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Existing Federal Economic Assistance Options for Small Businesses Affected by the Coronavirus (COVID-19)

While the existing federal economic assistance option with the U.S. Small Business Administration (“SBA”), called Economic Injury Disaster Loans (“EIDLs”), have existed for some time, the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (P.L. 116-123) increases the amount made available to the SBA to use for EIDLs to $197.2 million.

EIDLs are low-interest federal disaster loans of up to $2 million offered by the SBA to small businesses, as well as private, non-profit organizations in all U.S. states and territories to help alleviate economic injury directly caused by COVID-19. EIDLs may be used to pay fixed debts, payroll, accounts payable, and other bills that cannot be paid due to the impact of COVD-19. See 13 C.F.R. § 123.303(a).

Importantly, loan proceeds may not be used to:
• Refinance existing debt;
• Repay other SBA loans or loans from another federal agency;
• Pay, directly or indirectly, any taxes, fines or penalties;
• Repair physical damage; or
• Pay dividends or other disbursements to owners, partners, officers or stockholders, except for reasonable remuneration directly related to their performance of services for the business.

13 C.F.R. § 123.303(b).

Small businesses that need working capital to help meet their financial obligations should consider applying for an EIDL. For more information on EIDLs, what constitutes an eligible “small business,” and how to apply for EIDLs, please see the full client alert here.

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Existing Federal Economic Assistance Options for Small Businesses Affected by the Coronavirus (COVID-19)

Jack Horan Testifies in Congress Regarding GSA’s Proposed “Transactional Data” Rule

On June 25, 2015, Partner John C. Horan testified in front of the U.S. House of Representatives Committee on Small Business, Subcommittee on Contracting and Workforce  regarding GSA’s proposed rule that would require contractors to  electronically report the price the federal government paid for an item or service bought through the GSA Federal Supply Schedule and other GSA government-wide contract vehicles.  The controversial rule, which was published on March 4, 2015, has received a great deal of opposition not only by industry, but also by the GSA Inspector General.  Mr. Horan testified that the proposed rule is problematic for contractors – particularly small business contractors – for the following reasons: (1) the rule creates a significant and unnecessary reporting burden on these contractors; and (2) the rule is subject to misuse that could result in considerable harm.  Additionally, there  is no evidence that the transactional data will improve GSA’s ability to purchase items on a more cost-effective basis.   Read more from Mr. Horan’s testimony here: Horan Committee on Small BusinessTestimony

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Jack Horan Testifies in Congress Regarding GSA’s Proposed “Transactional Data” Rule