Sen. Chris Coons, D-Delaware, who serves as ranking member of the Financial Services and General Government Appropriations Subcommittee and sits on the Small Business and Entrepreneurship Committee, released a statement May 26 on the success of the small business loan relief program that originated from his legislation, the Small Business Debt Relief Act.
The program, created as part of the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, provided $17 billion that the Small Business Administration is required to use to pay the principal and interest on each of the 320,000 pre-existing SBA-backed loans in the U.S., as well as all conventional SBA loans made in the next six months. According to the SBA, 263,192 small businesses were enrolled in the program in April, and at least $1.032 billion in aid has been delivered in the form of loan relief. Thousands of other businesses have reportedly received relief from their lenders, who are expected to begin receiving reimbursement from the SBA this month.
“We need to do everything we can to ensure small businesses can reopen their doors after the COVID-19 pandemic,” said Coons. “The Paycheck Protection Program has delivered critical assistance, but there are hundreds of thousands of vulnerable small businesses across the United States that need more help than the PPP can provide. That’s why I worked to secure a provision in the CARES Act to relieve small businesses of the significant financial burden of their pre-existing SBA-backed loans. The good news is that this program is working. This program is successfully targeting the businesses that are bearing the brunt of this pandemic — minority- and women-owned businesses and locally owned restaurants, hotels and daycares — that need help from the federal government the most. I’m proud that this program is delivering for business owners up and down the First State and across the U.S.”
Coons’ Small Business Debt Relief Act, which passed as part of the CARES Act, assists borrowers in three major SBA lending programs:
— The 7(a) Loan Guarantee Program consists of $95 billion of outstanding loans. The two industries with the largest share of that volume are restaurants and hotels, which are among the hardest-hit by COVID-19. Childcare centers, dental practices and medical practices also rely heavily on the program.
— The 504 Certified Development Company loan guarantee program provides long-term fixed rate financing for major fixed assets, such as land, buildings, equipment and machinery and microloan programs. The total of outstanding 504 loans is $26 billion.
— The Microloan program provides loans of up to $50,000 to small businesses and nonprofit childcare centers, via nonprofit intermediary lenders. The total of outstanding microloans is more than $560 million.