• House Democrats have offered $ 60 billion in aid to small businesses as part of the $ 1.9 trillion US bailout currently undergoing budget reconciliation.
  • The most important aspect of the plan for small businesses is the creation of a new $ 25 billion grant program run by the Small Business Administration, dedicated solely to helping struggling restaurants.

The context

With an unlikely bipartisan deal on President Biden’s $ 1.9 trillion coronavirus relief plan, the US bailout, Democrats have turned to the process of budget reconciliation. This powerful legislative tool would allow Senate Democrats to bypass Senate obstructions that would otherwise require 60-vote assent or simple majority unanimity (for an overview of the budget reconciliation process, see here). Twelve House committees made recommendations and drafted elements of the US $ 1.9 trillion bailout, including the Financial Services Committee chaired by President Maxine Waters and the Small Business Committee chaired by President Nydia M Velázquez.

President Velázquez released invoice text and one summary of a $ 50 billion small business bailout that would create $ 25 billion in restaurant subsidies and expand the Paycheque Protection Program (PPP) to make more associations eligible for loans. President Waters also published invoice text and one summary of a proposed $ 75 billion aid plan, but the majority of this proposal is not about financial services but rather housing (see the analysis of housing here). Only $ 10 billion of this package is for small businesses, but this $ 10 billion, in the form of a proposed state small business credit initiative, is designed to support $ 100 billion in funding. through state, territorial and tribal governments.

At a total cost of $ 60 billion, aid for financial services represents only a small fraction of the total relief plan of $ 1.9 trillion, especially compared to the 800 billion dollars the CARES law intended to support small and large companies or $ 325 billion in small business aid that Congress passed in December, including additional funding of $ 284 billion for the PPP, which remains widely available.

The Democrats’ proposal

Small Business Committee

$ 25 billion for the creation of a new Small Business Administration (SBA) grant program specifically for restaurant use, with $ 5 billion earmarked only for restaurants with less than $ 500,000 in revenue in 2019. Grants would be available to pay for a wide range of expenses, from rent to payroll to paid sick leave. Individual restaurants can get a grant of up to $ 10 million, calculated using the difference between 2020 and 2019 revenues. During the first three weeks of the program, grant applications from women-owned restaurants, ex-combatants and “socially and economically disadvantaged people[s]”will have priority.

$ 15 billion in additional funding for Economic Disaster Lending Grants (EIDL), the SBA disaster loan program. These funds must first address “potential funding gaps” and target program participants who may not have received funds before those funds then become available to other “severely affected” small businesses. In 2020, the SBA approved approximately $ 200 billion in EIDL loans nationwide.

$ 7.25 billion in additional funding for the PPP. These funds do not appear to be intended for strengthen the PPP significantly, but rather to offset the cost of expanding the scope of PPP eligibility to include nonprofit and Internet-only news publishers.

$ 1.25 billion in additional funding for the SBA Shuttered Venue Operators Grant Program, a $ 15 billion program established in December to provide assistance to operators of performance venues, including theaters, museums, zoos and aquariums.

$ 175 million for the creation of a Community Navigator Pilot Program, an educational program designed to guide business owners through the COVID-19 financial assistance options available to them.

$ 1.35 billion new administrative funds to carry out these programs.

House Financial Services Committee

10 billion dollars for the State Small Business Credit Initiative, a financing program led by local governments (state, territory and tribe) to provide up to $ 100 billion in financing to small businesses. This funding will prioritize businesses owned and controlled by socially and economically disadvantaged people, including minority-owned businesses, and will require participating local governments to submit plans explaining how they would provide these funds quickly and encourage participation. minority and community development financial institutions. It is not clear how local governments would be allocated this $ 10 billion.

The Byrd rule

The key to the modern implementation of the reconciliation process is the “Byrd Rule”, named in honor of former Senator Robert Byrd. Since budget reconciliation represents a “fast-track” process whereby measures can be passed by the Senate by a simple majority only, concerns have been expressed that reconciliation could be used to pass a “foreign issue” that does not clearly relate to the reconciliation instruction. Byrd’s rule contains six instructions as to what could constitute a foreign matter, but, in simple terms, the illegal provisions are those which have no budgetary implications, would increase the deficit for the financial year above that covered by the reconciliation measure or would cover subjects outside the competence of the submitting committee.

If any of the above violated the Byrd Rule, it would likely be an extension of PPP to cover new eligible institutions, as this change on its own would not appear to have budgetary implications. The fact that the Small Business Committee appropriates an additional $ 7.25 billion for the program may just be an added budgetary implication to get around this rule, given that there is no reason for a change. scope of the PPP requires the program to receive additional funding.


$ 60 billion is a rather modest beer in the context of the $ 1.9 trillion US bailout and previous legislative efforts. With the overall plan primarily focused on direct payments to individuals, tax credits, running hospitals, and opening schools, financial services are not a particular priority for Congress, with little attention being paid to them. the industry gets being reserved only for struggling small businesses. . The bill proposed by President Velázquez is interesting because of its focus, and in particular because it represents the first relief specifically targeting restaurants by name. This new program, however, will once again increase the burden on an already taxed SBA, a previously relatively sleepy agency highlighted by the CARES Act and already at its limits in terms of manpower, infrastructure. and experience. That the proposal circumvents the PPP is also curious. This mix of grants and assistance programs, while individually hyper-centric, multiplies an already crowded field of relief options available to small businesses, so left-wing lawmakers feel the need to put in place a educational body just to navigate those choices, rather than improving existing options to better meet identified needs.

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