Congress may reallocate unspent funds from the State Small Business Credit Initiative (SSBCI) to further COVID-19 research.
This legislation, called the COVID Supplemental Appropriations Act, comes after the Biden administration's pleas to Congress for funding to continue the fight against COVID-19. But lawmakers have disagreed on where those funds would originate. Senate Republicans have insisted that the funds be repurposed from previously passed COVID-19 program legislation, leading Democrats to find funding within programs like SSBCI.
SSBCI is an aid program meant to help small businesses gain access to capital. Created in 2010 as a result of the Great Recession, the program was reauthorized by President Biden in March 2021 and was given $10 billion in new funds. Rather than one-time grants, the SSBCI permits states to create individual financing programs to support small businesses. These include venture capital initiatives, loan guarantees, and private capital that state governments would be required to match with federal funds.
According to the Treasury Department, most of the unspent funds that Congress intends to shift from the SSBCI are already expired. Amounting to $2 billion, these extra funds originate from the Shuttered Venues Operators Grant program, which funded live music venues, museums, theaters, and other cultural establishments. The bipartisan deal to reallocate those funds, which reached the Senate in early April, also proposed that $2 billion should be reallocated from an undispersed sum of $10 billion. Experts at the Council of Development Finance Agencies say that this cut could result in as much as a $20 billion reduction in private investments through to SSBCI.
The legislation also includes the reallocation of $900 million unspent from the Economic Injury Disaster Loan (EIDL) program. Small businesses were permitted to apply for an EIDL and receive up to a $15,000 forgivable loan. After the reallocation, the EIDL would still have enough funds to accommodate pending loan modifications.