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CRS Summarizes Pending Legislation to Assist Small Businesses

In a new report on the Small Business Administration ("SBA") 7(a) Loan Guaranty Program, the Congressional Research Service ("CRS") summarized pending legislation to assist small businesses adversely affected by coronavirus ("COVID-19").

In the report, the CRS details the history and the current state of the SBA's Loan Guarantee program and "issues raised concerning the SBA’s administration of the 7(a) program, including the oversight of 7(a) lenders and the program’s lack of outcome-based performance measures."

In significant part, the CRS reviewed past legislative efforts to support small business and summarized several bills and proposals recently introduced to assist small businesses that have been impacted by the COVID-19 pandemic. The recent bills introduced include:

  • S.3519, the Small Business Debt Relief Act, which would authorize $16.8 billion in appropriations to relieve small businesses of principal, interest, and fee payments on certain SBA loans for six months.

  • S.3518, the COVID-19 RELIEF for Small Businesses Act of 2020, which would: authorize the same appropriations as S. 3519; increase loan guarantee percentages and maximum loan amounts across the SBA's various existing loan types, and waive certain loan fees; create temporary interest- and fee-free direct lending programs for eligible borrowers to pay employee payrolls, rent or utilities, and refinance up to 50% of existing debt, employee benefits, and past-due taxes; and authorize additional funds for fee reductions, loan guarantees, disaster loan administrative expenses, and disaster loan credit subsidies.

  • S.3548, the Coronavirus Aid, Relief, and Economic Security Act (“CARES ACT”), which would expand small businesses' access to funding for the "covered period" of February 15, 2020 to June 30, 2020 (any loan issued during such time, or which will be used to pay certain business expenses incurred during such time, a "covered loan"). The bill also would: increase the SBA's lending authorization from $30 billion to $349 billion during the covered period; make eligible for covered loans any business, nonprofit organization, or veterans organization of 500 or less employees; increase maximum covered loan amounts, and waive certain fees and loan requirements; provide covered loans with a 100% SBA loan guarantee to both SBA and non-SBA lenders so that they may assist small businesses in meeting payroll obligations; provide loan forgiveness for covered loan amounts used to pay certain overhead expenses; and require lenders to presume that all eligible covered loan recipients are borrowers whose operations are significantly impacted by COVID-19, and thus are eligible to receive complete deferrals on repayment for up to a year.

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