As the year comes to a close, Congress continues to negotiate legislation to provide much-needed COVID relief but has yet to vote on a bill. The Emergency Coronavirus Relief Act of 2020, a $908 billion bipartisan proposal that appears to have momentum on Capitol Hill, has now split into two bills: $748 billion for small business relief, unemployment insurance, education, and vaccine distribution and a separate $160 billion bill that contains state and local funding and addresses employer liability issues.
The $748 billion contains provisions to support CDFIs and MDIs based on Senator Mark Warner’s (D-VA) Jobs and Neighborhood Investment Act legislation introduced this past summer. OFN is especially pleased to see $12 billion for CDFIs in the relief bill — including $1 billion in emergency CDFI Fund grant dollars and another $1 billion targeted to minority lending institutions.
The proposal also includes another round of funding for the Paycheck Protection Program (PPP). OFN is pleased to see the bill include many of our PPP recommendations put forth in a December 10 Senate Small Business Committee hearing: set-asides for small businesses with ten or fewer employees and for loans made by CDFIs and other small community lenders; streamlined forgiveness for PPP loans of $150,000 or less; second draw loans for certain businesses, addressing the tax deductibility of PPP loans and repealing the PPP forgiveness reduction for businesses that received Economic Injury Disaster Loan advances.
The bill also includes an extension of the Section 1112 CARES Act payments of principal, interest, and associated fees on qualifying Small Business Administration (SBA) 7(a) loans, 504 loan, and microloans.
The bipartisan compromise legislation is promising but the path forward is unclear. It is expected that COVID relief will be attached to whatever year-end spending bill is considered this week but there is no guarantee. Congress has until December 18 to come to an agreement on government spending for FY2021. Substantial progress has been made towards an omnibus bill to fund the government, but if there is not an agreement, Congress must pass another short-term funding measure or risk a partial government shutdown. If action is not taken this week, COVID relief would likely be put on pause until January, after President-elect Biden’s January 20 inauguration.