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Senate proposes $2.3 billion cut to SSBCI
Earlier this week, legislation was introduced in the Senate that would rescind $2.3 billion from the State Small Business Credit Initiative. The purpose of the action would be to source funds for an additional $10 billion for new COVID expenses; the Senate proposal opts to reduce selected unspent funds from American Rescue Plan Act and CARES Act programs. The cut to SSBCI is targeted at states’ potential third tranches of program funds, as well as 40 percent of the overall SSBCI technical assistance funding.
The language about SSBCI would produce the following effects:
- States would lose the ability to access a third tranche of general capital funds (about $2.1 billion in total);
- States that reach their third tranche would still have access to a pool of funds for very small businesses (about $170 million) and for businesses owned by “socially- and economically-disadvantaged individuals” (about $510 million + additional incentive funds);
- The pool of technical assistance funding available to businesses through the program would be reduced from $500 million to $300 million; and,
- States would be able to increase the administrative cost rate to 5 percent across all three tranches, addressing an anticipated operational concern many states have raised during the 12 months awaiting access to first tranche of SSBCI funds.
The Senate’s proposal follows an attempt to fund $15 billion in COVID costs as part of the FY 2022 omnibus, but this was rejected in the House over concerns about using State and Local Fiscal Recovery Funds to cover the costs. Other programs proposed for cuts include the Aviation Manufacturing Jobs Protection Program, Shuttered Venue Operator Grants, and funding for the food supply chain and agriculture.
The legislation is currently stalled over an unrelated immigration debate but is expected to be picked up again in late April, when the Senate returns from a two-week recess.
Legislators are also discussing the need for additional COVID spending bills later in the spring or summer.