As Congress prepares to pass a $ 10 billion bill to boost Covid-19 that would help further vaccine production and maintain test capability, lawmakers once again plan to cut aid to small businesses to pay her.
A bipartisan Senate negotiator this week reportedly agreed on a spending deal that, if approved, would further fund the US response to the coronavirus pandemic. To partially pay for it, lawmakers are proposing cuts in funding for two vital small business assistance schemes: SVOGs and EIDLs. These programs, which offer grants and low-interest loans, respectively, support closed spaces such as concert halls and cinemas and small businesses that are suffering financially amid Covid-19 disruption.
In one overview of the agreementwhich is the full Senate is expected to vote this week, the legislators noted that they will cancel the funding for the SVOG of the Small Business Administration, with the exception of a small amount to cover pending appeals and reconsiderations. In August, the SBA launched an additional SVOG program, with $ 7.2 billion in bids for recipients who had already received an initial grant since the program’s first rerun. The first rerun of SVOG, which had $ 16.25 billion in space, began on April 26, 2021 and yielded only $ 9 billion in 11,500 spaces before sunset on August 20.
Lawmakers noted in the review that “all applications for initial and first additional awards facilitated through the program have been met.” But that’s not very true, says Michael Strickland, founder and president of Bandit Lites, a lighting design and installation company based in Knoxville, Tennessee.
While it is true that the supplement has been around for about six months – long enough for the venues to re-utilize it – businesses in the event and entertainment world have hoped that the excessive amount in SVOG, which is estimated at around $ 2.2 billion will be allocated to support a new bill called the Music Act. This bill, which was introduced in December by Senator Marsa Blackburn (R-TN) and retains bipartisan support, will help businesses and event service artists who were also swept away by the pandemic but were not eligible for the SVOG program.
“Thousands of us are behind, with huge debts from 16 months of zero income,” says Strickland. While these businesses were eligible for a forgivable loan from the Payroll Protection Program, the extent of the business holidays tended to far exceed the amount of funding for which they were eligible. In addition, many companies in this sector do not have full-time employees, which was a key factor in determining the amount of PPP loan that companies received.
As for EIDL, interest was quick, as other relief efforts from the pandemic era, such as PPP and the Restaurant Revitalization Fund, have stalled – especially since September, when the SBA raised its loan ceiling to $ 2 million. dollars, from $ 500,000. SBA EIDL loans have 30-year maturities and interest rates ranging from 2.75 percent for nonprofits to 3.75 percent for businesses.
Lawmakers note that the proposed abolition of the US Targeted EIDL Advance unallocated funding still leaves enough time to cover pending loan modifications and the recently announced six-month deferral of loan payments. Approved on March 11, 2021, the $ 1.9 trillion rescue plan approved $ 15 billion in reimbursed funds for disaster-targeted advance disaster loans (EIDLs), which at the time were open to $ 10,000 in grants. in small, low-income communities that have been hit hardest by the pandemic.
But there is a very big “but”. The unallocated funding for this program has already been utilized.
The infrastructure bill, passed in August, calls for $ 38 billion in unallocated funding, originally earmarked for small business aid programs. That includes $ 17.6 billion from the EIDL program, $ 13.5 billion from the Targeted EIDL Advance, $ 4.7 billion from the PPP, and $ 1.4 billion from the Financial Stabilization Program. Another $ 992 million was raised from the SBA’s corporate loan program.
While no proper business owner will stand in the way of additional funding for Covid testing and vaccination, which inevitably helps businesses keep employees healthy and insurance costs low, the mechanism for funding this additional assistance seems, at least, defective. It should be noted that previous negotiations on this new aid package for Covid included the utilization of unused aid provided to States. It is unclear whether redirecting these funds could be a better way than eliminating small business financing. What is clear: The tests are important, the pandemic is not over and businesses still need help.