Washington, D.C. – Today, the Economic Innovation Group (EIG) welcomed a proposal led by U.S. Senate Small Business Committee Chairman Marco Rubio (R-FL) to establish a long-term lending program to aid and stabilize America’s small businesses throughout the prolonged economic disruption caused by COVID-19.
“The Recovery Sector Loan program is exactly the kind of lifeline small businesses need in the midst of this prolonged crisis,” said EIG President and CEO John Lettieri. “EIG applauds Chairman Rubio’s work in putting forward a proposal for small business relief that recognizes the need for longer-term certainty and access to capital, rather than continued stop-gap solutions. We look forward to working with leaders in Congress in the weeks ahead to build upon this much-needed legislation to ensure it has the necessary scope and resources to address the severe challenges facing America’s small business community.”
Even before the pandemic’s recent acceleration, a clear majority of small businesses did not expect to resume normal operations for at least six months, if ever. Only 14 percent expected a return to normalcy within three months. While PPP was intended for short-term relief in the early stage of the COVID-19 crisis, this latest Senate proposal reflects the need for longer-term relief, and would serve small businesses with 1 percent interest, 20-year loans that can be used to meet a variety of working capital needs. This “Recovery Sector Loan” proposal specifically targets businesses with fewer than 500 employees located in certain low-income communities, which have been disproportionately affected by the pandemic and economic downturn.
The new legislation closely reflects EIG’s recommendations for a long-term, low-interest working capital lending facility, which the organization first put forward in March in a proposal by Lettieri and Upwork chief economist Adam Ozimek. More recently, EIG led a coalition of business and industry organizations in sending a letter to Congressional leadership outlining the key principles that should guide the next phase of small business relief. The organizations wrote:
“The next phase of relief must be designed to enable them to survive a prolonged period of lower consumer demand, ongoing operational disruption, and continued uncertainty until the availability of a vaccine and effective therapeutic treatment eliminate COVID-19 as a severe public health concern. Simply extending PPP and expanding its eligibility to a wider range of severely impacted entities alone is not sufficient to address the threat to small employers throughout the country.”
Since the COVID-19 pandemic reached the U.S., EIG set out to ensure entrepreneurs and small businesses could weather this period of economic disruption and help drive economic recovery.
About the Economic Innovation Group (EIG)
The Economic Innovation Group (EIG) is an ideas laboratory and advocacy organization whose mission is to advance solutions that empower entrepreneurs and investors to forge a more dynamic American economy. Headquartered in Washington, D.C. and led by an experienced, bipartisan team, EIG convenes leading experts from the public and private sectors, develops original policy research, and works to advance creative legislative proposals that will bring new jobs, investment, and economic growth to communities across the nation. For more information, visit eig.org.
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