Too Small to Fail Act

To amend the Small Business Act to provide no interest rate loans to small businesses and non-profit entities impacted by the coronavirus (COVID-19), and for other purposes. 1. Short title This Act may be cited as the Too Small to Fail Act 2. Financial assistance to small businesses and non-profit entities Section 7 of the Small Business Act ( 15 U.S.C. 636 (k) Coronavirus related loans (1) In general The Administration shall waive the credit elsewhere requirement of subsection (a)(1) for loans to small businesses and non-profit entities affected by the coronavirus (COVID-19). Such loans shall be provided by the Administration at no interest rate. (2) Authorization of appropriations For an additional amount for the Disaster Loans Program Account (A) not to exceed $225,000,000 may be transferred to and merged with Salaries and Expenses (B) none of the funds provided under this heading may be used for indirect administrative expenses. (3) Emergency requirement The amount provided under paragraph (2) is designated as an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985 and the amount designated under such paragraph as an emergency requirement pursuant to such section 251(b)(2)(A)(i) shall be available only if the President subsequently so designates such amount and transmits such designation to the Congress. (4) Suspension of payment The Administration is authorized to suspend the payment of any loan made under this Act to any small business or non-profit entity affected by the coronavirus (COVID-19) for a period determined by the Administration. . 3. Emergency EIDL grants (a) EIDL emergency grant (1) In general During the covered period, an eligible entity that applies for a loan under section 7(b)(2) of the Small Business Act ( 15 U.S.C. 636(b)(2) (2) Verification Before disbursing amounts under this subsection, the Administrator shall verify that the applicant is an eligible entity. (3) Use of funds An advance provided under this subsection may be used to address any allowable purpose for a loan made under section 7(b)(2) of the Small Business Act ( 15 U.S.C. 636(b)(2) (A) providing paid sick leave to employees unable to work due to the direct effect of the COVID–19; (B) maintaining payroll to retain employees during business disruptions or substantial slowdowns; (C) meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains; (D) making rent or mortgage payments; and (E) repaying obligations that cannot be met due to revenue losses. (4) Repayment An applicant shall not be required to repay any amounts of an advance provided under this subsection, even if subsequently denied a loan under section 7(b)(2) of the Small Business Act ( 15 U.S.C. 636(b)(2) (5) Unemployment grant If an applicant that receives an advance under this subsection transfers into the loan program under section 7(a) of the Small Business Act ( 15 U.S.C. 636(a) (6) Authorization of appropriations There is authorized to be appropriated to the Small Business Administration $10,000,000,000 to carry out this subsection. (7) Termination The authority to carry out grants under this subsection shall terminate on December 31, 2020. (b) Definitions In this Act— (1) the term covered period (2) the term eligible entity (A) a startup with not more than 500 employees; (B) any individual who operates under a sole proprietorship or as an independent contractor; (C) a cooperative with not more than 500 employees; or (D) an ESOP (as defined in section 3 of the Small Business Act ( 15 U.S.C. 632 (3) the term COVID-19

Summary: Too Small to Fail Act This bill establishes requirements for, and revises components of, loan programs of the Small Business Administration (SBA) to provide economic relief to small businesses affected by COVID-19 (i.e., coronavirus disease 2019). Specifically, the SBA must waive the requirement that small businesses affected by COVID-19 be unable to find credit elsewhere in order to be eligible for SBA loans, and it must provide loans made in response to COVID-19 at no interest rate. In addition, the SBA is authorized to temporarily defer payments on any SBA loan for a small business that is affected by COVID-19. During the period from January 31, 2020, and ending on December 31, 2020, eligible small businesses that apply for an emergency disaster loan in response to COVID-19 may request that the SBA provide an advance of up to $15,000 within three days of receiving the application. Such advance may be used for any allowable purpose, including (1) providing paid sick leave to employees who are unable to work due to direct effects of  COVID-19, (2) maintaining payroll to retain employees during business disruptions or substantial shutdowns, and (3) making rent or mortgage payments. Applicants shall not be required to repay any amounts of such advance, even if they are subsequently denied an emergency disaster loan. Further, under certain conditions, such advance may also be taken into consideration when determining forgiveness for a loan to meet payroll costs.