Cantwell Secures Critical Funding for Washington Small Businesses in COVID Stimulus Bill; Targeted Relief for Smallest Businesses in Underserved Communities

Bill includes more than $284 billion for PPP, including $35 billion set aside for smallest businesses

WASHINGTON, D.C. – Today, U.S. Senator Maria Cantwell (D-WA) highlighted the inclusion of key small business priorities she championed and pushed for in the bipartisan COVID-19 stimulus bill that passed both the Senate and the House of Representatives overwhelmingly last night.

The bill provides $284.5 billion for the Paycheck Protection Program (PPP), a new infusion of cash for a program that has been a lifeline for small businesses across the country, including 108,000 Washington state small businesses and nonprofits who received $12.5 billion in PPP loans. The bill extends PPP through March 31, 2021 and enables small businesses and nonprofits to apply for a 2nd PPP loan of up to $2 million if they have 300 or fewer employees and have experienced a revenue loss of at least 25% between comparable quarters in 2019 and 2020.

“I’m very glad… that we were able to get the PPP program that helps small businesses, so that they can continue to try to make ends meet as we continue to work our way through this pandemic,” Senator Cantwell said in a speech on the Senate floor on Monday night.

Important Changes to the Paycheck Protection Program (PPP)

  • The bill expands the types of expenses that are allowable and forgivable to include:  
    • Payment for any software, cloud computing, and other human resources and accounting needs.
    • Costs related to property damage due to public disturbances that occurred during 2020 that are not covered by insurance.
    • Expenditures to a supplier pursuant to a contract, purchase order, or order for goods in effect prior to taking out the loan that are essential to the recipient’s operations at the time at which the expenditure was made. Supplier costs of perishable goods can be made before or during the life of the loan.
    • Personal protective equipment and adaptive investments to help a loan recipient comply with federal health and safety guidelines or any equivalent State and local guidance related to COVID-19 during the period between March 1, 2020, and the end of the national emergency declaration.
    • The bill repeals the requirement for PPP borrowers to deduct from forgiveness the amount of their Economic Injury Disaster Loan (EIDL) grant.
    • The bill clarifies that federal small business COVID assistance -- PPP forgiven funds, as well as EIDL grants, loan repayment assistance, and grants for shuttered venues -- are not taxable income and that deductions are allowed for otherwise deductible expenses paid with small business assistance funds.
    • The bill allows small businesses in the restaurant and hospitality industries to receive larger awards (loan would equal 3.5 times average monthly payroll costs, rather than 2.5 times).

Economic Injury Disaster Loan (EIDL) Grants

  • The bill contains $20 billion for new EIDL grants. Small businesses and nonprofits in low-income communities are eligible to receive $10,000 grants. Small businesses and nonprofits in low-income communities that received an EIDL Advance previously are eligible to receive the full $10,000 if their award was less in the first round of grants.
  • Before the EIDL grant program ran out of money in July, more than 96,000 Washington state businesses and nonprofits received more than $308 million in grants.
  • Cantwell has consistently supported the EIDL Grant program and other grant programs that provide direct cash assistance to small businesses and nonprofits throughout this pandemic. EIDL Grants were included in the Heroes Small Business Lifeline Act, which Cantwell cosponsored. Cantwell also introduced legislation, prior to the CARES Act, along with Senator Cardin,  to provide grants of up to $50,000 to small businesses, nonprofits, and small farm cooperatives that were denied an SBA disaster loan.

Aid for Smallest Businesses (10 or Fewer Employees)

Many small businesses with 10 or fewer employees have not gotten the help they need to deal with the impacts of the coronavirus pandemic. Most of the smallest businesses are owned by women and minority entrepreneurs in underserved communities. For example, 98% of women-owned businesses and 99% of Black-owned businesses in Washington state have fewer than 10 employees, according to the U.S. Census Bureau. These smaller businesses faced challenges in getting PPP loans when applying through national banks and often received little to no assistance. The Small Business Administration (SBA) Inspector General found, in a report released on May 8, 2020, that small businesses in underserved communities had not been adequately prioritized by the SBA.

  • The bill contains $35 billion specifically for 1st and 2nd round PPP loans of up to $250,000 for small businesses with 10 or fewer employees and for small businesses in distressed areas.
  • The bill simplifies the forgiveness process for loans of up to $150,000 and revises the loan processing fee tiers to incentivize lenders to make loans to underserved and underbanked businesses.
  • The bill also gives borrowers in the microloan program an extra two years to repay their loan, provides funding to deploy $64 million more in loans, and adds flexibility for lenders to counsel and deploy capital faster and where it is needed the most to help businesses impacted by the COVID-19 pandemic.
  • Cantwell has repeatedly urged SBA Administrator Carranza and Treasury Secretary Mnuchin to prioritize helping small businesses with 10 or fewer employees. At a hearing in October, Cantwell said to Administrator Carranza: “There are a lot of women and minorities that are small businesses under ten employees, and again, how do they keep that business going if they don’t have access to capital. So I hope in this next round we’ll prioritize that.”

Community Development Financial Institutions (CDFIs)

  • In addition to the $15 billion set-aside for community lenders under the Paycheck Protection Program, this bill also contains $12 billion for community lenders like Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) to expand capital access and technical assistance to underserved communities.   
    • $9 billion is provided to create a new Emergency Capital Investment Program, which will provide low-cost, long-term capital investments to CDFIs and MDIs to expand lending and investment activity in low-income and minority communities, especially those that have been disproportionately impacted by the COVID pandemic.
    • $3 billion in emergency assistance directly to the CDFI Fund:
      • $25 million will be targeted to Native communities
      • $1.2 billion will be targeted to minority lending institutions, a new category of CDFIs that predominantly serve minority communities.
  • This funding will benefit the 30+ CDFIs that are in or around the State of Washington including Craft3, Evergreen Business Capital, and Impact Washington, as well as Washington state’s four Native CDFIs that are vital to their communities but faced challenges in participating in PPP. This includes the Northwest Native Development Fund, which serves Native-owned small businesses on and around the Colville, Spokane, and Kalispel Reservations.
  • Cantwell has pushed for increased resources to CDFIs, highlighting their role in helping small businesses access capital: “I can see in my state, where the CDFIs are basically getting out and marketing themselves and getting access to capital to, frankly, small businesses that just got turned down by banks.”
  • Cantwell led an appropriations letter earlier this year requesting support for Native American CDFIs, and she signed onto an additional letter in March requesting appropriations funding for CDFIs.

SBA Debt Relief Program

  • The bill provides $3.5 billion to renew the SBA Debt Relief Program for three months for all businesses starting February 1, 2021, and then for an additional five months for businesses with SBA microloans or community advantage loans as well as businesses in hard-hit industries like hotels or restaurants.
  • More than 8,000 small businesses in Washington state currently have traditional SBA loans and would benefit from this relief.
  • Cantwell cosponsored legislation, along with Senator Chris Coons, (D-DE) to extend this program and supported the program when it was originally included in the CARES Act.

Live Venues, Theatres, and Museums

  • The bill includes $15 billion in grants to live venues, independent movie theaters, and cultural institutions like museums. The bill includes a set aside of $2 billion for entities with no more than 50 employees.
  • Without this relief, 63% of Washington state’s independently owned clubs would have to permanently close, according to a survey by the Washington Nightlife Music Association.
  • Cantwell cosponsored the Save Our Stages Act, led by Senators John Cornyn (R-TX) and Amy Klobuchar (D-MN), which would have provided similar relief grants to live venues.
  • Cantwell spoke about the impacts that the pandemic has had on the live music industry and the urgent need for Congress to pass relief to these venues at a Commerce Committee hearing in December, saying in part: “Even in Spokane, The Pin, a staple of the music scene there, closed its doors. And independent venues like Spokane Arena, the Knitting Factory, Martin Woldson Theater at the Fox, and many others are impacted by these closures and looking for relief. So, when I hear these comments this morning and our colleagues, you’d think this would just be a slam dunk, that we could just, if nothing else, just go ahead and pass legislation. For us, it’s 38,000 Washingtonians, about a $2.4 billion music industry overall. So we don't want to see permanent closure, because it's very hard to start these again… We have got to get our colleagues to understand, we need to act now on this legislation.”

Minority Business Development Agency (MBDA)

  • The bill provides $25 million to support MBDA Centers in assisting minority businesses to prevent, prepare for and respond to coronavirus.
  • This would benefit the MBDA Business Center in Tacoma, which provides technical assistance to nearly 200 clients throughout Washington state and the Pacific Northwest from the African, Asian, Hispanic American, American Indian and Alaskan Native communities.
  • Cantwell has consistently supported the MBDA and is a cosponsor of the Minority Business Resiliency Act, which would codify the MBDA into law, create regional MBDA offices, strengthen its grant-making capacity, and increase its coordination with other agencies.

Women’s Business Centers (WBCs)

  • The bill extends the waiver, originally included in the CARES Act, that previously required WBCs to match federal funds with a proportion of non-federal funds through June 30, 2021. This will enable WBCs to continue to help female entrepreneurs respond to this pandemic.  

Tax Relief for Brewers, Vintners, Distillers

  • The bill includes the Craft Beverage Modernization and Tax Reform Act, legislation Senator Cantwell cosponsored and pushed for, to level the playing field for small craft beer brewers, cider makers, vintners, and distillers by permanently extending federal excise tax relief.

Employee Retention Tax Credit (ERTC)

  • The bill extends the ERTC that was created in the CARES Act through June 30, 2021 and enhances the tax credit by lowering the revenue loss requirement to access this credit from 50% to 20%, increasing the credit rate from 50% to 70% of employee wages and healthcare expenses, and raising the limit on per-employee creditable wages from $10,000/year to $10,000/quarter.