With the latest round of coronavirus relief set to start going out to small businesses this week, Democrats on Capitol Hill are asking the Small Business Administration to pay extra attention to one aspect of the rescue plan that has proved especially controversial—the emergency grant advances that were supposed to be disbursed within three days.
Democrats, including House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer, sent a letter to the SBA last week asking for a speedier and more equitable process for the grant advances, noting that the latest round of funding is meant to expand access to capital for underserved businesses, minority-owned companies, and “mom and pop” shops, many of which were unable to secure loans the first time around.
Though the letter addresses several components of the new funding—including the separate Paycheck Protection Program—the lawmakers take particular aim at the SBA’s handling of emergency advances accessed through its Economic Injury Disaster Loans, which are meant to provide quick relief for suffering businesses. The advances don’t have to be paid back, even if the business is ultimately turned down for a loan.
While the federal government’s initial stimulus package allowed for grant advances of up to $10,000 to small businesses, the SBA later said it would use a scaled-down model of $1,000 per employee and $10,000 maximum. That meant significantly smaller advances for businesses with fewer than 10 employees.
Recipients who had been expecting the full amount were livid: At the time, many businesses and sole proprietors complained that the SBA had arbitrarily changed the rules.
The Democrats would seem to agree.
“[The] Trump Administration used its discretionary authority to severely limit these awards,” the lawmakers said in their letter. “That means that, currently, a sole proprietor or small family-run business with only two or three employees cannot receive the full $10,000 allowed under the statute.”
The new round of funding, signed into law last week, injects another $10 billion into the EIDL grant program. The lawmakers say that new recipients, in addition to businesses that received smaller grants with the first round, should receive full awards “regardless of their size.” They also called on the SBA to disburse the funds within three days, as is spelled out in the statute. The first round of disbursements was plagued by delays and glitches.
It’s unclear if the SBA will follow the recommendations in the letter or simply proceed with the employee-based model. Reached for comment, a spokesperson told Fast Company, “We typically don’t comment on congressional letters.”
You can read the full letter here.