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Bipartisan bill aims to help smallest businesses weather the coronavirus crisis

Bipartisan bill aims to help smallest businesses weather the coronavirus crisis
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As the nation's smallest businesses struggle to survive the coronavirus crisis, a bipartisan group of lawmakers wants to throw them a special lifeline.

The lawmakers, led by Rep. Dan KildeeDaniel (Dan) Timothy KildeeLawmakers fear voter backlash over failure to reach COVID-19 relief deal Democrats set to hold out for big police reform More than 100 Democrats press Trump to extend jobless benefits MORE (D-Mich.), will introduce legislation Friday providing $50 billion to the smallest small businesses nationwide, which have strained to compete with larger firms for emergency aid through existing federal programs.

While Congress has already allocated more than $650 billion for the Paycheck Protection Program (PPP), which is designed to provide easy-access loans to the hardest hit businesses, the smallest shops in the country have had trouble participating amid the mad rush to access the benefits.

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The new legislation aims to plug those gaps, adopting a new distribution chain and tighter eligibility guidelines targeting only the smallest businesses — places like coffee houses, bars and barber shops that "are kind of like the fabric of a community," Kildee said, "but don't ever get to the front of the line no matter how quickly that line is moving."

"It's businesses that are outside the traditional banking sector and don't have traditional banking relationships," Kildee said Thursday by phone. "What we're seeing is that the PPP program just doesn't necessarily get to that cohort of the very small businesses."

The bill has attracted support from across the aisle: Republican Reps. Fred UptonFrederick (Fred) Stephen UptonWarren, Porter to headline progressive fundraiser supporting seven swing state candidates Preventing next pandemic requires new bill's global solutions Hillicon Valley: Judge's ruling creates fresh hurdle for TikTok | House passes bills to secure energy sector against cyberattacks | Biden campaign urges Facebook to remove Trump posts spreading 'falsehoods' MORE (Mich.) and Brian FitzpatrickBrian K. FitzpatrickLawmakers urge IRS to get stimulus payments to domestic violence survivors Hopes for DC, Puerto Rico statehood rise Florida Democrat introduces bill to recognize Puerto Rico statehood referendum MORE (Pa.) are both on board, as is Rep. Dwight EvansDwight (Dewey) EvansWill the next coronavirus relief package leave essential workers behind? Bipartisan GROCER Act would give tax break to frontline workers Bipartisan bill aims to help smallest businesses weather the coronavirus crisis MORE (D-Pa.). A Senate companion bill, sponsored by Sens. Steve DainesSteven (Steve) David DainesPower players play chess match on COVID-19 aid Democrats seek to block appeal of court ruling ousting Pendley, BLM land plans Climate change — Trump's golden opportunity MORE (R-Mont.) and Cory BookerCory Anthony BookerDemocratic senators unveil bill to ban discrimination in financial services industry Obama endorses Espy in Mississippi Senate race Durbin signals he isn't interested in chairing Judiciary Committee MORE (D-N.J.), is also on deck.

The problems plaguing the PPP became apparent almost immediately after Congress created the program, through the CARES Act, in late March.

Within two weeks, the $349 billion allotment was virtually gone, and critics howled that hundreds of publicly traded businesses — companies with access to other streams of capital — consumed millions of dollars aimed at helping "small businesses." (Under public pressure, some of those companies have returned the loans).

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In addition, the Small Business Administration (SBA), which is overseeing the PPP, neglected to provide guidance to commercial lenders directing them to prioritize rural and underserved communities, as dictated by the law, according to a recent report from the SBA's inspector general.

A more recent coronavirus relief bill, adopted late last month, provided an additional $310 billion for PPP loans. As part of the package, Democrats insisted on tweaking the program's guidelines to ensure that smaller businesses can participate, particularly those owned by women, veterans, people of color and other vulnerable groups.

Yet the groups representing those businesses say their members, who often have little credit and no relationship with commercial lenders, are still falling through the cracks.

"[The law] said that the communities that were most affected and impacted would be those that would be prioritized," said Ron Busby, president of the U.S. Black Chambers. "That's black and brown communities. And that has not been the case."

The new proposal veers from the PPP in at least two significant ways.

First, while the PPP loans have been funneled through banks, and then the SBA, the newly proposed funding would sidestep commercial lenders, delivering aid from state and local governments through community development funds, which are on the front lines of the relief effort.

"These are funds that are already set up, but they're operating with locally derived resources that are going to dry up fast," Kildee said.

Second, the new funds would cater only to the smallest businesses: those with 20 employees or fewer, with an exception for high-poverty communities, where the cap is raised to 50. Both figures are a sharp reduction of the limits governing the PPP, which provides loans to companies with up to 500 employees.

"We know that the PPP program is only covering a fraction of the businesses that could benefit," Kildee said. "It's just increasingly clear that we need one more piece here."

Whether the proposal gains steam on Capitol Hill remains an open question.

House Democrats will vote Friday to approve a massive, $3 trillion coronavirus relief package, providing a new infusion of funding to tackle the health and economic fallout of the deadly pandemic. The package includes no new funding for the PPP — which has more than $100 billion remaining in its coffers, according to the SBA's tally — but it tweaks the program's rules yet again to encourage more lending to smaller businesses.

GOP leaders in the Senate, however, have shown no interest in moving another round of emergency aid quickly, likely pushing the adoption of any more funding into June.

Kildee predicted that public pressure on Senate Republicans will ultimately force them to act. And he'll be ready when they do.

"Our view is, unfortunately, this is going to be going on for awhile," he said. "So the next train leaving the station we want to try to get this on."

On Friday, the proposal won the endorsement of almost 100 mayors from around the country. 

Updated 3:40 p.m.