This article first appeared on the Business Journals’ website.
A $25 billion proposal recently approved by the U.S. House Small Business Committee would boost a number of Small Business Administration grant and lending programs.
The package will be included in the roughly $3.5 trillion “Build Back Better” legislation crafted by Democrats in both chambers and designed to be passed via a process called reconciliation, which requires only bare majorities in both chambers of Congress.
One of the biggest line items included in the House Small Business Committee legislation is $9.5 billion to create a program to provide “patient capital” to underserved markets and critical industries such as child care, manufacturing and infrastructure to be titled the Venture Small Business investment Companies program.
The legislation also includes $4.465 billion over a 10-year period to fund a new direct loan product under the SBA’s current 7(a) lending program, which currently uses a network of banks to make loans that are then guaranteed by the SBA.
“Small businesses are the foundation of our economy and ultimately the key to our nation making a full economic recovery,” said Committee Chairwoman Rep. Nydia Velázquez, D-N.Y., in a press release Thursday announcing the passage of the legislation out of committee. “The small business policies that we advanced today represent a generational investment in America’s entrepreneurs and will help businesses recover from Covid now and prosper in the future.
- $35 million in funding for veteran federal procurement entrepreneurship training
- $1 billion in funding for an uplift accelerator program and business development academy at Historically Black Colleges and Universities (HBCUs) and Minority Serving Institutions (MSIs) for underrepresented small businesses
- $1 billion to establish a national network of business incubators
- $20 million to enhance the SBA’s Office of Native American Affairs
- $600 million to enhance, improve, and expand the SBA’s Community Advantage program
- $500 million to fund a pilot program for eligible cooperatives and employee-owned businesses to receive SBA loan products without the requirement of a personal or entity guarantee
- $2.746 billion to establish a direct lending subprogram under the 504/CDC lending program to allow community development corporations to make loans to small contractors, small manufacturers, and small businesses in underrepresented markets
- $100 million to invest in entrepreneurial training initiatives for the formerly incarcerated
It is ultimately unclear how much — and which proposals — will make it into the Democratic reconciliation package and if that package will ultimately pass Congress. Democrats have no room for error in the Senate, and Sen. Joe Manchin, D-W.V., has issued a laundry list of demands to win his support for what could be a much smaller version of the legislation.
Ranking member Rep. Blaine Luetkemeyer, R-Mo., called the hearing to pass the legislation a “shame and a disgrace” and highlighted a number of amendments Republicans sought to add to the legislation, which were shot down.
“At a time when small businesses are working tirelessly to get back on their feet and serve their communities, Democrats are pushing through billions of dollars in reckless spending and leaving Main Street U.S.A. with their bill. It is our duty on this committee to provide much-needed relief to struggling small-business owners in the most responsible, efficient way possible,” Luetkemeyer said.
Sen. Ben Cardin, D-Md., chairman of the Senate Small Business Committee, said in a statement Thursday that the overall reconciliation bill was a “once-in-a-generation” opportunity to create jobs and rebuild the country.
“This budget will invest $25 billion in American small businesses in the next 10 years and give them the resources they need to participate in the rebuilding of our nation’s infrastructure,” Cardin said. “I am looking forward to working with my colleagues over the next several weeks toward final passage of the budget, as well as the bipartisan Infrastructure Investment and Jobs Act.”
The Infrastructure Investment and Jobs Act, passed by the Senate on a bipartisan basis and with roughly $1 trillion in projects would be paid for in part by cutting funding for existing SBA Covid-19 small business grant and lending programs. The cuts come in the form of “rescissions,” which is when Congress takes back unused funding from a federal agency or program, and which were reviewed by The Business Journals. These rescissions include cutting $13.5 billion from the SBA’s Economic Injury Disaster Loan program.
Meanwhile the SBA is officially raising the cap on its Economic Injury Disaster Loan program to $2 million, the agency announced Thursday. The SBA had quietly put out a new interim final rule effective September 8 that included a variety of other changes to the EIDL, and that the SBA hoped would spur more businesses to turn to the program.