To pay for new Covid-19 vaccines, testing, and therapeutics, Congress is considering taking back some of the money it authorized last year for a small business aid program.
The Biden administration requested additional funding from Congress a few weeks ago, stating that funds are required to continue fighting Covid-19. However, lawmakers can’t agree on how to fund the request. Senate Republicans have insisted that any new funding be fully offset by repurposing funds from the previous Covid-19 relief legislation.
A bipartisan agreement reached earlier this month in the Senate would fully offset the $10 billion bill by reallocating a variety of Covid-19 relief funds that Congress had previously authorized but not yet spent. The majority of the funds were left over from programs that had already run their course. However, the agreement proposes taking $2 billion from a $10 billion small business program that has yet to be funded.
The State Small Business Credit Initiative, as it is known, gives money to states to help them create small business financing programs. Instead of providing emergency grants and loans like other Covid-19 aid programs, it’s a long-term aid program designed to help small businesses gain access to capital as the economy recovers.
The threat of a cut has put states’ plans on hold after months of planning how to best use the money. Oregon, like many other states, was ready to launch several small business financing programs as soon as the Treasury Department released the funds. If funds are cut, there could be significant delays.
He estimated that Oregon would receive more than $83 million, enough to help 1,000 businesses. However, if Congress withholds some of the funds, the state’s budget could be cut by as much as $20 million, leaving it with only enough funds to help 700 small businesses.
The State Small Business Credit Initiative was established in 2010 with the goal of assisting small businesses in their recovery from the Great Recession. President Joe Biden signed the American Rescue Plan Act into law in March 2021, reauthorizing the program and providing $10 billion in funding.
After weeks of negotiations, lawmakers left for a two-week recess without voting on the Covid-19 relief bill. Republicans demanded a vote on an immigration amendment to reinstate Title 42, a pandemic-era rule that allowed immigrants to be returned to their home countries immediately if a public health emergency existed.
The bill would use nearly $2 billion left over from the Shuttered Venues Operators Grant program, which provided funds to live music venues, theaters, and museums that were forced to close due to the Covid-19 pandemic. The application period for the program ended in August. It distributed over $14 billion in grants.
The bill would also redirect about $900 million from the Covid-19 Economic Injury Disaster Loan Advance Program, which allowed some small businesses to receive up to $15,000 in interest-free loans. According to a summary of the bill provided by Senate Democrats, the program would be left with enough money to accommodate pending loan modifications and the recently announced six-month loan payment deferment.
The Aviation Manufacturing Jobs Protection Program, which provided funding to businesses to cover up to half of their payroll costs for certain categories of employees for up to six months, would bring in more than $2.3 billion. In exchange, those companies were required to make a number of commitments, including not involuntarily furloughing or laying off employees in that group for the next six months.
The bill would also use $500 million in unspent money from the Higher Education Emergency Relief Fund. This program allowed colleges to give emergency financial aid grants to students whose lives had been disrupted by the Covid-19 pandemic. Another $1.6 billion in unspent funds previously allocated to the US Department of Agriculture will be repurposed.