The $2 trillion stimulus package moving through Congress would allocate roughly $350 billion to guarantee loans for small businesses, a provision aimed at helping a vital sector of the economy but which could also test the ability of the Small Business Administration and the nation’s lenders to get money quickly to affected companies, the Wall Street Journal reported. Small technology companies and other startups funded by venture-capital partnerships, meanwhile, fear they may not be eligible for loans under the draft guidelines. The legislation approved by the Senate yesterday calls for the loans to be distributed using the existing framework of the SBA’s 7(a) program, the agency’s primary loan offering. The 7(a) program is a partnership between private financial lenders, which issue the loans, and the SBA, which guarantees them. The SBA currently guarantees about $25 billion in 7(a) loans to small businesses, and the additional $350 billion in lending authority would be on top of that. Businesses and nonprofits with fewer than 500 employees would generally be eligible for the loans, according to initial drafts of the legislation’s text that could be subject to revisions. The loans also would be open to self-employed and gig economy workers such as ride-hailing drivers.
