Federal Stimulus

From the Senate Floor 🗣️

Excerpt: Senator Ben Cardin (Maryland)

Small Business & Entrepreneurship Committee Ranking Member

March 25, 2020

We have three new programs, three new programs to help small businesses in our community. They’ll have different titles, but every one of them provide grant help to small businesses. I’m going to repeat that. You might hear this is a loan. No, these are going to be funds that go to small businesses that do not have to be repaid. These are grant money. Why? Because a small business owner can’t incur more debt today when they had no idea how they are going to be able to survive in the future. We’ve got to provide immediate help, immediate help. It’s got to be substantial. And it’s got to be in a way that they know that they’re not encumbering their future. We’ve got to get that message out. This is going to be immediate help to help America’s small business.

One program provides $350 billion of relief to small companies under 500 employees. $350 billion. It is triggered by going to your financial institution and getting what’s known as a 7-A loan. Let me caution you. It’s going to be forgiven if you follow the rules here.

But you go to a bank, a financial institution. You do a 7-A loan, a hundred percent guaranteed by the government so the bank has no risk factor. There are no payments due for a year. Even getting into this loan, there are no obligations for cash outlays on behalf of the borrower. The fees have been waived.

So this is a cost-free opportunity to get the cash you need to keep your small business open. That’s the purpose of this new program under the small business administration.

The amount of the loan. You take your average payroll before the coronavirus was here, and you take your monthly average payroll and multiply it by 2.5. Basically, what you’re getting is two months of payroll for your workers, plus an extra — it comes out to an extra 25% of your payroll because it’s two months of that.

Now, what eligible expenses — what can you use this for? Well, you can use the two months for payroll. Pay your workers. Keep them employed. It saves you the cost of rehiring if you had to furlough or lay off workers. You can keep them employed. You can use the extra funds to cover their expenses that you have on their health care or held expenses. You can use the extra 25% for rents or mortgage payments or utility bills. So it gives you a cash to conduct your business for the next two months. It gives you the ability to keep afloat so that you’re ready to rebound when the economy rebounds.

Who is eligible? Companies under 500, but we went beyond the traditional 7-A’s eligibility. We are also allowing nonprofits to be able to get into this program so that they will also be able to stay afloat, because we know the important work that nonprofits do for our community. They are also eligible. We gave some relaxation to the 500 rule for locations that were for restaurants or hotels that have multiple locations. This is a program that’s aimed at keeping businesses open and ready, small businesses for when we get through this coronavirus. And then this amount of money that you borrowed is totally forgiven. Totally forgiven if you maintain your workforce to the pre-coronavirus level or bring back your workforce to the pre-coronavirus level during the stated period of time of this bill. So if you keep your work force, bring back your work force, the government’s going to help you maintain your ability and make sure your workers get paid and their benefits are maintained. It works very well with the other provisions that are in other parts of this bill such as the unemployment insurance benefits. Yes, if you furlough workers, can you collect unemployment benefits at basically full salary for the next four months, so that’s also available to small businesses. But we want you to also know that you can keep your employees employed, there, ready for the business to rebound, as we hope it will shortly. That’s just one program. We have other programs available.

We have a new program which is labeled as a grant, a $10 billion grant program for emergency cash availability for small businesses. There are businesses that have a hard time going to a bank and getting a commercial loan. There are many small businesses that need cash today. They can’t wait for that process to work its way through to get that check from the small business administration through one of their financial institutions. It’s going to take a little bit longer for them to be able to get that done.

So we have emergency disaster relief loans in the first supplemental. We made it clear that small businesses qualify for emergency disaster relief loans if they have been adversely impacted by the coronavirus. These are direct loans coming out of the small business administration. These are not loans that are from financial institutions. We have included that in the first supplemental. We have now — we now allow you to make that application and with that application if you need to get cash immediately, the S.B.A. can write you a check for up to $10,000. And we want that done within three days. We want that money out in days, not weeks. We hear that all the time from small businesses. We need help now… This is a need that’s out there today and will be available to small business owners.

Now, we have a third program. That’s two programs. You can get this basically two-month help from the federal government to pay your payroll and related expenses. You can get a $10,000 immediate cash advancement on that through applying for disaster relief loan and showing a need at this stage, and then there is a third program.

There are many small businesses today that have existing loans under the small business administration. These are 7-A loans or 504 loans. 7-A is the traditional loan. 504 are the larger loans. What this bill does is provide $17 billion of relief so those who had these existing loans do not need to make any payments on those loans, they’re forgiven for the next six months…

We also provide money in the minority business development centers. They are there in our community. Why? Because we have to get the message out to small businesses about these new tools, how we can access banks to get the 7-A loans that are forgiven that are actually grants. How they can apply to the small business administration for disaster relief loans and get a cash advancement. How they can get relief from the current 7-a and 504 loans. So we give money to these institutions so that these entrepreneur service groups so they can help women businesses and minority businesses get access. I must tell you, madam president, we have also put a clear intent that we expect financial institutions to make loans to all sized small businesses in all communities so that all communities can benefit from this legislation. We have increased the size of express loans under this…

And I just want to compliment the work of other working groups, particularly on the tax provisions. I was very pleased to work with Senator Wyden. The two of us worked on what’s known as a retention credit which allows companies to bring the furloughed workers back and get a credit up to 50% of that wage up to $10,000 as a tax credit in order to bring back those workers. Well, for some small businesses, that may be a better option than what I have outlined before in regards to the two and a half months of aid based on payroll. You have a choice. You can do better under retention credit. It’s a new credit. If not, use the other. Small businesses are given more flexibility…

Small Business Guidance & Loan Resources

The U.S. Small Business Association has created a page for small businesses affected by COVID-19. There are links to the Economic Injury Disaster Loan Program, guidance for running a business during the outbreak, and more.