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Small Business Lending Continuity Act

 

May 20 @ 7:00 PM EDT - Senate Passes Small Business Lending Continuity Act

This evening, the Senate passed a standalone bill titled the Small Business Lending Continuity Act of 2020 by Unanimous Consent (UC).  NAGGL thanks the legislation’s original co-sponsors—Senators Duckworth, Rubio, Coons, Risch, Blackburn, Cardin, and Shaheen—for their leadership and for working closely with NAGGL on the legislative text to drive a solution forward in the Senate to address a very technical concern in the CARES Act that could have enormous consequences for the 7(a) program.  It is important to note that the Small Business Lending Continuity Act of 2020would not change PPP policy.  Rather, this legislation has to do with allowing the regular 7(a) loan program to go back to standing on its own, removing it from being fatally intertwined with the volatility of a stimulus program.

By way of a reminder, the CARES Act language combined the PPP and the 7(a) loan program’s authorization caps into one joint cap for the covered period of February 15, 2020 to June 30, 2020.  The statute also made the 7(a) loan program’s FY20 $30 billion authorization cap null and void for the entirety of the covered period.  When the joint appropriations cap was increased to a total of $670.335 billion to fully fund $659 billion in total authorization, Congress provided enough PPP funding to allow the joint authorization cap to be fully expended.  However, since the 7(a) loan program has utilized over $5.2 billion of the total $659 billion joint authorization (as of April 30, 2020), we know now that the PPP-only appropriation provided in CARES Act will never be fully expended.  Rather, whenever PPP and the 7(a) program combined authorization during the covered period reaches a total of $659 billion, both programs will be shuttered.  If this happens prior to July 1st when the 7(a) loan program’s FY20 authorization cap is reinstated, the 7(a) loan program will shut down at that time unless Congress swiftly passes the “Small Business Lending Continuity Act of 2020,” which is the only stable path forward to ensure the 7(a) loan program remains available for borrowers.

In the midst of the frenzy over PPP, NAGGL has continued to keep a watchful eye on the regular 7(a) loan program to ensure its stability and continued presence for lenders and small business borrowers.  When the CARES Act was first passed, NAGGL alerted the Hill to the problem and has never stopped raising it as a priority since. 

The bill will now go to the House where NAGGL will be working with leadership and authorizers to encourage its swift passage.  Once passed by the House, it will go to the President’s desk for his signature before becoming law. NAGGL will keep you updated along the way.

Please find NAGGL’s letter of support for the Small Business Lending Continuity Act of 2020.

Please find NAGGL’s two letters (Request to Separate 7(a) and PPP, and Request to Reinstate 7(a) Loan Program) to Senate and House leadership alerting them of the issue in April and May. 

 

The full text of the Small Business Lending Continuity Act of 2020 can be found here

 

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