Middle-Market Public Policy Roundup

In this week’s roundup, we look at the recently-christened Biden administration, which released an ambitious proposal last week to reopen the U.S. economy and extend relief to small businesses in the wake of the COVID-19 pandemic. We also summarize a study released by the Federal Reserve examining the impact of the delay of Paycheck Protection Program loans early in the pandemic, and an upcoming call by the Securities and Exchange Commission on startup and small-cap capital raising. 

Biden Outlines Small Business Relief in Rescue Plan

• President Joe Biden, who was sworn in this week, outlined an ambitious plan to mend the U.S. economy battered by the COVID-19 pandemic, with billions earmarked for small business relief.
• Biden’s American Rescue Plan proposes a $1.9 trillion relief package aimed at funding coronavirus vaccinations, making direct payments to individuals and families, and helping reopen the economy.
• According to the plan released last week, the Biden administration would work with Congress to provide $15 billion in grants for more than 1 million small businesses hit hardest by the pandemic, and $175 billion in additional low-interest loans and venture capital to entrepreneurs—with special attention given to companies in clean energy.
• The American Rescue Plan would also extend additional benefits from the Community Credit Corporation at the Department of Agriculture to restaurants, bars and other businesses that have suffered disproportionately during the pandemic.
• The proposal also calls for increases in government spending on health care, infrastructure, transportation, as well as mandates to increase the minimum wage and hazard pay to frontline workers.

Delay in Initial PPP Funding Disproportionately Hurt Small Businesses: Fed Study

• Delay in the distribution of Paycheck Protection Program loans early in the pandemic contributed to significant job loss, especially among small firms, according to a recent study published by the Federal Reserve.
• Loans delayed due to insufficient initial funding under the CARES Act in May reduced employment significantly in the following months, with effects felt disproportionately by small businesses.
• About half of the jobs lost to insufficient PPP funding were lost in firms with fewer than 10 employees, despite accounting for less than 20% of employment, the study showed.
• The Fed’s estimates imply PPP saved millions of jobs but larger initial funding could have saved millions more if it had been directed toward the smallest firms.

SEC to Host Call on Startup and Small Cap Capital Raising

• The Securities and Exchange Commission’s Office of the Advocate for Small Business Capital Formation will host its second annual Capital Call on Feb. 4, where the office will talk about what’s happening with capital raising from startup to small-cap businesses.
• The Capital Call is styled after public companies’ earnings release calls and will include discussion and an opportunity to ask questions about the office’s recent annual report to Congress and the SEC.
• During the virtual event, office staff members will discuss what has been happening with capital raising across the country, including a spotlight on the impacts of the COVID-19 pandemic, challenges faced by underrepresented businesses, the office’s work in supporting small businesses and their investors, and the policy recommendations the office has developed in response.