WASHINGTON, D.C. – U.S. Senators Cory Booker (D-NJ) and Steve Daines (R-MT) today unveiled an ambitious new $50 billion proposal to provide greater relief to small businesses left out of the Paycheck Protection Program, and urged Senate Leaders to include the bipartisan proposal in the next COVID-19 stimulus package.
In a letter sent today to Senate Majority Leader Mitch McConnell and Minority Leader Chuck Schumer, the Senators outlined their proposal, which would create a $50 billion “Small Business Local Relief Fund” to provide direct assistance to cities, counties, and states to seed and scale local relief funds targeting businesses with 20 employees or less, or businesses with 50 employees or less located in low-income neighborhoods.
The Fund would “build on what is already working across the country,” the lawmakers wrote, “with a particular focus on businesses that are very small, minority-owned, rural, our outside the mainstream banking system.”
While a number of states and local governments have stepped in to create localized relief funds for small businesses, such efforts are “massively oversubscribed,” the lawmakers wrote. For example, the New Jersey Economic Development Administration, which recently made available roughly 2,000 micro-grants to small businesses, received 10,000 applications within 75 minutes of opening its application portal.
The Senators’ proposal would seek to scale and replicate such efforts across the country.
“By capitalizing new and existing local relief funds, we can open up more channels for distribution to help small businesses make payroll, pay rent, and otherwise weather this economic storm,” they wrote in the letter.
While the Paycheck Protection Program is poised to deliver hundreds of billions of dollars in much-needed relief to struggling businesses, due to structural issues and high demand, it is less likely to serve the needs of certain small businesses that lack close ties to the banking sector – a gap the Small Business Local Relief Fund seeks to fill.
Booker and Daines plan to introduce legislation in the coming days. Rep. Dan Kildee (D-MI) will introduce the companion measure in the House of Representatives.
Since the onset of the COVID-19 crisis, Booker has made it a priority to provide small businesses, workers, and consumers with the resources and benefits they need to weather the economic storm. He was one of the first lawmakers to propose direct cash payments to millions of Americans and he was instrumental in eliminating the “waiting week” requirement for unemployment benefits, to ensure laid-off workers received assistance more quickly. He also created a 12-page small business resource guide for New Jersey business owners that has been downloaded nearly a thousand times.
Full text of the letter is available here. And included below.
April 16, 2020
|The Honorable Mitch McConnell||The Honorable Charles Schumer|
|Majority Leader||Minority Leader|
|United States Senate||United States Senate|
|Washington, D.C. 20510||Washington, D.C. 20510|
Dear Majority Leader McConnell and Minority Leader Schumer:
Through no fault of their own, businesses across the country are facing unprecedented financial strain. Without immediate action to build on the CARES Act, COVID-19 poses an existential threat to the Main Street businesses that are the life blood of our communities and the engine of our economy.
As Congress develops a future package to provide relief to American small business owners, we urge you to consider our proposal for a Small Business Local Relief Fund (The Fund). The Fund, seeded with $50 billion and operated by Treasury, would allocate funding to cities, counties and states to seed and scale local relief funds that are explicitly targeted towards very small businesses. These local entities would in turn provide support to small businesses with less than20 employees and those located in low-income communities (defined as those eligible for theNew Markets Tax Credit), with a particular focus on businesses that are very small, minority owned, rural, or outside the mainstream banking system. Flexible financing could serve as a bridge or complement to the Paycheck Protection Program and other existing federal programs.
The Fund would build on what is already working across the country. Since the outset of theCOVID-19 pandemic, a number of state and local small business relief funds have emerged to meet immediate needs. These local funds are led by a mix of local stakeholders, including city and county governments, public authorities, philanthropies, community development financial institutions (CDFIs), and business chambers of commerce. Recognizing that no community or region is alike, they offer one or more financing products, including grants and zero-interest loans—based on their own capacity and the needs of local borrowers.
But local efforts are massively oversubscribed. Chicago’s $100 million Small BusinessResiliency Loan Fund was launched on March 31st and within four days had already received applications for more than $215 million. The funds run by the Indianapolis Chamber ofCommerce and the City of Birmingham are both oversubscribed by twofold. And the New JerseyEconomic Development Administration, which made available roughly 2,000 micro-grants to small businesses, received 10,000 applications within 75 minutes of opening its application portal.
By capitalizing new and existing local relief funds, we can open up more channels for distribution to help small businesses make payroll, pay rent, and otherwise weather this economic storm.
Thank you for considering. We look forward to working with you to deliver urgent help toAmerica’s small businesses and their employees.