Washington, D.C. – U.S. Senators Catherine Cortez Masto (D-Nev.) and Bob Menendez (D-N.J.) introduced legislation that would help small businesses recover from the economic downturn caused by the COVID-19 outbreak. In an effort to slow the spread of the virus, many states, such as Nevada, have put restrictions on the operations of businesses, which have already caused a decline in customers and lower profits.
This week, the Small Business Administration (SBA) approved Nevada’s disaster declaration allowing small businesses across the state to access Economic Injury Disaster Loans (EIDLs) at a lower, 3.5% interest rate. The senators’ legislation would make EIDLs, up to $2 million, interest-free, saving small businesses struggling during the coronavirus outbreak significant amounts of money.
“Nevada’s small businesses need relief from the economic effects of the coronavirus pandemic, and they need it now,” said Senator Cortez Masto. “Offering interest-free disaster loans during a public health crisis is just common sense. I’m proud to cosponsor this legislation to protect not just our small businesses around the country, but also the millions of workers they employ.”
Congresswoman Nydia Velázquez (D-NY) introduced a companion bill in the House earlier this month.
BACKGROUND:
Under the Small Business Relief from Communicable Disease Induced Economic Hardship Act, small businesses would be able to access up to $2 million to help meet financial obligations and operating expenses. Under current law, EIDLs are only available to businesses that are located in a declared disaster area and the spread of a communicable disease is not considered a disaster. Additionally, the bill specifies that the loans would be interest free.
The bill would allow small businesses affected by the COVID-19 outbreak to take advantage of EIDLs by:
- Expanding the definition of a disaster to include a communicable disease, such as COVID-19, for which the federal government has issued a travel alert or warning,
- Adding a triggering event for which the EIDL may be used and;
- Making the EIDL loans interest free.
The bill text can be found here. A section-by-section summary can be found here.