The U.S. House of Representatives will vote to send an additional $310 billion to the Small Business Administration’s emergency lending program, kicking off the second run at a program that faced glitches, hurdles, problems, and public outcry in its initial rollout.
Yet that same program is so desperately needed—and oversubscribed—that it ran out of money the first time in less than two weeks.
Bottom Line
There is a tension with this program akin to what most rescue programs face—how do you kick as much money out the door as possible, as quickly as possible, while ensuring only the small businesses that truly need the money, get it? The dozens of public companies, some of which appeared to have clear pathways to more traditional financing, who received loans in the first tranche make clear the balance between those two sides wasn’t right the first time around. Officials, through public shaming and a new set of guidelines, will attempt to shift that starting Thursday.The Changes to the Program
There weren’t many. Well, there weren’t any in terms of how the program is constructed. But lawmakers did include a new set aside of $60 billion that is designed to get money to smaller lenders, lenders with connections to minority-owned small businesses, or those with limited or no bank relationships. The inclusion of Community Development Financial Institutions, which traditionally aren’t SBA lenders, in this set-aside, is specifically designed to help minority and underbanked small businesses.The Numbers
Treasury and the Small Business Administration have made a big point of the fact 74 percent of the loans approved in the first tranche was for $150,000 or less—and that’s no small thing given that made up 1.2 million loans. But flip the data a bit, and you get a better sense of the actual distribution of the money.
