available to businesses (as well as small agricultural cooperatives and most
private nonprofit organizations) located in a declared disaster area. The business must have
suffered substantial economic injury, be unable to obtain credit elsewhere, and be defined as
small by SBA size regulations (which vary from industry to industry).7 An SBA EIDL provides up
to $2 million to help meet financial obligations and operating expenses “that could have been met
had the disaster not occurred.”8

3 Amy Yee, Andre Tartar, and Marie Patino, “How Fixes to the $800 Billion Covid Relief Program Got Money to More
Small Businesses,” Bloomberg, August 22, 2022, https://www.bloomberg.com/graphics/2022-covid-relief-ppp-loans-
small-business.
4 SBA, Paycheck Protection Program (PPP) Report: Approvals Through 05/31/2021, May 31, 2021, p. 2,
https://www.sba.gov/sites/sbagov/files/2021-06/PPP_Report_Public_210531-508.pdf.
5 SBA, Forgiveness Platform Lender Submission Metrics, October 26, 2022, p. 1, https://www.sba.gov/sites/sbagov/
files/2022-10/2022.10.24_Weekly%20Forgiveness%20Report_Public.pdf.
6 For more information, see CRS Report R44412, SBA Disaster Loan Program: Frequently Asked Questions, by Bruce
R. Lindsay.
7 For more information on size standards, see 13 C.F.R. §123.300. Size standards vary according to a variety of factors,
including industry type, average firm size, and start-up costs and entry barriers. Size standards are codified at 13 C.F.R.
Part 121. For further analysis, see CRS Report R40860, Small Business Size Standards: A Historical Analysis of
Contemporary Issues, by R. Corinne Blackford and Anthony A. Cilluffo.
8 SBA, Economic Injury Disaster Loans, https://www.sba.gov/funding-programs/disaster-assistance/economic-injury-
disaster-loans.
Congressional Research Service

3

link to page 35 SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

Title II of P.L. 116-123 (the Coronavirus Preparedness and Response Supplemental
Appropriations Act, 2020), deemed COVID-19 a disaster under Section 7(b)(2)(D) of the Small
Business Act of 1953,9 making economic injury from COVID-19 an eligible expense under SBA
EIDL.
The CARES Act also authorized emergency payments (Emergency EIDL Advances) to all
eligible COVID EIDL applicants. The SBA Administrator could provide up to $10,000 as an
advance payment within three days after receiving a COVID EIDL application from an eligible
entity. Applicants were not required to repay the advance payment, even if subsequently denied
an EIDL.10
Additionally, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act11
authorized the Targeted EIDL Advance program. Targeted EIDL Advances were available to
COVID EIDL applicants in low-income communities with revenue loss greater than 30% over
specified time periods and with no more than 300 employees. The Economic Aid Act required
SBA to provide first priority to eligible borrowers in low-income communities who had already
received an Emergency EIDL Advance below the $10,000 maximum, and second priority to
eligible first-time applicants located in low-income communities.
Lastly, the American Rescue Plan Act of 2021 (ARPA; P.L. 117-2) authorized Supplemental
Targeted EIDL Advances, which provided payments of $5,000 to businesses in low-income
communities with revenue loss greater than 50% over specified time periods and with no more
than 10 employees. Like the Emergency EIDL Advances, Supplemental Targeted EIDL Advances
did not have to be repaid.
As of April 27, 2022, SBA had approved over 3.9 million COVID EIDLs totaling over $378.4
billion; disbursed 5,781,390 EIDL advances totaling $20 billion; disbursed 601,058 Targeted
EIDL Advances totaling over $5.2 billion; and disbursed 453,417 Supplemental Targeted EIDL
Advances totaling over $2.3 billion.12
See Appendix B for more details on COVID EIDLs.
Section 1112 Payments for Debt Relief
As part of the CARES Act, Congress authorized and appropriated money for SBA to make
monthly scheduled loan payments on existing SBA business loans. These payments, known as
Section 1112 payments in reference to the section of the CARES Act that authorized them, were
allowed to be made for a six-month period at the beginning of the COVID-19 pandemic.
Congress later provided another period for payments to be made—the length of which varied
among businesses—in the Economic Aid Act. Section 1112 payments could only be used for
payments that SBA automatically remitted to lenders on behalf of borrowers for SBA business
loans.

9 Small Business Act; P.L. 83-163, as amended; 15 U.S.C. §§631 et seq. Hereinafter Small Business Act.
10 Section 1110(3) of the CARES Act.
11 Division N, Title III of the Consolidated Appropriations Act, 2021, P.L. 116-260; hereinafter Economic Aid Act.
12 SBA, “Disaster Assistance Update Nationwide COVID EIDL, Targeted EIDL Advances, Supplemental Targeted
Advances, April 28, 2022 (figures as of April 27, 2022),” https://www.sba.gov/document/report-covid-19-eidl-reports-
2022. As of January 1, 2022, SBA stopped accepting applications for new COVID EIDL loans or advances. See SBA,
About Targeted EIDL Advance and Supplemental Targeted Advance, June 26, 2023, https://www.sba.gov/funding-
programs/loans/covid-19-relief-options/covid-19-economic-injury-disaster-loan/about-targeted-eidl-advance-
supplemental-targeted-advance#id-program-overview.
Congressional Research Service

4

link to page 37 link to page 40 link to page 43 SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

See Appendix C for more information on Section 1112 payments.
Shuttered Venue Operators Grant (SVOG) Program
Prior to the passage of the Economic Aid Act, certain organizations, including the National
Independent Venue Association (NIVA), argued that the pandemic relief programs were
inadequately tailored to the needs of live venue operators. For example, NIVA pointed out that, in
general, PPP loans were available only to businesses with 500 or fewer employees, regardless of
whether those employees were full-time or part-time. NIVA argued that this unfairly excluded
venue operators, which often have over 500 employees, but many of whom are part-time. As a
result, venue operators often have less than 500 full-time equivalent (FTE) employees, but still
could not access PPP loans.13
In 2020, the Economic Aid Act authorized SVOG. SVOG provided awards to venues that had
experienced revenue loss because of COVID-19. SVOG awards were capped at $10 million. SBA
approved 22,811 awards (including initial and supplemental grants, the latter of which were for
up to 50% of the initial award) and disbursed a total of nearly $14.6 billion.14
See Appendix D for more details on SVOG.
Restaurant Revitalization Fund (RRF)
Restaurant trade associations also argued that COVID-19 uniquely affected the restaurant
industry, necessitating targeted relief. For example, in a March 2021 letter to Members of
Congress, the National Restaurant Association wrote that, “no other industry has lost more jobs
and more revenue than the restaurant industry, and we have been consistent in urging a restaurant-
specific recovery plan from Congress.”15
Following these concerns, ARPA authorized the RRF. RRF awards provided grants up to $5
million per permanent physical location (not to exceed $10 million per applicant) to restaurants
and similar businesses “where the public or patrons assemble for the primary purpose of being
served food or drink.”16 SBA approved 101,004 applications for $28.6 billion.17 SBA received
over 278,000 applications requesting $72.2 billion.18
See Appendix E for more details on RRF.
SBA’s Pre-Pandemic Capacity and Surge Response
With the exception of EIDL, which Congress significantly expanded for the pandemic, SBA’s
pandemic relief programs addressed in this report were new. To open the programs quickly and to

13 National Independent Venue Association, “What is NIVA (National Independent Venue Association),”
https://www.saveourstages.com/about-us.
14 SBA, Shuttered Venue Operators Grant Public Report, July 5, 2022, p. 2, https://www.sba.gov/sites/default/files/
2022-07/SVOG%20Public%20Report%20-%20Midday%205%20July%202022-508_0.pdf.
15 Letter from Sean Kennedy, Executive Vice President, Public Affairs, National Restaurant Association, to The
Honorable Nancy Pelosi, The Honorable Chuck Schumer, The Honorable Kevin McCarthy, The Honorable Mitch
McConnell, March 2, 2021, https://restaurant.org/NRA/media/Downloads/PDFs/advocacy/2021/Survey-Letter-to-
Hill.pdf.
16 135 Stat. 86.
17 SBA, Restaurant Revitalization Fund (RRF) Report, June 30, 2021, p. 2, https://www.sba.gov/document/report-
restaurant-revitalization-fund-reports.
18 SBA, “SBA Administrator Announces Closure of Restaurant Revitalization Fund Program.”
Congressional Research Service

5

link to page 11 SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

prepare to respond to anticipated high demand for the programs and a sudden strain on agency
resources, SBA hired new staff and contractors, some of whom were relatively inexperienced.
SBA implemented most of these programs shortly after Congress authorized them. For example,
PPP launched on April 3, 2020,19 just seven days after the CARES Act was enacted. By April 16,
lenders had approved 1,661,367 PPP loans worth $342.3 billion.20 Most of the other programs
underwent similarly rapid rollouts, and were accepting applications within weeks of
authorization.
Staffing
SBA’s pandemic relief programs significantly expanded the agency’s operations. To cite one
example, as of May 31, 2022, SBA was servicing about four million outstanding disaster loans—
more than 15 times the number of loans the agency was servicing before the pandemic.21
SBA had occasional pre-pandemic staffing challenges. In April 2020, one SBA Office of
Inspector General (OIG) report noted that, “SBA experienced challenges with having experienced
staff to provide the appropriate and accurate assistance needed to respond to large scale
disasters.”22 Another report found that SBA had dealt with staffing issues, including lack of
training, for “several years” before the pandemic, despite making recent progress.23
Through supplemental appropriations, Congress provided SBA approximately $3.4 billion in
FY2020 to use for either salaries or administrative expenses (which can include salaries).
Table 2 presents SBA’s FY2020 supplemental appropriations for salaries and expenses.
Table 2. FY2020 Supplemental Appropriations for SBA Salaries and Administrative
Expenses
Law
U.S. Statutes Citation
Appropriation (millions)
Coronavirus Preparedness and
134 Stat. 147
$20.0
Response Supplemental
Appropriations Act, 2020 (P.L. 116-
123)
CARES Act (P.L. 116-136)
134 Stat. 301
$675.0
CARES Act (P.L. 116-136)
134 Stat. 533
$562.0

19 SBA, “SBA’s Paycheck Protection Program for Small Businesses Affected by the Coronavirus Pandemic Launches,”
press release, April 3, 2020, https://www.sba.gov/article/2020/apr/03/sbas-paycheck-protection-program-small-
businesses-affected-coronavirus-pandemic-launches.
20 SBA, Paycheck Protection Program (PPP) Report, April 16, 2020, p. 2, https://www.sba.gov/sites/default/files/
2021-09/PPP%20Deck%20copy-508_4.16.pdf.
21 SBA OIG, Top Management and Performance Challenges Facing the Small Business Administration in Fiscal Year
2023, Report 23-01, October 14, 2022, p. 31, https://www.sba.gov/sites/default/files/2022-10/
SBA%20OIG%20Report%2023-01_0.pdf. Hereinafter FY2023 Management Challenges.
22 SBA OIG, Second White Paper: Risk Awareness and Lessons Learned from Audits and Inspections of Economic
Injury Disaster Loans, Report 20-12, April 3, 2020, p. 4, https://www.sba.gov/document/report-20-12-second-white-
paper-risk-awareness-lessons-learned-audits-inspections-economic-injury-disaster-loans.
23 SBA OIG, Top Management and Performance Challenges Facing the Small Business Administration in Fiscal Year
2022, Report 22-02, October 15, 2021, p. 26, https://www.oversight.gov/sites/default/files/oig-reports/SBA/SBA-OIG-
Report-22-02.pdf. Hereinafter FY2022 Management Challenges.
Congressional Research Service

6

link to page 12 link to page 13

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

Law
U.S. Statutes Citation
Appropriation (millions)
Paycheck Protection Program and
134 Stat. 628
$2,100.0
Health Care Enhancement Act (P.L.
116-139)
Source: CRS analysis of enacted bil s.
SBA subsequently added staff and contractors to implement its pandemic relief programs. SBA
increased employee levels to almost double the agency’s previous high.24
Figure 1 presents SBA employment (excluding contractors) from FY2018 to FY2022.
Figure 1. SBA Employment, FY2018-FY2022

Source: U.S. Office of Personnel Management (OPM), FedScope, SBA Employment Trend.
Notes: FedScope uses the “on-board employment” method to capture the number of employees in a federal
agency. This includes the number of employees in pay status at the end of a given quarter, and counts ful -time,
part-time, and temporary/non-permanent employees. Contract workers are not included in the data. Data are
from September, aligning with the end of the federal fiscal year.
SBA’s staff count roughly doubled during the pandemic. However, much of the increase included
staff with relatively little experience or non-permanent employees. Noting this dynamic at a
March 2023 congressional hearing, SBA’s Deputy Inspector General said, “SBA needs
experienced and well-trained personnel to provide appropriate assistance and handle the increased
loan volumes and expedited processing timeframes.”25
Figure 2 shows SBA’s employment by tenure.

24 FY2023 Management Challenges, p. 28.
25 Sheldon Shoemaker, Deputy Inspector General, U.S. Small Business Administration, Statement for the Record
Before the Subcommittee on Government Operations and the Federal Workforce, Committee on Oversight and
Accountability, U.S. House of Representatives, March 9, 2023, p. 4, https://oversight.house.gov/wp-content/uploads/
2023/03/Statement-for-the-Record-03-09-2023_Final-Shoemaker.pdf.
Congressional Research Service

7

link to page 13

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

Figure 2. SBA Employees by Years of Experience, FY2018-FY2022

Source: OPM, FedScope, SBA Employment Trend.
Figure 3 shows SBA employment by permanent and non-permanent status.
Figure 3. SBA Employees by Permanent and Non-Permanent Status,
FY2018-FY2022

Source: OPM, FedScope, SBA Employment Trend.
SBA OIG has stated that staffing challenges are likely to recur anytime SBA needs to increase
staffing in response to a disaster. As a result, SBA OIG suggested the agency develop “training
that is comprehensive and reoccurring to improve the overall customer experience, reduce
applicant processing times, and increase the number of loans and grants designated for
approval.”26

26 FY2022 Management Challenges, p. 27.
Congressional Research Service

8

link to page 14 SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

SBA’s Use of Contractors
In addition to agency staff, SBA hired contractors (who are not included in OPM’s employee
data) to help administer its pandemic relief programs. According to SBA, OPM grants SBA a
long-standing appointment hiring authority specifically for disaster loan-making activities.27
Table 3 presents SBA’s Office of Disaster Assistance’s (ODA’s) staffing figures from February
2020 to November 2020, when ODA’s pandemic hiring efforts paused.28
Table 3. ODA Employee and Contract Workforce
February 2020 to November 2020
Month
Employees
Contractors
Total Workforce
February
1,093
87
1,180
March
1,653
90
1,743
April
2,215
1,655
3,870
May
2,880
2,398
5,278
June
3,677
3,020
6,697
July
4,585
2,966
7,551
August
5,903
3,123
9,026
September
6,870
2,395
9,265
October
7,293
2,201
9,494
November
7,592
2,174
9,766
Source: Employee and contract workforce data provided by SBA Office of Legislative Affairs to CRS, April 18,
2023.
In some cases, contractors were relatively unfamiliar with SBA programs, and the Government
Accountability Office (GAO) expressed concern that SBA did not properly oversee its
contractors.29 In one example, SBA outsourced the receiving and processing of some COVID
EIDL applications to an existing SBA contractor. However, the contractor had done only limited
work on disaster loans before the pandemic.
SBA reserved certain grantmaking and loan processing functions for agency staff. For example,
SBA staff performed final manual reviews of PPP applications instead of contractors, who helped
conduct automated reviews and preliminary manual reviews of loans marked for further
screening.30

27 Correspondence from SBA Office of Legislative Affairs to CRS, April 18, 2023.
28 SBA’s ODA was transferred to the OCA on July 3, 2022.
29 U.S. Congress, House Committee on Small Business, Update on SBA’s Pandemic Response Programs, 117th Cong.,
1st sess., April 20, 2021 (Washington: GPO, 2021), p. 21.
30 Until June 2021, PPP applications were initially marked for manual review based on loan dollar amount, random
statistical sampling, and loans unresolved after automated and preliminary manual reviews. After that, PPP applications
were marked for manual review based on the application’s specific fraud risk. See SBA OIG, SBA’s Paycheck
Protection Program Loan Review Processes, Report 22-09, February 28, 2022, pp. 2 and 10, https://www.sba.gov/
document/report-22-09-sbas-paycheck-protection-program-loan-review-processes.
Congressional Research Service

9

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

SBA’s Pandemic Grant Programs
Congress authorized the SVOG and RRF programs to give grants directly to businesses, a
practice SBA was not previously authorized to do.31 Although SBA does make grants—its
entrepreneurial development programs provide grants to “resource partners”, which then offer
training and technical assistance to small businesses—it generally does not give grants directly to
small businesses, and is more often considered to have expertise in making and guaranteeing
loans than giving grants.
An illustration of this is that SBA has far fewer employees working in grants management than as
loan specialists. At the conclusion of FY2019, SBA had only 19 employees working in grants
management, which did not rank among the 20 largest occupational categories at the agency.32 By
contrast, SBA had 609 loan specialists at that time—its second largest occupational category.33
To implement its new direct grant programs—SVOG and RRF—SBA increased its grants
management staffing. By the end of FY2021, SBA had 175 employees working in grants
management. SBA also detailed employees from other parts of the agency to work on the grant
programs. Approximately 400 staff from SBA’s OCA and field offices were assigned to review
RRF applications.34 At its peak, SVOG had approximately 500 permanent and contract staff
providing review.35
SBA developed experience, training, and certification requirements and a training plan for those
administering its pandemic grant programs. According to SBA OIG, SBA implemented these
plans and requirements “to address the systemic weaknesses OIG found in prior audits of SBA’s
grants management.”36 However, to expedite hiring, SBA’s acting Chief Operating Officer waived
the requirements and the training plan for new grants management staff in March 2021, which
SBA OIG warned could result in mismanagement.37 SBA OIG had also previously warned that
SBA would need to ensure its grant programs identified, developed, and implemented proper
training for grants management staff before expanding the agency’s grantmaking activities.38

31 The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, which
SBA administers but are operated by 11 other federal departments and agencies, award grants directly to businesses.
For more information, see CRS Report R43695, Small Business Research Programs: SBIR and STTR, by Marcy E.
Gallo.
32 OPM defines grants management positions as those whose work involves “(1) the management, award, and/or
obligation of funds for grants, cooperative agreements, and other related instruments and services such as discretionary
and mandatory grants, using financial, administrative, business and negotiation procedures; (2) the competitive or non-
competitive evaluation of grants proposals; and/or (3) the administration or termination, and/or closeout of grants
and/or grants assistance and agreement awards.” See OPM, Handbook of Occupational Groups and Families,
December 2018, p. 86, https://www.opm.gov/policy-data-oversight/classification-qualifications/classifying-general-
schedule-positions/occupationalhandbook.pdf. Prior to the pandemic, the bulk of SBA’s grantmaking was done by
giving grants to resource partners or intermediaries, outside organizations which then operated technical assistance
programs, and were overseen by SBA.
33 OPM, FedScope, SBA Employment, https://www.fedscope.opm.gov/employment.aspx.
34 U.S. Government Accountability Office, Restaurant Revitalization Fund: Opportunities Exist to Improve Oversight,
GAO-22-105442, July 14, 2022, p. 33, https://www.gao.gov/products/gao-22-105442.
35 FY2023 Management Challenges, p. 31.
36 SBA OIG, Serious Concerns About SBA’s Control Environment and the Tracking of Performance Results in the
Shuttered Venue Operators Grant Program, Report 21-13, April 7, 2021, p. 5, https://www.sba.gov/document/report-
21-13-management-alert-serious-concerns-about-sbas-control-environment-tracking-performance-results.
37 FY2022 Management Challenges, p. 35.
38 SBA OIG, White Paper: Risk Awareness and Lessons Learned from Prior Audits of Entrepreneurial Development
Programs, Report 20-13, April 23, 2020, p. 6, https://www.sba.gov/document/report-20-13-white-paper-risk-
awareness-lessons-learned-prior-audits-entrepreneurial-development-programs.
Congressional Research Service

10

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

Comparison with SBA’s Great Recession Programs
Congress also authorized SBA to provide financial relief during the Great Recession. The American Recovery and
Reinvestment Act of 2009 (P.L. 111-5) provided $730 mil ion to SBA. Of that, Congress appropriated $255 mil ion
for the America’s Recovery Capital (ARC) Loan Program to provide small businesses with loans up to $35,000.
The implementation timelines for ARC and SBA’s pandemic relief programs (which were orders of magnitude
larger than ARC) were notably different. SBA did not publish its first rule on ARC until nearly four months after
Congress authorized the program.39 Conversely, the CARES Act required SBA to issue PPP regulations within 15
days of enactment.40 SBA issued its first interim final rule for PPP on April 2, 2020 (six days after enactment of the
CARES Act) and two additional interim final rules on April 15.41 By June 30, SBA had published 22 interim final
rules for PPP.
SBA also stood up its other pandemic relief programs more quickly than ARC. SBA issued initial ARC procedural
guidance on June 8, nearly four months after Congress authorized the program.42 By the end of July—a month and
a half after ARC launched—SBA had approved 799 loans and disbursed $25.8 mil ion.43 In contrast, PPP began
accepting applications on April 3, 2020—seven days after Congress authorized the program and one day after SBA
issued its first interim final rule on PPP. As of May 16, PPP lenders had approved 4,341,145 loans worth $513.3
bil ion.44
PPP’s rapid start-up helped provide quick financial relief to small businesses and nonprofits, but may have also—in
addition to the evolving nature of the pandemic—exposed some weaknesses in the initial structuring of the
program by Congress and SBA. Over the duration of PPP, Congress amended the program at least six times, while
SBA and the Department of the Treasury (Treasury) published more than 30 interim final rules for the program.45
SBA’s Experience Starting New Programs
SBA’s pandemic relief programs provided significant funding to businesses harmed by the
pandemic. In doing so, Congress and SBA authorized provisions and procedures that required
certain tradeoffs. Those included allowing new applicants and lenders to take part in SBA’s
pandemic relief programs and relaxing certain internal controls, for example through SBA’s
policy (later revoked) of requiring loan reviewers to process a certain amount of applications in a
specified time.
This section examines the major issues SBA encountered in standing up and implementing its
pandemic relief programs.

39 SBA, “American Recovery and Reinvestment Act: America’s Recovery Capital (Business Stabilization) Loan
Program,” 74 Federal Register 27243-27248, June 9, 2009.
40 134 Stat. 312.
41 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program,” 85 Federal Register 20811-
20821, April 15, 2020.
42 SBA, SBA Information Notice: Updated SBA’s ARC Loan Program Procedural Guide, August 31, 2009, p. 1,
https://www.sba.gov/document/information-notice-5000-1120-updated-sbas-arc-loan-program-procedural-guide.
43 U.S. Government Accountability Office, Status of the Small Business Administration’s Implementation of
Administrative Provisions in the American Recovery and Reinvestment Act of 2009, GAO-10-298R, January 19, 2010,
p. 28, https://www.gao.gov/products/gao-10-298r.
44 SBA, Paycheck Protection Program (PPP) Report, May 16, 2020, p. 2, https://www.sba.gov/sites/default/files/2021-
09/PPP_Report_200518-508.pdf.
45 Following the CARES Act, statutory amendments include P.L. 116-139, P.L. 116-142, P.L. 116-147, P.L. 116-260,
P.L. 117-2, and P.L. 117-6. For a list of PPP-related interim final rules, see U.S. Department of the Treasury,
“Paycheck Protection Program,” accessed August 15, 2023, https://home.treasury.gov/policy-issues/coronavirus/
assistance-for-small-businesses/paycheck-protection-program.
Congressional Research Service

11

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

PPP and Fintechs
Financial technology firms (fintechs) participated in PPP to a greater extent than in other SBA
business loan programs. In 2020, 19 fintechs and other state-regulated lenders participated in PPP
as lenders, making 250,720 PPP loans for a total of $6.1 billion.46 Fintech participation in PPP
expanded in 2021. In 2021, 41 fintechs and other state-regulated lenders participated in PPP as
lenders, making 1.2 million loans for a total of $21.9 billion.47 Fintechs also participated as Loan
Service Providers (LSPs), a longstanding feature of SBA’s business loan programs where third-
party entities provide loan-related services (such as applicant referrals or application processing)
for SBA-approved lenders. SBA has not released comprehensive data on participation by fintechs
as LSPs. However, an investigation by the House Select Committee on the Coronavirus Crisis
found that fintechs participating in PPP as LSPs may have facilitated fraud in the program.48
Different observers have taken away different lessons from fintech participation in PPP. In
November 2022, SBA proposed to revise business loan program regulations to license additional
Small Business Lending Companies (SBLCs), which are non-depository loan funds who receive
special permission to participate in SBA’s longstanding, flagship 7(a) loan program (The CARES
Act made PPP part of SBA’s 7(a) program, so all 7(a) lenders were automatically approved to
make PPP loans.49) In the rulemaking, SBA specifically pointed to their experience with PPP,
stating that “many non-traditional lenders participated” in PPP, and “based on the success of the
PPP,” licensing additional SBLCs would open “opportunities for non-traditional lenders to
participate in 7(a) … providing additional sources of capital to America’s small businesses and
targeting gaps in the credit market.”50 Some Members of Congress interpreted the experience of
fintechs in PPP differently. In a letter to SBA Administrator Guzman regarding the proposed
changes, Senate Committee on Small Business and Entrepreneurship Chair Benjamin Cardin and
Ranking Member Joni Ernst pointed to SBA’s experience with PPP as a reason to not move
forward with the proposed changes:
Taken together, the proposed changes seem to be intended to make 7(a) lending more
accessible to non-federally regulated, non-depository financial technology companies, or
“fintechs.” These proposals come just as the Select Subcommittee on the Coronavirus
Crisis published a report on December 1, 2022, attributing billions of fraudulent PPP loans
to fintechs operating without fraud controls or an adequate regulatory framework. We
acknowledge that SBA has responded to the report by taking steps to either suspend or
further investigate some of the named entities. While there are currently some fintech
lenders in the 7(a) program, they must comply with current 7(a) guardrails. However, we
are concerned that SBA continues to press forward with a strategy aimed at granting more

46 SBA, Paycheck Protection Program (PPP) Report: Approvals through 08/08/2020, August 8, 2020, p. 4,
https://www.sba.gov/sites/sbagov/files/2021-09/PPP_Report%20-%202020-08-10-508.pdf.
47 SBA, Paycheck Protection Program (PPP) Report: Approvals through 05/31/2021, May 31, 2021, p. 3,
https://www.sba.gov/sites/sbagov/files/2021-06/PPP_Report_Public_210531-508.pdf.
48 House Select Committee on the Coronavirus Crisis, “‘We Are Not the Fraud Police’: How Fintechs Facilitated Fraud
in the Paycheck Protection Program,” staff report, December 1, 2022, archived by the National Archives and Records
Administration at https://www.webharvest.gov/congress117th/20221225055243/https://coronavirus.house.gov/news/
reports/new-select-subcommittee-report-reveals-how-fintech-companies-facilitated-fraud-paycheck.
49 Some lenders participated in more than one program, so the number of unique lenders participating in at least one
SBA business loan program is less than the sum of lenders in each program. For 7(a) and 504 data, see SBA Office of
Capital Access, “7(a) & 504 Lender Report: FY2019,” data as of July 31, 2023, https://careports.sba.gov/views/
7a504LenderReport/LenderReport?%3Aembed=yes&%3Atoolbar=no. For Microloan data, see SBA Office of Capital
Access, “Microloan Lender Report: FY2019,” data as of July 31, 2023, https://careports.sba.gov/views/
MicroloanLenderReport/Report?%3Aembed=yes&%3Atoolbar=no.
50 SBA, “Small Business Lending Company (SBLC) Moratorium Rescission and Removal of the Requirement for a
Loan Authorization,” 87 Federal Register 66963, November 7, 2022, https://www.federalregister.gov/d/2022-23597.
Congressional Research Service

12

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

fintech entities access to the 7(a) program without taking into account the risks these types
of entities pose to consumer protection or program integrity.51
CARES Act Prohibitions for COVID EIDL
SBA was aware from the inception of the COVID EIDL program that it may face implementation
and administrative challenges. An April 2020 SBA OIG report noted that “SBA’s oversight of
loan applications will be unprecedentedly stretched as a result of the increased loan volume and
expedited timeframes.”52
The CARES Act prohibited SBA from requiring tax return transcripts to prove COVID EIDL
eligibility. SBA has requested tax transcripts to prove eligibility for EIDLs in the past, as well as
for other types of disaster assistance loan applications. The CARES Act also allowed SBA to
accept applicant self-certifications of eligibility. (The Economic Aid Act later allowed SBA to
obtain tax transcripts to verify eligibility and ended the use of applicant self-certification.)
These provisions may have allowed SBA to quickly process COVID EIDL applications.
However, such reduced requirements might also have encouraged fraud and “unscrupulous
borrowers.”53 While the CARES Act allowed SBA to rely on applicant self-certification, it did not
prohibit the agency from establishing internal controls to verify applicant eligibility. Not doing so
may have contributed to COVID EIDL fraud. For example, to help save time, SBA did not check
applicants’ Employer Identification Numbers, which would have indicated whether an applicant
had any employees. Taking this step “would have reduced the likelihood of fraud and applicant
errors” and may have prevented SBA from disbursing $4.5 billion more in COVID EIDLs to sole
proprietors and independent contractors than those entities were entitled to receive.54
SBA Reduced Internal Controls
In addition to the provisions of the CARES Act that emphasize expedience, SBA acted
independently to quickly disburse COVID EIDLs. In doing so, SBA’s Inspector General stated:
SBA’s initial response to implement the COVID-19 EIDL program made billions of dollars
of capital available to provide prompt economic relief to businesses affected by COVID-
19. To expedite the process, SBA “lowered the guardrails” or relaxed internal controls,
which significantly increased the risk of program fraud. The unprecedented demand for
COVID-19 EIDLs and the equally unprecedented challenges SBA had in responding to
this pandemic combined with lowered controls resulted in billions of dollars in potentially
fraudulent loans and loans to potentially ineligible businesses.55

51 Senator Benjamin Cardin, Chairman, and Senator Joni Ernst, Ranking Member, Senate Committee on Small
Business & Entrepreneurship, “Letter to the Honorable Isabella Casillas Guzman, SBA Administrator,” March 6, 2023,
https://www.ernst.senate.gov/imo/media/doc/cardin_and_ernst_letter_to_sba_re_proposed_rulespdf.pdf.
52 SBA OIG, Second White Paper: Risk Awareness and Lessons Learned from Audits and Inspections of Economic
Injury Disaster Loans, Report 20-12, April 3, 2020, p. 2, https://www.sba.gov/document/report-20-12-second-white-
paper-risk-awareness-lessons-learned-audits-inspections-economic-injury-disaster-loans.
53 SBA OIG, Follow-up Inspection of SBA’s Internal Controls to Prevent COVID-19 EIDLs to Ineligible Applicants,
Report 22-22, September 29, 2022, p. 7, https://www.sba.gov/document/report-22-22-follow-inspection-sbas-internal-
controls-prevent-covid-19-eidls-ineligible-applicants.
54 SBA OIG, SBA Emergency EIDL Grants to Sole Proprietors and Independent Contractors, Report 22-01, October 7,
2021, p. 7, https://www.sba.gov/document/report-22-01-sba-emergency-eidl-grants-sole-proprietors-independent-
contractors.
55 SBA OIG, Hannibal “Mike” Ware, Inspector General, U.S. Small Business Administration, Before the Select
Subcommittee on the Coronavirus Crisis, U.S. House of Representatives, March 25, 2021, p. 4, https://www.sba.gov/
sites/default/files/2021-04/Statement%20for%20the%20Record_Final%20SSCC%20508.pdf.
Congressional Research Service

13

link to page 15 SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

SBA OIG found that to quickly disburse funds, SBA loosened certain internal controls, including:
• Not using its “rule of two.” Typically, SBA requires two personnel to approve a
loan. However, SBA did not utilize this system for COVID EIDLs, instead
relying on an initial subcontractor review and then a batch approval by an SBA
team that included little to no vetting of application information.56
• Establishing timing goals for loan decisions. Officials in SBA’s ODA instituted
production goals for COVID EIDL approvals. Loan officers were to make final
loan decisions on at least four loans per hour, while team leads were required to
make final loan decisions for 10 to 12 loans per hour. To match these paces, loan
officers had an average of 15 minutes to make a decision on a loan, and for team
leads, an average of five to six minutes. These goals resulted in what SBA OIG
described as “cursory reviews.”57 In August 2020, SBA instituted a new rule that
curtailed these goals.
• Discarding subcontractor system warnings. A COVID EIDL subcontractor’s
system documented fraudulent applications with duplicate names, account
numbers, addresses, or other information. Despite this, SBA officials did not
always act on the notifications and still approved some of the applications.58
SVOG’s Single Advance Payment System
Partly in an effort to distribute funds in a timely manner, SBA took steps to implement SVOG that
may have affected program integrity. As noted, SBA officials waived the agency’s standard
experience, training, and certification requirements for grants officers, as well as SBA’s training
plan for administering pandemic-related grants. (See “SBA’s Pandemic Grant Programs”.) In
addition, SBA used a potentially risky payment method and waived certain documentation
requirements for grantees.
SBA initially gave out SVOG awards to grantees deemed a moderate or high risk in two or more
disbursements. According to SBA OIG, such a system can better detect fraud than disbursing
awards in a single payment, as the awarding agency can use interim financial reporting on the use
of funds to monitor grantee compliance.59
However, four months after starting to disburse SVOG funds, SBA switched to a single advance
payment for all grantees, regardless of risk level. Although the move enabled SBA to disburse
funds more quickly, it removed internal fraud, waste, and abuse controls.60

56 SBA OIG, Inspection of Small Business Administration’s Initial Disaster Assistance Response to the Coronavirus
Pandemic, Report 21-02, October 28, 2020, pp. 24-25, https://www.sba.gov/document/report-21-02-inspection-small-
business-administrations-initial-disaster-assistance-response-coronavirus-pandemic.
57 Ibid., p. 25.
58 Ibid., pp. 24-25.
59 SBA OIG, SBA’s Award and Payment Practices in the Shuttered Venue Operators Grant Program, Report 22-15,
July 5, 2022, p. 3, https://www.sba.gov/document/report-22-15-sbas-award-payment-practices-shuttered-venue-
operators-grant-program. Hereinafter SBA’s Award and Payment Practices.
60 Ibid., p. 3.
Congressional Research Service

14

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

Waiver of Pre-Approval for Grantee Budgetary Changes for SVOG
Office of Management and Budget (OMB) regulations require that federal grantees prepare a
budget that represents a financial plan for use of the awards.61 In most cases, grantees are required
to report budget changes to the awarding agency and request prior approval for the changes.62
SBA waived the prior approval requirement for changes between line items within SVOG
grantees’ budgets.63 Federal regulations allow agencies to do so.64 However, SBA commonly
requires prior approval for such changes.65 Removing the requirement left SBA without a process
for monitoring how grantees would use award funds. Further, many SVOG applicants may have
not applied for a federal grant before, and therefore may have had less experience complying with
government requirements. Requiring grantees to follow their proposed budgets could have
reduced the risk of noncompliance.66
Policy Considerations
Congress has demonstrated ongoing interest in SBA’s pandemic relief programs. In the 118th
Congress, the Senate Committee on Small Business and Entrepreneurship, House Committee on
Small Business, and House Committee on Oversight and Accountability each held hearings on
SBA’s pandemic relief programs. The 117th Congress passed the COVID-19 EIDL Fraud Statute
of Limitations Act (P.L. 117-165) and the PPP and Bank Fraud Enforcement Harmonization Act
of 2022 (P.L. 117-166), which, respectively, extended the statutes of limitations for prosecuting
COVID EIDL and PPP fraud to 10 years.
Given Congress’s interest in SBA’s pandemic relief programs and the amount of money spent, it
may opt to examine several issues.
Balancing Quick Relief with Internal Controls and Fraud
Prevention
SBA’s quick implementation of its pandemic relief programs involved tradeoffs. By acting
quickly, SBA might have made its programs more vulnerable to waste, fraud, and abuse.
According to GAO, “While millions of small businesses have benefited from these programs, the
speed with which the programs were implemented left SBA with limited safeguards to identify
and respond to program risks, including susceptibility to improper payments and fraud.”67
A June 2023 SBA OIG report found that SBA disbursed more than $200 billion in potentially
fraudulent COVID EIDLs, Targeted and Supplemental Targeted EIDL Advances, and PPP
loans—equating to about 17% of funds distributed in those programs.68 The activities were
concentrated in COVID EIDL. SBA OIG estimated that $136 billion of the potential fraud was

61 2 C.F.R. §200.308(a).
62 2 C.F.R. §200.308(b).
63 SBA’s Award and Payment Practices, p. 5.
64 2 C.F.R. §200.308(f).
65 SBA’s Award and Payment Practices, p. 5.
66 SBA’s Award and Payment Practices, p. 6.
67 U.S. Congress, House Committee on Small Business, Update on SBA’s Pandemic Response Programs, 117th Cong.,
1st sess., April 20, 2021 (Washington: GPO, 2021), p. 38.
68 SBA OIG, COVID-19 Pandemic EIDL and PPP Loan Fraud Landscape, Report 23-09, June 27, 2023, p. 8,
https://www.sba.gov/document/report-23-09-covid-19-pandemic-eidl-ppp-loan-fraud-landscape.
Congressional Research Service

15

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

from COVID EIDL, representing approximately 33% of total COVID EIDL funds distributed. In
contrast, SBA OIG estimated only about 8% of total PPP funds distributed—about $66 billion—
was potentially fraudulent. (A separate report from SBA, issued the same day as the SBA OIG
report, estimated that there was a total of $36 billion of pandemic relief loans and grants issued
fraudulently.)69
By comparison, GAO found that in FY2021, federal unemployment insurance (which Congress
expanded in response to the pandemic, and which has also received attention for being the subject
of potential fraud) had an approximately 19% improper payment rate, and in FY2022, an
approximately 22% improper payment rate. These figures were a significant increase from
FY2020, when federal unemployment insurance had a 9.2% improper payment rate.70
To prepare for future emergencies, Congress may assess the impacts of the tradeoffs it made in
authorizing SBA’s pandemic relief programs. Certain stipulations of these authorizations—for
example, that SBA promulgate regulations for PPP within 15 days of the CARES Act’s
enactment—may have helped SBA quickly distribute money to needy businesses, but may also
have helped lead SBA to prioritize speed above all other concerns.71 Congress may seek to
develop a framework for assessing the implications of such decisions in future scenarios. For
example, Congress may assess whether, in future emergencies, potential program authorizations
should be more explicit about whether the program should prioritize getting relief out quickly or
prioritize program integrity (and what that may require of agencies administering the programs).
Congress could also determine whether SBA’s actions in its pandemic relief programs met
Congress’s intent.
Separate from actions that Congress mandated, SBA also lowered certain internal controls on its
own recognizance. In a March 2023 statement submitted to Congress regarding SBA’s decision to
rely on self-certification of eligibility for COVID EIDLs, SBA’s Deputy Inspector General noted:
My office knew from the onset of pandemic relief that SBA would face a delicate balancing
act of preventing widespread fraud while ensuring timely disbursement of relief funds to
Americans in immediate need. The biggest concern for our office was SBA’s quick
delivery of capital to qualifying small businesses without first establishing the internal
controls necessary to decrease risk, such as verifying that the business did indeed exist
before the pandemic and that it had been adversely affected by the economic downturn.72
In any potential future legislation authorizing financial relief programs, Congress could determine
how much latitude to give agencies to implement their own policies. Congress could also be more
explicit about its goals in any potential legislation, for example by making clear in legislative or
committee report language that any implementing agencies are to make the provision of quick
financial relief their highest priority, and that agencies should make decisions with that in mind.

69 SBA, Protecting the Integrity of the Pandemic Relief Programs: SBA’s Actions to Prevent, Detect and Tackle Fraud,
June 27, 2023, p. 6, https://www.sba.gov/document/report-protecting-integrity-pandemic-relief-programs.
70 U.S. Government Accountability Office, Unemployment Insurance: DOL Needs to Address Substantial Pandemic UI
Fraud and Reduce Persistent Risks, GAO-23-106586, February 8, 2023, p. 19, https://www.gao.gov/products/gao-23-
106586. CRS was not able to locate information on pre-pandemic EIDL fraud rates.
71 See SBA OIG, SBA’s Handling of Potentially Fraudulent Paycheck Protection Program Loans, Report 22-13, May
26, 2022, p. 2, https://www.sba.gov/document/report-22-13-sbas-handling-potentially-fraudulent-paycheck-protection-
program-loans.
72 SBA OIG, Sheldon Shoemaker, Deputy Inspector General, U.S. Small Business Administration, Before the
Subcommittee on Government Operations and the Federal Workforce, Committee on Oversight and Accountability,
U.S. House of Representatives, March 9, 2023, p. 3, https://oversight.house.gov/wp-content/uploads/2023/03/
Statement-for-the-Record-03-09-2023_Final-Shoemaker.pdf.
Congressional Research Service

16

link to page 22 SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

Congress could also determine that its direction in the laws authorizing SBA’s pandemic relief
programs was sufficient.
Does SBA Have Sufficient Capacity?
Given SBA’s increased appropriations, responsibilities, and personnel during the COVID-19
pandemic, Congress may be interested in assessing whether the agency had—and continues to
have—sufficient capacity to implement and oversee its relief programs.
Despite SBA standing up new programs within days, weeks, or months of congressional
authorization, there may still be concerns as to whether SBA had or has enough resources to
administer its relief programs. SBA’s appropriations in FY2022 and FY2023, after increasing
dramatically in FY2020 and FY2021, were closer to pre-pandemic levels. SBA OIG received an
approximately $32 million base appropriation for FY2023—roughly $10 million higher than its
FY2022 appropriation—as well as transfers worth a further $1.6 million. This met SBA OIG’s
FY2023 budget request.73 However, SBA OIG’s budget request for FY2024 was $63.3 million,
which the office argued was necessary to oversee SBA’s expanded loan portfolio and manage the
extended statutes of limitation for PPP and COVID EIDL fraud.74
Table 4 presents SBA appropriations from FY2014 to FY2023.
Table 4. SBA Appropriations, FY2014-FY2023
Fiscal Year
Appropriation (millions)
2014
$928.9
2015
$887.6
2016
$871.0
2017
$1,336.8
2018
$2,359.8
2019
$715.4
2020
$761,980.5
2021
$379,496.7
2022
$2,219.8
2023
$2,077.8
Source: CRS analysis of various appropriations bil s and reports, joint accompanying statements, and
congressional budget justifications. For more information, see CRS Report R43846, Small Business Administration
(SBA) Funding: Overview and Recent Trends, by Robert Jay Dilger, R. Corinne Blackford, and Anthony A. Cil uffo.
According to its FY2024 budget request, SBA will service almost 3.6 million COVID EIDLs in
FY2023 and FY2024. As of May 31, 2022, SBA was servicing approximately 4 million pandemic
relief loans (PPP and COVID EIDLs) worth approximately $390 billion—more than 43 times the
dollar amount of SBA’s pre-pandemic loan portfolio.75 For FY2024, SBA proposed transferring

73 SBA, FY 2023 Congressional Budget Justification FY 2021 Annual Performance Report, March 28, 2022, p. 181,
https://www.sba.gov/sites/sbagov/files/2022-04/FY%202023%20SBA%20Congressional%20Budget%20Justification-
508-2022-0413%20updated.pdf.
74 SBA, FY 2024 Congressional Budget Justification FY 2022 Annual Performance Report, March 13, 2023, p. 204,
https://www.sba.gov/sites/sbagov/files/2023-05/FY_2024_CBJ-508.pdf. Hereinafter FY2024 CBJ.
75 FY2023 Management Challenges, p. 31.
Congressional Research Service

17

link to page 23

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

$227 million from its disaster loan account (which funds SBA’s disaster loan programs, including
non-COVID EIDL) to use on pandemic relief program salaries, administrative needs, and
oversight.76
Noting the amount of COVID EIDLs still in need of servicing, SBA OIG warned in October 2021
that SBA “does not have the staff or infrastructure to manage the unprecedented volume.”77 SBA
significantly increased its number of loan specialists during the pandemic.78 However, by FY2022
the number of SBA loan specialists had declined to near pre-pandemic levels.
Figure 4 shows the number of SBA loan specialists.
Figure 4. SBA Loan Specialists, FY2018-FY2022

Source: OPM, FedScope, SBA Employment Trend.
Given the ongoing administration of its pandemic relief programs, Congress may wish to consider
whether SBA has sufficient resources, both for operations and oversight.
Implementing a Fraud Prevention Framework at SBA
While SBA stood up its pandemic relief programs quickly, the agency’s ability to guard against
fraud may have been hindered both by choices SBA made in setting up its fraud detection systems
and by the lack of a centralized fraud prevention entity.
In 2022, SBA OIG found that SBA did not establish a central entity to manage and coordinate
attempts to find PPP fraud and did not formalize roles, responsibilities, and written processes to
deal with potential PPP fraud. While the CARES Act did not require the agency to establish a

76 FY2024 CBJ, p. 21.
77 FY2022 Management Challenges, p. 31.
78 OPM defines loan specialists as positions which require knowledge of “(1) credit risk factors and lending principles
involved in loans of specialized types granted, insured, or guaranteed by the Federal Government; (2) financial
structures and practices of business organizations concerned with such loans; and (3) pertinent statutory, regulatory,
and administrative provisions.” See OPM, Handbook of Occupational Groups and Families, December 2018, p. 89,
https://www.opm.gov/policy-data-oversight/classification-qualifications/classifying-general-schedule-positions/
occupationalhandbook.pdf.
Congressional Research Service

18

link to page 18 link to page 18 SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

fraud prevention framework, SBA OIG suggested that it may have reduced the risk of fraud. SBA
officials, though, argued that the speed with which they were required to start PPP precluded the
agency from implementing these processes.79 GAO suggested SBA designate one of its existing
departments to lead risk management efforts, but, according to GAO, SBA instead formed a fraud
risk council that GAO described as an “informal body.”80 Concerning SBA’s fraud detection
efforts, GAO officials testified that, “There is no clear responsibility to carry this out.”81
SBA did not conduct fraud risk assessments for PPP and COVID EIDL applications until October
2021. This was after PPP applications closed for the final time and about two months before
COVID EIDL applications closed. According to GAO, fraud risk assessments are more effective
at developing preventive fraud controls than at detecting fraud that has already occurred.82
However, SBA designed PPP fraud risk management with more controls at the forgiveness stage
than the application stage. Because fraudulent PPP borrowers were unlikely to seek forgiveness,
this lessened the effectiveness of SBA’s fraud controls.83 Congress may evaluate how to provide
departments and agencies the tools and time to implement fraud controls while also being able to
provide quick relief. For example, Congress could authorize federal agencies to detail employees
to an agency implementing fiscal relief programs, or provide additional resources for fraud
prevention.
In April 2022, SBA created a Fraud Risk Management Board (FRMB) intended to serve as “the
designated anti-fraud entity responsible for oversight and coordination of SBA’s fraud risk
prevention, detection, and response activities.”84 Congress may be interested in conducting
oversight of the FRMB to assess its effectiveness.
Preexisting SBA Challenges Exacerbated by the Pandemic
SBA’s implementation of its pandemic relief programs highlighted and, in some cases,
exacerbated some of the agency’s challenges that existed before the pandemic. These included
SBA’s internal controls for fraud prevention, certain agency capacities, and SBA’s grant
management.
As discussed above, in order to expedite financial assistance, SBA sometimes loosened or did not
fully adhere to internal controls in implementing its pandemic relief programs. (See “SBA
Reduced Internal Controls”.) For example, in reviewing COVID EIDL applications, SBA did not
use its usual “rule of two,” whereby at least two SBA staff must approve a loan. These types of
actions were not unprecedented. Following the Great Recession, SBA made ARC loans without
proper documentation to ensure borrower eligibility and allowable use of loan proceeds.85 SBA

79 Ibid., p. 5.
80 U.S. Congress, House Committee on Small Business, Update on SBA’s Pandemic Response Programs, 117th Cong.,
1st sess., April 20, 2021 (Washington: GPO, 2021), p. 21.
81 Ibid.
82 U.S. Government Accountability Office, Emergency Relief Funds: Significant Improvements are Needed to Address
Fraud and Improper Payments, GAO-23-106556, February 1, 2023, p. 15, https://www.gao.gov/products/gao-23-
106556.
83 FY2023 Management Challenges, pp. 6-7.
84 SBA, “Administrator Guzman Announces Expanded Efforts to Aggressively Crack Down on Bad Actors and Prevent
Fraud in Programs,” press release, April 1, 2022, https://www.sba.gov/article/2022/apr/01/administrator-guzman-
announces-expanded-efforts-aggressively-crack-down-bad-actors-prevent-fraud.
85 SBA OIG, America’s Recovery Capital Loans Were Not Originated and Closed in Accordance with SBA’s Policies
and Procedures, Report 11-03, March 2, 2011, p. 3, https://www.sba.gov/document/report-11-03-rom-11-03-americas-
recovery-capital-loans-were-not-originated-closed-accordance-sbas-policies.
Congressional Research Service

19

link to page 12 SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

OIG noted the need to establish proper controls to ensure applicant eligibility in an April 2020
white paper on previous SBA stimulus loans.86
SBA’s pandemic relief programs increased the agency’s workload. However, SBA also had a pre-
pandemic need to increase and train staff.87 SBA OIG noted that, with the sudden increase in SBA
disaster loans during the pandemic, the agency’s disaster assistance systems were insufficient to
meet the demand, requiring the agency to use contractors.88 As noted, SBA’s staffing levels have
also decreased since their peak in FY2021 (see Figure 1).
SBA OIG has cited oversight of grants management at SBA as a challenge for the agency each
year since at least FY2019. This includes SBA’s decentralized grant management structure.89 In
FY2020 and FY2021, SBA implemented the GrantSolutions platform and trained program
officials on the system. However, SVOG and RRF program officials chose to use other grant
management systems.90 Pre-pandemic, SBA also lacked complete and accurate performance data
for its grant problems, impeding program evaluation.91 This challenge persisted with SVOG, as
SBA did not require performance goals or establish performance requirements.
Congress may consider directing SBA to address some of these challenges. Congress may also
opt to let SBA address any challenges without congressional input.
SBA’s Grantmaking Authority
As noted, SBA had more expertise in making and guaranteeing loans to small businesses than in
making direct grants to small businesses. As a result, SBA may have comparatively less
experience making direct grants than other agencies that more commonly perform the task.
Conversely, SBA has more experience working with small businesses than other agencies.
Should Congress authorize grants to businesses in potential future emergencies, it may want to
evaluate how to balance SBA’s capacity as a grantmaking agency against the agency’s knowledge
of small business needs in deciding which agencies to authorize to provide financial relief. Other
agencies, such as the Federal Emergency Management Agency, have authority to make grants, but
may have less experience with small businesses. Congress could also determine whether it wants
to give SBA permanent authority to make direct grants, and under what scenarios. Lastly, as it did
during the COVID-19 pandemic, Congress could address future expansions of SBA’s
grantmaking authority in an ad hoc fashion.
In making these determinations, it is worth noting that there are tradeoffs between providing
assistance as a loan or as a grant. In general, grants are subject to more stringent requirements
than loans. For example, grants sometimes have narrower eligibility requirements than loans,

86 SBA OIG, White Paper: Risk Awareness and Lessons Learned from Prior Audits of Economic Stimulus Loans,
Report 20-11, April 3, 2020, p. 6, https://www.sba.gov/document/report-20-11-white-paper-risk-awareness-lessons-
learned-prior-audits-economic-stimulus-loans.
87 FY2022 Management Challenges, p. 26.
88 FY2023 Management Challenges, p. 28.
89 SBA OIG, Consolidated Findings of OIG Reports on SBA’s Grant Programs FYs 2014-2018, Report 19-02,
November 8, 2018, p. 2, https://www.sba.gov/document/report-19-02-consolidated-findings-oig-reports-sbas-grant-
programs-fys-2014-2018.
90 FY2023 Management Challenges, p. 34.
91 SBA OIG, Consolidated Findings of OIG Reports on SBA’s Grant Programs FYs 2014-2018, Report 19-02,
November 8, 2018, p. 4, https://www.sba.gov/document/report-19-02-consolidated-findings-oig-reports-sbas-grant-
programs-fys-2014-2018.
Congressional Research Service

20

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

have greater reporting requirements, and are subject to more post-award processes.92 This can
mean that administering grants takes more time and resources than loans. It can also mean that
grants may have more built-in oversight mechanisms. However, during the pandemic, OMB also
relaxed certain guidance for administration of federal grants. For example, OMB eased agency
requirements for publishing notices of funding opportunity and allowed grant recipients to delay
submitting closeout reports, which can include financial and performance data, for one year after
the grant expired.93
Such actions may have both facilitated agencies’ ability to award grants quickly and made aspects
of oversight more challenging. If Congress examines the types of financial relief SBA is
authorized to provide, it should be aware of the tradeoffs between loans and grants.
Concluding Observations
SBA’s pandemic relief programs represented a dramatic increase in the agency’s appropriations
and responsibilities. Congress authorized SBA to administer some of the largest financial relief
programs in U.S. history. The scale of these pandemic relief programs was unlike anything SBA
had previously undertaken.
SBA’s implementation and administration of its pandemic relief programs entailed a process of
balancing quick financial relief with effective management and oversight. Questions of how to
achieve the right mix of those considerations are likely to recur in potential future scenarios with
federal fiscal relief. As a result, the lessons from SBA’s experience with its pandemic relief
programs may be an area of congressional interest for the foreseeable future.

92 For more information on federal grants, see CRS Report R42769, Federal Grants-in-Aid Administration: A Primer,
by Natalie Keegan.
93 OMB, M-20-17, Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly
Impacted by the Novel Coronavirus (COVID-19) due to Loss of Operations, March 19, 2020, p. 4,
https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-17.pdf.
Congressional Research Service

21

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

Appendix A. Paycheck Protection Program (PPP)
Eligibility
When Congress authorized PPP in the CARES Act, PPP loans were available to for-profit small
businesses,94 as well as the following nonprofit organizations if they had 500 or fewer
employees:95 nonprofit organizations eligible for a Section 501(c)(3) federal tax exemption,
veterans’ organizations eligible for a Section 501(c)(19) federal tax exemption, and tribal
businesses. Self-employed individuals, such as sole proprietors and independent contractors, were
also eligible. PPP loan amounts were primarily based on an employer’s payroll costs, so an
employer would have had to pay payroll to qualify. Self-employed individuals calculated their
PPP loan amount based on their own earnings. In addition, entities must have been in operation
on February 15, 2020.
PPP eligibility changed during the course of the program to expand it to other small entities and
to further restrict it from large entities. The Economic Aid Act expanded eligibility to certain
housing cooperatives, news organizations, destination marketing organizations, and 501(c)(6) tax-
exempt organizations (such as business leagues and chambers of commerce). At the same time,
the law restricted eligibility for PPP loans for publicly traded companies and for entities in which
the President, Vice President, head of an Executive Department, or Member of Congress (or the
spouse of any of those individuals) owned at least a 20% stake in the entity. ARPA expanded PPP
eligibility to additional types of nonprofit entities and internet news publishing organizations.
Eligibility was different for second-draw PPP loans, authorized as part of the Economic Aid Act.
To qualify for a second-draw PPP loan, a borrower had to have received a first-draw PPP loan and
used the full amount of the loan, had fewer than 300 employees, and have been able to document
revenue losses of at least 25% in the first, second, or third quarter of 2020 relative to the same
quarter of 2019.
Eligible Uses
When considering eligible uses for a PPP loan, there were two important calculations: the
maximum amount an applicant could borrow (and therefore the maximum amount that could be
forgiven), and the amount actually eligible for forgiveness (based on how the borrower used the
PPP loan funds).
Maximum Loan Amount
When Congress authorized PPP in the CARES Act, there were three methods of calculating the
maximum loan amount, up to $10 million:
1. for most borrowers, the average monthly payroll costs during the one-year period
before the date the PPP loan was made, multiplied by 2.5;
2. for most seasonal business borrowers, the average monthly payroll costs during
the 12-week period beginning either February 15, 2019, or, at the borrower’s
choice, March 1, 2019, multiplied by 2.5; and

94 A for-profit small business needed to meet the industry-based size standard established by SBA. The industry-based
size standards are generally based on average annual gross receipts or average annual employment.
95 The nonprofit organization could use a higher employment threshold if it operated in an industry for which SBA
established a higher employment-based size standard.
Congressional Research Service

22

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

3. for borrowers that were not in business between February 15, 2019, and June 30,
2019, the average monthly payroll during the period beginning January 1, 2020,
and ending February 29, 2020, multiplied by 2.5.
In addition, if a borrower received an EIDL between January 31, 2020, and the date they received
a PPP loan, they were required to roll the EIDL into their PPP loan. They could add the EIDL
amount to the maximum PPP loan amount calculated using the relevant method above. PPP was
later changed so that borrowers were not required to roll over their EIDL into their PPP loan.
Self-employed borrowers could add an amount to their PPP loan for owner-equivalent wages.
This amount was the net profit reported on IRS Form 1040 Schedule C that covered the relevant
base period, up to a maximum of $100,000, divided by 12, and multiplied by 2.5. Therefore, the
maximum owner-equivalent wage was $20,833. For self-employed individuals without
employees, this was the maximum PPP loan they could receive. For self-employed individuals
who had employees, they could add the owner-equivalent wage to their employee payroll costs.
Second-draw PPP loans had a maximum of $2 million. There were four methods of calculating
the maximum amount of a second-draw PPP loan:
1. for most borrowers, the average monthly payroll during either (at the borrower’s
choice): the one-year period before the date the loan was made, or calendar year
2019, multiplied by 2.5;
2. for seasonal borrowers, the average monthly payroll cost incurred during any 12-
week period of the borrower’s choice between February 15, 2019, and February
15, 2020, multiplied by 2.5;
3. for borrowers who were not in business during the one-year period preceding
February 15, 2020, the average monthly payroll cost for the period that the entity
was in operation, multiplied by 2.5; and
4. for businesses in the accommodation and food services industry, the average
monthly payroll during either (at the borrower’s choice): the one-year period
before the date the loan was made, or calendar year 2019, multiplied by 3.5 (this
was a higher multiple).
Eligible Uses for Forgiveness
The eligible uses of proceeds of a PPP loan that qualified for forgiveness also varied over the
course of the program. At all times, most of the loan had to be spent on the employer’s payroll
costs. The share of the loan that could be used for nonpayroll costs changed, as did the eligible
nonpayroll costs.
When Congress authorized PPP in the CARES Act, the following were eligible uses of PPP loan
proceeds:
• payroll costs;
• costs related to the continuation of group health care benefits during periods of
paid sick, medical, or family leave, and insurance premiums;
• employee salaries, commissions, or similar compensations;
• payments of interest on any mortgage obligation (not including prepayments);
• rent;
• utilities; and
• interest on any other debt obligation incurred before the covered period.
Congressional Research Service

23

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

The Economic Aid Act added four more eligible uses for PPP loan proceeds:
• covered operations expenditures, meaning payments for business software or
cloud computing services used for a variety of specified business purposes;
• covered property damage costs, meaning costs due to property damage and
vandalism or looting due to public disturbances that occurred during 2020 that
were not covered by insurance;
• covered supplier costs, meaning costs paid to suppliers of certain goods that are
essential to the borrower’s operations; and
• covered worker protection expenditures, meaning costs, including operating or
capital expenditures, to adapt business activities to COVID health guidelines
issued by a government entity.
The CARES Act did not specify a share of PPP loan proceeds that must go toward payroll costs.
In SBA’s first interim final rule on PPP, SBA imposed a requirement that at least 75% of PPP loan
proceeds be used for payroll costs.96
This restriction meant that non-payroll costs in excess of 25% of the loan amount would not be
eligible for forgiveness. Congress changed this in June 2020 by adding a provision to the PPP
forgiveness statute, requiring borrowers to spend at least 60% of the PPP loan on payroll costs,
and allowing up to 40% for non-payroll costs.97
To qualify for forgiveness, a borrower needed to use PPP loan proceeds for one or more of the
above eligible uses during the loan’s covered period.98 As authorized by the CARES Act, all PPP
loans had a covered period of eight weeks, starting on the date the loan was originated. The
Paycheck Protection Program Flexibility Act of 2020 (P.L. 116-142) changed the covered period
to be the period beginning on the date the loan is originated and ending on the earlier of (1) 24
weeks later, or (2) December 31, 2020. Borrowers whose loan was originated before June 5, 2020
(the date the law was enacted) could elect to keep an 8-week covered period. The Economic Aid
Act changed the covered period to allow all borrowers to elect a covered period of either (1) eight
weeks after origination, or (2) 24 weeks after origination.
Additionally, borrowers would only be eligible for full forgiveness if they maintained their
employee count and wages during the loan’s covered period, of if they qualified for an
exemption. Generally, if a borrower reduced their FTE employees during the covered period
compared with their reference period, then their forgiveness amount would be reduced by the
same percentage.99 For example, if a borrower had 10 FTE employees but reduced their staffing
to eight FTE employees during the covered period, the borrower would only be eligible for 80%
of their otherwise qualifying forgiveness amount. Additionally, the borrower must reduce their
forgiveness amount dollar-for-dollar if the borrower reduced an employee’s wages beyond 25%.

96 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program,” 85 Federal Register 20811,
April 15, 2020, https://www.federalregister.gov/d/2020-07672.
97 Section 3 of the Paycheck Protection Program Flexibility Act of 2020 (P.L. 116-142).
98 The term “covered period” was used differently in the statutes covering loan eligibility (15 U.S.C. §636(a)(36)) and
loan forgiveness (15 U.S.C. §636m). For the purposes of determining eligibility, the covered period referred to the
period from February 15, 2020, through June 30, 2021 (this period was amended several times during the course of the
program) that related to several purposes in the program, including when the SBA could guarantee PPP loans. For the
purposes of loan forgiveness, the covered period meant the time after the PPP loan’s origination, during which the
borrower had to use the loan proceeds for eligible uses to qualify for forgiveness.
99 The reference period was, at the borrower’s election, either: (1) February 15, 2019, through June 30, 2019; (2)
January 1, 2020, through February 29, 2020; or (3) for seasonal employers, any consecutive 12-week period between
February 15, 2019, and February 15, 2020.
Congressional Research Service

24

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

For example, if a borrower reduced a full-time employee’s weekly wages from $1,000 during the
reference period to $700, the first 25% ($250 per week) is exempt, but the remainder ($50 per
week) must reduce the forgiveness amount. The reduction would depend upon the length of the
covered period the borrower chose: $400 for an 8-week covered period ($50 * 8 weeks) or $1,200
for a 24-week covered period ($50 * 24 weeks).100
The CARES Act granted the SBA Administrator and Secretary of the Treasury discretion to
determine de minimis exemptions from limits on forgiveness.101 SBA and Treasury regulations
adopted the following exemptions to the loan forgiveness limits due to employee count or wage
reductions:
• the borrower offered to restore employee hours at the same salary and wages,
even if the employee did not accept;
• the borrower fired an employee for cause, or the employee voluntarily resigned
or voluntarily requested a schedule reduction;
• the borrower eliminated employee count or wage reductions by December 31,
2020, or, for loans made after December 27, 2020, the last day of the covered
period;
• the borrower has a PPP loan of $50,000 or less.102
The last exemption, for PPP loans of $50,000 or less, exempted over 75% of PPP loans from the
employee count- and wage-maintenance requirements.103 It is not clear from publicly available
data how many loans the first three exemptions may have affected.
Eligible uses for a second-draw PPP loan were generally the same as those for first-draw PPP
loans. The covered period for a second-draw PPP loan could not overlap with that of a first-draw
PPP loan—meaning a borrower could not “double count” the same expenses towards forgiveness
of both loans. Additionally, the borrower had to use all of the first-draw PPP loan for eligible
expenses before disbursement of a second-draw PPP loan.104
The forgiveness process began with the borrower submitting an application for forgiveness to
their lender. Borrowers with a PPP loan of $150,000 or less could use a simplified forgiveness
application process. The lender made an initial decision on the application. If the lender
determined the borrower is eligible for full or partial forgiveness, the lender would request
payment for that amount from SBA. SBA could review the amount the lender submitted for
forgiveness, but SBA was required to remit payment within 90 days of the lender’s initial
application. Second-draw PPP loans followed the same process, but an application for forgiveness
of a second-draw PPP loan must have been submitted at the same time or after an application for

100 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program—Loan Forgiveness
Requirements and Loan Review Procedures as Amended by Economic Aid Act,” 86 Federal Register 8283, February
5, 2021, https://www.federalregister.gov/d/2021-02314.
101 Section 1106(d)(6) of P.L. 116-136.
102 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program—Loan Forgiveness
Requirements and Loan Review Procedures as Amended by Economic Aid Act,” 86 Federal Register 8283, February
5, 2021, https://www.federalregister.gov/d/2021-02314.
103 Based on CRS analysis of SBA PPP FOIA data as of September 30, 2022. Fully 78% of PPP loans (9.0 million of
11.5 million) had an amount of less than $50,000. The number of loans that qualify for the de minimis exemption
would be higher, since it would also include loans of exactly $50,000. For more current source data, see Small Business
Administration Office of Capital Access, PPP FOIA, https://data.sba.gov/dataset/ppp-foia.
104 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program—Loan Forgiveness
Requirements and Loan Review Procedures as Amended by Economic Aid Act,” 86 Federal Register 8283, February
5, 2021, https://www.federalregister.gov/d/2021-02314.
Congressional Research Service

25

link to page 32 SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

forgiveness of a first-draw PPP loan—meaning, the borrower could not apply for forgiveness of a
second-draw PPP loan before a first-draw PPP loan.105
Funding
Congress provided appropriations and authorization levels for PPP, and both amounts increased
over time:
• When authorized in the CARES Act, Congress appropriated $349 billion for PPP,
and authorized $349 billion of PPP lending between February 15, 2020, and June
30, 2020.
• The Paycheck Protection Program and Health Care Enhancement Act (PPP
Enhancement Act, P.L. 116-139,) amended the CARES Act to increase the
appropriation for PPP to $670.3 billion (an increase of $321.3 billion), and
increased the lending authorization to $659 billion.
• Congress extended the PPP lending authority (but did not change the amount)
through August 8, 2020, in P.L. 116-147.
• The Economic Aid Act made several changes to PPP appropriations and lending
authorizations. First, it rescinded $146.5 billion from the combined account that
funded PPP and Section 1112 debt payments.106 The Economic Aid Act also
appropriated $284.5 billion for first- and second-draw PPP loans. Finally, it
amended the lending authorization to include first- and second-draw PPP loans,
extended lending authority through March 31, 2021, and increased the lending
authorization to $806.5 billion (an increase of $147.45 billion).
• ARPA appropriated an additional $7.3 billion for the cost of the law’s
amendments to PPP. ARPA also increased the lending authorization to $813.7
billion (an increase of $7.3 billion).
• The PPP Extension Act of 2021 (P.L. 117-6) extended SBA’s authority to approve
PPP loans from March 31, 2021, through June 30, 2021. However, under the law,
SBA could only accept new applications through May 31, 2021. During June
2021, SBA could only process applications received through the end of May.
PPP Demand
There was significant demand from small businesses for PPP loans, especially in the early stages
of the program. PPP lending occurred in three “rounds”:
• round one ran from April 3, 2020, through April 15, 2020. SBA began to accept
applications for PPP loans on April 3, 2020, and the initial authorization of
$349.0 billion was exhausted in 13 days;
• round two ran from April 27, 2020, through August 8, 2020, with a short
interruption in early July 2020; and
• round three included all loans for first- and second-draw PPP approved in 2021.
Table A-1 shows the number of loans approved and the net dollars for PPP lending for 2020,
2021, and, for 2021, first- and second-draw loans. More PPP loans were made in 2021 than in

105 Ibid.
106 Congress did not allocate the rescission between funds for PPP and Section 1112 payments. While the funds in that
account were used for both programs, it is likely that the rescission mostly affected PPP appropriations.
Congressional Research Service

26

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

2020 (57% vs. 43%). The average PPP loan was larger in 2020 than in 2021 ($101,549 vs.
$41,560). In 2021, fewer than half of PPP loans were second-draw loans (44% of the 2021 total),
but 75% of the 2021 net dollars lent in PPP were for second-draw loans. First-draw loans
approved during 2021 had a lower average size ($18,288) than either 2020 PPP loans or second-
draw loans.
Table A-1. PPP Lending, 2020 and 2021
Time Period
Loans Approved
Net Dollars
2020 and 2021
11,823,594
$799,832,866,520
2020
5,141,665
$522,132,758,441
2021
6,681,929
$277,700,108,079
During 2021, First-Draw Loans
3,768,309
$68,915,276,574
During 2021, Second-Draw Loans
2,913,620
$208,784,831,505
Source: SBA, “Paycheck Protection Program (PPP) Report: Approvals through 05/31/2021,”
https://www.sba.gov/sites/sbagov/files/2021-06/PPP_Report_Public_210531-508.pdf.
Notes: Totals for 2020 were not reported by SBA in the source report. The amounts in this table were
calculated by subtracting the reported 2021 totals from the program totals.
Lending Set-Asides
As authorized in the CARES Act, PPP did not include set-asides for any groups of lenders or
businesses. Some Members of Congress and observers were concerned that some businesses and
nonprofit organizations may not be able to access a lender that would make a PPP loan for them,
and that smaller lenders may have faced barriers to participating in the program.107 Partially in
response to those concerns, Congress included set-asides for portions of PPP lending in later
expansions of the program.
The PPP Enhancement Act required that SBA approve at least $60 billion in PPP loans from
certain lenders. The law required SBA to approve at least $30 billion in PPP loans from mid-size
banks and credit unions (with assets between $10 billion and $50 billion). The law also required
SBA to approve an additional at least $30 billion in PPP loans from Community Development
Financial Institutions (CDFIs), and small banks and credit unions (with assets below $10
billion).108
The Economic Aid Act required that SBA approve at least $15 billion in PPP loans from CDFIs
and at least $15 billion from small banks, credit unions, and Farm Credit System lenders (with
assets below $10 billion). The law also included set-asides for particular types of borrowers:
• at least $15 billion in first-draw PPP loans for borrowers that either (1) had 10
employees or fewer, or (2) received a loan of $250,000 or less and were located
in a low- to moderate-income neighborhood;

107 For example, see U.S. Senate Committee on Small Business and Entrepreneurship, “Cardin Statement on Passage of
the Interim COVID-19 Relief Package,” press release, April 21, 2020, https://www.sbc.senate.gov/public/index.cfm/
pressreleases?ID=683E2D75-7B8F-411B-B5F3-56EF7D400325; and U.S. Government Accountability Office,
“Paycheck Protection Program: Program Changes Increased Lending to the Smallest Businesses and in Underserved
Locations,” GAO-21-601, September 21, 2021, https://www.gao.gov/products/gao-21-601.
108 For more information on CDFIs, see CRS Report R42769, Federal Grants-in-Aid Administration: A Primer, by
Natalie Keegan.
Congressional Research Service

27

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

• at least $35 billion for borrowers who had not previously received a PPP loan;
and
• at least $25 billion in second-draw PPP loans for borrowers that either (1) had 10
employees or fewer, or (2) received a loan of $250,000 or less and were located
in a low- to moderate-income neighborhood.
ARPA did not include any explicit set-asides for lenders or borrowers. However, the law
appropriated $7.3 billion to PPP for the costs of carrying out that section (Section 5001) of ARPA,
thereby effectively setting aside the whole amount for the entities to which ARPA expanded PPP
eligibility. SBA could also use any remaining funds from amounts previously appropriated to
approve loans to newly eligible borrowers.
PPP Lenders
As mentioned, the CARES Act made PPP part of SBA’s 7(a) program, so all 7(a) lenders were
automatically approved to make PPP loans. The CARES Act also gave SBA and Treasury
authority to approve additional lenders to participate in PPP.109 Under SBA’s first interim final
rule on PPP, the following types of lenders were eligible to make PPP loans:
• federally insured depository institutions and credit unions;
• Farm Credit System institutions (other than the Federal Agricultural Mortgage
Corporation) that met Bank Secrecy Act requirements; and
• other depository or non-depository institutions that had originated, maintained,
and serviced more than $50 million in business or commercial loans during a
consecutive 12-month period in the previous 36 months, or that were service
providers to an insured depository institution, and that met Bank Secrecy Act
requirements.110
SBA later amended those regulations to expand the number of lenders eligible to participate in
PPP to “ensure broad and diverse lender participation.”111 Under the amended regulations, non-
bank lenders or non-insured depository institutions were eligible to participate if they met the $50
million volume requirement over a recent 12-month period for any of the three functions:
originating, maintaining, or servicing loans (the original interim final rule required all three).
Additionally, SBA amended the regulations to allow CDFIs that were not federally insured banks
or credit unions (CDFIs that were federally insured banks or credit unions could already
participate), and minority-, women-, or veteran-owned non-bank lenders to participate if they
originated, maintained, or serviced (any of the three) at least $10 million in business or
commercial loans (instead of $50 million) during a recent 12-month period.
Most PPP lenders were not recently active in other SBA programs, although the exact number of
new lenders is unclear. A total of 5,467 lenders participated in PPP in 2020, 2021, or both

109 15 U.S.C. §636(a)(36)(F)(iii).
110 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program,” 85 Federal Register 20811,
April 15, 2020, https://www.federalregister.gov/d/2020-07672. Lenders meeting these stipulations were still ineligible
to make PPP loans if they were in troubled condition or subject to a formal enforcement action from their federal
regulator.
111 SBA, “Business Loan Program Temporary Changes; Paycheck Protection Program—Requirements—Corporate
Groups and Non-Bank and Non-Insured Depository Institution Lenders,” 85 Federal Register 26324, May 4, 2020,
https://www.federalregister.gov/d/2020-09576.
Congressional Research Service

28

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

years.112 For comparison with other SBA lending programs, in FY2019, 1,532 lenders made at
least one 7(a) loan,113 185 Certified Development Companies (CDCs) made at least one 504
loan,114 and 144 Microloan Intermediaries made at least one microloan.115

112 SBA, Paycheck Protection Program (PPP) Report: Approvals Through 05/31/2021, May 31, 2021, p. 2,
https://www.sba.gov/sites/sbagov/files/2021-06/PPP_Report_Public_210531-508.pdf.
113 For more information on the 7(a) program, see CRS Report R41146, Small Business Administration 7(a) Loan
Guaranty Program, by Robert Jay Dilger and Anthony A. Cilluffo.
114 For more information on the 504 program, see CRS Report R41184, Small Business Administration 504/CDC Loan
Guaranty Program, by Robert Jay Dilger and Anthony A. Cilluffo.
115 For more information on the Microloan program, see CRS Report R41057, Small Business Administration
Microloan Program, by Robert Jay Dilger and Anthony A. Cilluffo.
Congressional Research Service

29

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

Appendix B. SBA COVID Economic Injury Disaster
Loan (EIDL)
Eligibility
Although the SBA EIDL program was already in existence, Congress took a number of steps to
make the loans available in response to the pandemic and streamline the application process to
meet EIDL demand.
Disaster Definition
A declaration must be issued under the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (P.L. 93-288, as amended; 42 U.S.C. §§5121 et seq.) or the Small Business Act of
1953 (P.L. 83-163, as amended; 15 U.S.C. §§631 et seq.) to make SBA EIDL available. There
was concern, however, that a pandemic would not meet the Small Business Act’s definition of a
disaster:
a sudden event which causes severe damage including, but not limited to, floods,
hurricanes, tornadoes, earthquakes, fires, explosions, volcanoes, windstorms, landslides or
mudslides, tidal waves, commercial fishery failures or fishery resource disasters ... ocean
conditions resulting in the closure of customary fishing waters, riots, civil disorders or other
catastrophes, except it does not include economic dislocations.116
As mentioned, Title II of P.L. 116-123 (the Coronavirus Preparedness and Response
Supplemental Appropriations Act, 2020), deemed COVID-19 a disaster under Section 7(b)(2)(D)
of the Small Business Act, making economic injury from the pandemic an eligible expense under
SBA EIDL.
Streamlined Loan Processing
In anticipation of increased demand for COVID EIDLs, the CARES Act addressed anticipated
delays in loan application processing by authorizing the SBA Administrator, in response to
economic injuries caused by COVID-19, to:
• waive the “credit not available elsewhere” requirement;
• approve an applicant based solely on their credit score; 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).
The CARES Act also prohibited SBA from obtaining Internal Revenue Service tax records and
required SBA to accept an applicant’s self-certification to determine eligibility to help streamline
the application process.
The CARES Act expanded eligibility for COVID EIDL to include businesses of not more than
500 employees, 501(c)(3) nonprofit organizations, 501(c)(19) veterans’ organizations, or tribal
business that were not currently eligible that had not more than 500 employees or, if applicable,
the SBA’s size standard in number of employees for the industry in which they operate. Sole
proprietors, independent contractors, and eligible self-employed individuals were also eligible.

116 15 U.S.C. §632(k).
Congressional Research Service

30

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

Eligible Uses and Loan Amount Limits
COVID EIDL borrowers could only use loan proceeds for working capital necessary to alleviate
the specific economic injury and to resume normal operations.117 The maximum loan amount for
COVID EIDLs fluctuated over the course of the program due to budgetary concerns. Some key
maximum limit changes include:
• on May 3, 2020, SBA reduced the maximum loan amount for a COVID EIDL to
$150,000;
• on March 24, 2021, SBA increased the maximum loan amount from $150,000 to
$500,000 (effective April 6, 2021);118 and
• on September 9, 2021, SBA increased the maximum loan amount from $500,000
to $2 million (effective October 8, 2021).119
Funding
The CARES Act appropriated $562 million for COVID EIDLs. The law also appropriated $10
billion for Emergency EIDL Advances. The PPP Enhancement Act appropriated a further $50
billion for COVID EIDLs and $10 billion for Emergency EIDL Advances. The Economic Aid Act
appropriated $20 billion for Targeted EIDL Advances. ARPA appropriated $10 billion for
Targeted EIDL Advances, $5 billion for Supplemental Targeted EIDL Advances, and $460
million for COVID EIDL.
COVID EIDL Demand
Demand for COVID EIDL was significant. SBA received 27.7 million applications for COVID
EIDLs by December 31, 2021.120 On January 1, 2022, SBA stopped accepting applications for
new COVID EIDLs or advances. As of May 6, 2022, SBA’s COVID EIDL funds were exhausted
and SBA stopped accepting COVID EIDL loan increase requests or requests for reconsideration.
SBA closed the COVID EIDL application portal on May 16, 2022.
At the time of this writing, SBA had approved over 3.9 million COVID EIDLs totaling more than
$378.4 billion; disbursed 5,781,390 EIDL advances totaling $20 billion; disbursed 601,058
Targeted EIDL Advances totaling more than $5.2 billion; and disbursed 453,417 Supplemental
Targeted EIDL Advances totaling more than $2.3 billion.121

117 13 C.F.R. §123.105(2).
118 SBA, “SBA to Increase Lending Limit for COVID-19 Economic Injury Disaster Loans,” March 24, 2021,
https://www.sba.gov/article/2021/mar/24/sba-increase-lending-limit-covid-19-economic-injury-disaster-loans.
119 SBA, “SBA Administrator Guzman Enhances COVID Economic Injury Disaster Loan Program to Aid Small
Businesses Facing Challenges from Delta Variant,” September 9, 2021, 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 Announces Key Policy Change: Existing COVID Economic Injury Disaster Loan Program
Borrowers to Receive an Additional Deferment,” March 15, 2022, https://www.sba.gov/article/2022/mar/15/sba-
administrator-guzman-announces-key-policy-change-existing-covid-economic-injury-disaster-loan.
120 FY2023 Management Challenges, p. 28.
121 SBA, “Disaster Assistance Update Nationwide COVID EIDL, Targeted EIDL Advances, Supplemental Targeted
Advances, April 28, 2022 (figures as of April 27, 2022),” https://www.sba.gov/document/report-covid-19-eidl-reports-
2022.
Congressional Research Service

31

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

Appendix C. Section 1112 Payments for Debt Relief
Eligibility
For the CARES Act version of Section 1112 payments, SBA automatically remitted the required
monthly payment, including principal, interest, and any associated fees, to the lender on the
behalf of borrowers. Loans made through the following SBA business loan programs were
eligible:
• 7(a) loans, including loans made through the Community Advantage Pilot
Program, and excluding PPP loans;
• 504 program loans, only including the CDC portion; and
• Microloans made to a small business by a Microloan Intermediary.
All SBA business loans in regular servicing status were eligible for six months of payments from
SBA in the first round of Section 1112 payments. Loans in repayment and not on deferral were
eligible for six months of payments, starting with the next payment due after the CARES Act’s
enactment. Loans in repayment but in deferral were eligible for six months of payments, starting
with the next payment due after the deferral ended. Loans made after the CARES Act was
enacted (March 27, 2020) but before six months after that date (September 27, 2020) were
eligible for six months of payments, beginning with the first payment due on that loan.
The Economic Aid Act authorized a second round of Section 1112 payments. The law provided
different durations of payments based on the characteristics of the business and loan. All loans
were eligible for at least three months of additional payments, with the longest duration being
eight months of additional payments. As explained further below, SBA determined Congress did
not provide enough appropriations to make all of the payments and used the authority granted in
the Economic Aid Act to modify the prioritization to fit the funds available.
Eligible Uses
Section 1112 payments could only be used for payments that SBA automatically remitted to
lenders on behalf of borrowers for SBA business loans.
Funding
The CARES Act appropriated $17 billion for Section 1112 payments. The Economic Aid Act
made two changes to Section 1112 appropriations. First, it rescinded $146.5 billion from the
appropriations account shared by PPP and Section 1112.122 Second, it appropriated $3.5 billion
for additional Section 1112 payments.
Prioritization of Payments
Congress authorized different amounts of second round Section 1112 payments based on the
characteristics of the loan and the borrower. Congress appropriated $3.5 billion for the purpose of
making the Section 1112 payments authorized by the Economic Aid Act (first round payments for
expanded eligibility borrowers and all second round payments). Additionally, if SBA determined
that the $3.5 billion Congress appropriated for the additional Section 1112 payments was not

122 Congress did not allocate the rescission between funds for PPP and Section 1112 payments. While the funds in that
account were used for both programs, it is likely that the rescission mostly affected PPP appropriations.
Congressional Research Service

32

link to page 38 link to page 38 link to page 39 link to page 39 SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

sufficient, Congress required SBA to “develop a plan to proportionally reduce the number of
months [of payments], while ensuring all [appropriations] are fully expended.”123 SBA
determined that the appropriations were not sufficient to make all the Section 1112 payments
Congress authorized, and created such a prioritization plan.124
Table C-1 compares the Section 1112 payments authorized by Congress with SBA’s prioritization
plan. Congress authorized a minimum of three additional monthly payments and a maximum of
eight additional monthly payments for the second round Section 1112 payments. SBA’s
prioritization plan made a minimum of two additional monthly payments and a maximum of five
additional monthly payments. Congress also expanded eligibility to six months of first round
Section 1112 payments for loans that were approved on or before September 27, 2020, but fully
disbursed after that date. SBA made three months of first round Section 1112 payments for these
expanded eligibility loans.
Table C-1. Prioritization of Section 1112 Debt Relief Payments
First Round Plus Second Round Payments, In Months
Authorized in
the Economic
SBA’s
Characteristics of Loan and Borrower
Aid Act
Prioritization Plan
Loans approved before March 27, 2020, and not on deferment
7(a) and 504 loans generally
6 + 3
6 + 2
7(a) and 504 loans to certain industriesa
6 + 8
6 + 5
Community Advantage loans and Microloans
6 + 8
6 + 5
Loans approved before March 27, 2020 and on determent
7(a) and 504 loans generally
6 + 3
6 + 2
7(a) and 504 loans to certain industries
6 + 8
6 + 5
Community Advance loans and Microloans
6 + 8
6 + 5
All loans approved from March 27, 2020 to September 27, 2020b
6 + 0
6 + 0 or 3 + 0c
All loans approved from September 28, 2020 to January 31, 2021
0 + 0
0 + 0
All loans approved from February 1, 2021 to September 30, 2021
0 + 6
0 + 3
Source: Table created by CRS using information from Section 325 of the Economic Aid Act and SBA,
“Adjustment to the 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, https://www.sba.gov/sites/
sbagov/files/2021-02/Procedural%20Notice%205000-20095%20Adjustment%20to%20Number%20of%20
Months%20for%20Section%201112%20Payments-508.pdf.
a. The Economic Aid Act authorized additional monthly payments to businesses in certain industries, identified
by a sequence of numbers at the beginning of their 2017 North American Industry Classification System
(NAICS) industry code: 61 educational services; 71 arts, entertainment, and recreation; 72 accommodation
and food services; 213 support activities for mining; 315 apparel manufacturing; 448 clothing and clothing
accessories stores; 451 sporting goods, hobby, musical instrument, and book stores; 481 air transportation;
485 transit and ground passenger transportation; 487 scenic and sightseeing transportation; 511 publishing

123 Section 325 of the Economic Aid Act.
124 SBA, “Adjustment to the 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, https://www.sba.gov/sites/
sbagov/files/2021-02/Procedural%20Notice%205000-20095%20Adjustment%20to%20Number%20of%20Months%20
for%20Section%201112%20Payments-508.pdf.
Congressional Research Service

33

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

industries (except internet); 512 motion picture and sound recording industries; 515 broadcasting (except
internet); 532 rental and leasing services; and 812 personal and laundry services.
b. Under the CARES Act, SBA made Round 1 Section 1112 payments for all loans with a final disbursement on
or before September 27, 2020. The Economic Aid Act amended the CARES Act to authorize Round 1
Section 1112 payments to all loans approved on or before September 27, 2020. This expanded the Round 1
Section 1112 payments to any loans that were approved but were not yet ful y disbursed on or before
September 27, 2020.
c. SBA’s plan allowed for the ful 6 months of Round 1 Section 1112 payments for all loans that were ful y
disbursed on or before September 27, 2020. For loans that were approved on or before September 27,
2020, but had not been ful y disbursed by that date (loans that gained eligibility for Round 1 Section 1112
payments in P.L. 116-260), SBA only made 3 months of Round 1 Section 1112 payments.
Congressional Research Service

34

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

Appendix D. Shuttered Venue Operators Grant
(SVOG) Program
Eligibility
The SBA’s ODA administered the SVOG program. Awards were available to a range of
businesses, including:
• live venue operators or promoters;
• theatrical producers;
• live performing arts organization operators;
• “relevant” museum operators, including zoos and aquariums;
• motion picture theater operators;
• talent representatives; and
• subsidiaries of eligible entities that also met the eligibility requirements.125
SVOG applicants must have been in operation as of February 29, 2020, and experienced a 25% or
more reduction in gross earned revenue during at least one quarter of 2020 as compared to the
corresponding quarter of 2019. Entities that owned or operated otherwise eligible businesses in
more than one country, owned or operated otherwise eligible businesses in more than 10 states,
and had more than 500 employees as of February 29, 2020, were ineligible for awards.126
SVOG awards were for up to $10 million. The Economic Aid Act set aside $2 billion for
employers with 50 or fewer FTE employees. The law also authorized SBA to offer supplemental
SVOG awards in certain cases, worth up to 50% of the initial award. The law also authorized
SBA to distribute SVOG awards during three priority periods:
• in the first period, which lasted for the first 14 days after SBA began accepting
applications, only applicants with at least a 90% revenue loss from April 1, 2020,
to December 31, 2020, compared with the same period in the previous year,
could receive awards;
• in the second period, which lasted for the next 14 days, only applicants with at
least a 70% revenue loss under the same parameters as the first priority period
could receive awards;
• in the third period, SVOG initial grants were open to all applicants (supplemental
grants could not be awarded until all applications for initial grants that were
submitted within the program’s first 60 days were processed).
Eligible Uses
The Economic Aid Act mandated that grant recipients could use SVOG awards on expenses
including:
• payroll costs;

125 SBA, FAQ Regarding Shuttered Venue Operators Grant (SVOG), October 20, 2021, p. 2, https://www.sba.gov/sites/
default/files/2021-10/10-20-21%20SVOG%20FAQ%20FINAL_508_final.pdf.
126 Ibid.
Congressional Research Service

35

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

• rent and scheduled mortgage payments;
• utility payments;
• scheduled debt payments;
• worker protection expenditures;
• payments to independent contractors;
• advertising;
• production transportation; and
• capital expenditures.
The Economic Aid Act contained expanded oversight requirements for SVOG. Those included
requiring SVOG recipients to keep business records for four years following receiving an award;
requiring SVOG recipients to keep other supporting documentation for three years after receiving
an award; and requiring the SBA Administrator to submit to the Senate Committee on Small
Business and Entrepreneurship and House Committee on Small Business an audit plan for SVOG.
Funding
The Economic Aid Act appropriated $15 billion to SBA to carry out SVOG. ARPA appropriated
an additional $1.25 billion to SVOG.
SVOG Demand and Implementation Delays
SVOG’s implementation had several delays. On March 19, 2021, SBA announced the SVOG
application portal would open on April 8.127 However, the application portal had technical issues
and did not accept any applications on April 8. On April 23, SBA announced the portal would
open on the next day.128 The portal ultimately opened on April 26.
In addition to delays opening the portal, SBA’s pace of distributing SVOG awards drew criticism
from some Members of Congress. For example, as of June 1—past the 28 days comprising the
first two priority periods—SBA had received 13,619 applications and approved 31 awards worth
a total of $34.2 million.129 In a June 15, 2021 letter to SBA Administrator Isabella Casillas
Guzman, 55 Senators wrote, “We urge you to immediately take steps to ensure the funds are
distributed to qualified applicants ... the SVOG program requires the award of funding to eligible
applicants who meet the simple requirements of the program.”130 In a written response to
questions from Representative Blaine Luetkemeyer, SBA Administrator Guzman wrote that, “The

127 SBA, “SBA Launches Portal to Begin Accepting Shuttered Venue Operators Grant Applications on April 8,” press
release, March 19, 2021, https://www.sba.gov/article/2021/mar/19/sba-launches-portal-begin-accepting-shuttered-
venue-operators-grant-applications-april-8.
128 SBA, “SBA to Reopen Shuttered Venue Operators Grants for Applications on April 24 at 12:30 p.m. EDT,” press
release, April 23, 2021, https://www.sba.gov/article/2021/apr/23/sba-reopen-shuttered-venue-operators-grants-
applications-april-24-1230-pm-edt.
129 SBA, Shuttered Venues Public Report, June 1, 2021, p. 2, https://www.sba.gov/sites/default/files/2021-06/
Shuttered%20Venues%20Public%20Report%20%20-%20Midday%201%20June%202021-508.pdf.
130 Letter from John Cornyn, United States Senator; Amy Klobuchar, United States Senator; and Bill Cassidy, United
States Senator, et al. to The Honorable Isabella Casillas Guzman, Administrator, Small Business Administration, June
15, 2021, https://static1.squarespace.com/static/5e91157c96fe495a4baf48f2/t/60c8d7a135a12d342fc9df9c/
1623775138394/Guzman+Letter_SVOG+Approval+Delays.pdf.
Congressional Research Service

36

link to page 42

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

SBA recognized the pace of SVOG awards did not meet the need for this emergency funding
program.”131
SBA’s review and disbursal pace increased following the June 2021 letter. For example, as of July
6, 2021 SBA had received 14,884 applications and approved 4,222 awards worth a total of $3.2
billion.132 By August 2, 2021 SBA had received 15,707 applications and approved 10,448 awards
worth a total of $8.1 billion.133 SBA opened applications for supplemental SVOG awards on
August 11.134 SBA stopped accepting all SVOG applications (initial and supplemental) on August
20, 2021. Ultimately, SBA approved 22,811 awards (including initial and supplemental grants)
and disbursed a total of nearly $14.6 billion.135
Figure D-1 presents data on SVOG initial applications and awards.
Figure D-1. SVOG Cumulative Applications and Awards

Source: SBA, various SVOG public reports. Available at SBA, SVOG Data, https://www.sba.gov/funding-
programs/loans/covid-19-relief-options/shuttered-venue-operators-grant/svog-data.
Notes: Does not include SVOG supplemental awards. SBA did not make data on the number of supplemental
applications publicly available.

131 U.S. Congress, House Committee on Small Business, An Examination of the SBA’s COVID-19 Programs, 117th
Cong., 1st sess., May 26, 2021, H.Rept. 117-15 (Washington: GPO, 2022), p. 70.
132 SBA, Shuttered Venue Operators Grant Public Report, July 6, 2021, p. 2, https://www.sba.gov/sites/default/files/
2021-07/SVOG%20Public%20Report%20-%20Midday%20July%206%202021-508.pdf.
133 SBA, Shuttered Venue Operators Grant Public Report, August 2, 2021, p. 2, https://www.sba.gov/sites/default/files/
2021-08/SVOG%20Public%20Report%20-%20Midday%20Aug%202%202021-508.pdf.
134 SBA, “SBA Announces Plan to Open Supplemental Grants for Shuttered Venue Operators Grant Applicants,” press
release, August 11, 2021, https://www.sba.gov/article/2021/aug/11/sba-announces-plan-open-supplemental-grants-
shuttered-venue-operators-grant-applicants.
135 SBA, Shuttered Venue Operators Grant Public Report, July 5, 2022, p. 2, https://www.sba.gov/sites/default/files/
2022-07/SVOG%20Public%20Report%20-%20Midday%205%20July%202022-508_0.pdf.
Congressional Research Service

37

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

Appendix E. Restaurant Revitalization Fund (RRF)
Eligibility
The SBA’s OCA administered the RRF program. As stipulated in ARPA, in addition to
restaurants, eligible applicants included:
• food stands, trucks, and carts;
• caterers;
• bars;
• bakeries;
• breweries; and
• wineries and distilleries.
Applicants may not have owned or operated more than 20 locations as of March 13, 2020, and
could not be publicly traded. The award amount was equal to the amount of COVID-19-related
revenue loss an entity experienced, as determined by formulas and up to program limits. Entities
that received SVOG awards were not eligible to receive RRF awards.
Eligible Uses
ARPA mandated that grant recipients could use RRF awards on expenses including:
• business payroll costs;
• rent and mortgage payments;
• business debt service;
• business utility payments;
• business maintenance expenses;
• construction of outdoor seating;
• business supplies (including protective equipment and cleaning materials); and
• covered supplier costs.
Funding
ARPA appropriated $28.6 billion to the RRF. ARPA required SBA to set aside $5 billion for
entities with 2019 gross receipts of $500,000 or less. Additionally, SBA set aside $4 billion for
entities with 2019 gross receipts from $500,001 to $1.5 million, and $500 million for entities with
2019 gross receipts of not more than $50,000.136
RRF Demand
SBA announced on May 5—two days after the RRF application portal opened—that it had
received over 186,000 applications.137 On May 10, SBA announced it had approved over 16,000

136 SBA, Restaurant Revitalization Funding Program, April 28, 2021, p. 15, https://www.sba.gov/document/support-
restaurant-revitalization-funding-program-guide.
137 SBA, “Administrator Isabella Casillas Guzman Announces Initial Results of Restaurant Revitalization Fund,” press
(continued...)
Congressional Research Service

38

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

applications worth over $2 billion.138 On May 12, SBA announced it had received over 147,000
applications requesting $29 billion—more than the total appropriated to the program.139 On May
18, SBA announced that businesses had until May 24 to submit their applications.140 On July 2,
SBA announced the RRF’s closure.141
In total, SBA approved 101,004 applications worth $28.6 billion.142 SBA received over 278,000
applications requesting $72.2 billion.143
Prioritization Lawsuits
ARPA required SBA to give priority to applicants owned by socially- and economically-
disadvantaged individuals, women, and veterans. The law defined “socially- and economically-
disadvantaged” through reference to the Small Business Act; under an applicable SBA regulation,
some applicants are presumed to be “socially disadvantaged” because they belong to a specified
race or ethnicity.144 ARPA directed SBA to only make awards to businesses owned by members of
those groups for the RRF’s first 21 days of operations.
Three lawsuits challenged the constitutionality of the prioritization period. The lawsuits were
successful, and federal courts ruled that SBA could not prioritize businesses owned by women or
socially- and economically-disadvantage individuals. (The courts allowed the veterans’
prioritization to stand).145
By the time the courts announced their decisions, SBA had already began taking applications.
(The RRF’s application portal opened on May 3, 2021.) According to press reports, this resulted
in the agency having to freeze pending payments to 2,965 priority applicants.146

release, May 5, 2021, https://www.sba.gov/article/2021/may/05/administrator-isabella-casillas-guzman-announces-
initial-results-restaurant-revitalization-fund.
138 SBA, “The SBA Funds 16,000 Restaurant Revitalization Fund Awards,” press release, May 10, 2021,
https://www.sba.gov/article/2021/may/10/sba-funds-16000-restaurant-revitalization-fund-awards.
139 SBA, “Recovery for the Smallest Restaurants and Bars: Administrator Guzman Announces Latest Application Data
Results for the Restaurant Revitalization Fund,” press release, May 12, 2021, https://www.sba.gov/article/2021/may/
12/recovery-smallest-restaurants-bars-administrator-guzman-announces-latest-application-data-results.
140 SBA, “Last Call: Administrator Guzman Announces Final Push for Restaurant Revitalization Fund Applications,”
press release, May 18, 2021, https://www.sba.gov/article/2021/may/18/last-call-administrator-guzman-announces-final-
push-restaurant-revitalization-fund-applications.
141 SBA, “SBA Administrator Announces Closure of Restaurant Revitalization Fund Program,” press release, July 2,
2021, https://www.sba.gov/article/2021/jul/02/sba-administrator-announces-closure-restaurant-revitalization-fund-
program.
142 SBA, Restaurant Revitalization Fund (RRF) Report, June 30, 2021, p. 2, https://www.sba.gov/document/report-
restaurant-revitalization-fund-reports.
143 SBA, “SBA Administrator Announces Closure of Restaurant Revitalization Fund Program,” press release, July 2,
2021, https://www.sba.gov/article/2021/jul/02/sba-administrator-announces-closure-restaurant-revitalization-fund-
program.
144 13 C.F.R. §124.103.
145 See CRS Legal Sidebar LSB10631, The American Rescue Plan Act: Equal Protection Challenges, by Christine J.
Back and April J. Anderson.
146 Andy Medici, “Pressure Builds on SBA to Disburse $180M in Unused Restaurant Grants,” The Business Journals,
August 11, 2022.
Congressional Research Service

39

SBA as a Vehicle for Crisis Relief: Lessons from the COVID-19 Pandemic

Author Information

Adam G. Levin, Coordinator
Bruce R. Lindsay
Analyst in Economic Development Policy
Specialist in American National Government

Anthony A. Cilluffo

Analyst in Public Finance

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in
its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or
material from a third party, you may need to obtain the permission of the copyright holder if you wish to
copy or otherwise use copyrighted material.

Congressional Research Service
R47694 · VERSION 1 · NEW
40

Download PDF

Download EPUB

Revision History

Sep. 14, 2023

HTML · PDF

Metadata

Topic areas

American Law

Economic Policy

Report Type: CRS Report

Source: CRSReports.Congress.gov

Raw Metadata: JSON