Advocates say rural small businesses such as hair salons, restaurants and retail establishments were excluded from U.S. House Democrats’ $2.2 trillion relief package that the chamber approved last night.
Earlier this year, the $2 trillion CARES Act paid for a Small Business Administration (SBA) program to allow banks to waive six months of principal, interest and any associated fees for small businesses with existing loans. But similar relief was not extended to borrowers with loans through Rural Development programs under the U.S. Department of Agriculture.
"It's a really common-sense proposal," said Johnathan Hladik, policy director of the Center for Rural Affairs in Lyons, Nebraska. "It just extends the same treatment that SBA businesses received."
Rural entrepreneurs and advocates say they lack the banking relationships necessary to tap into the debt relief program and the Paycheck Protection Program, the largest pot of money the CARES Act provided to the SBA.
The Rural Equal Aid Act, introduced in August by U.S. Rep. Cindy Axne, an Iowa Democrat, would have provided similar relief to rural businesses and nonprofits using several USDA loan programs. A companion bill was introduced in the Senate by Montana Democrat Jon Tester. Both bills have bipartisan support.
Two USDA programs included in the measure make loans through local intermediaries. The Intermediary Relending Program provides loans of up to $250,000 to cover expenses related to starting or expanding small businesses. About 1,200 small rural businesses that employ 10 or fewer people receive loans through the Rural Microentrepreneur Assistance Program, which offers loans of no more than $50,000 through local nonprofits.
Funding the programs for six months would cost $15 million under the Axne bill, with all but $1 million going toward the Intermediary Relending Program, Hladik said. The Center for Rural Affairs, which helped to draft the legislation, supports funding both.
Other USDA loan programs, such as Business & Industry Loan Guarantees and the Community Facilities Direct Loan and Grant Program, also were included in Axne’s bill. Both lenders have been able to approve and make covered loans under the Paycheck Protection Program. In May, USDA used CARES Act funding to make up to $1 billion in loan guarantees available to rural businesses and agricultural producers through the Business & Industry program.
The House Democrats’ plan also would extend the Paycheck Protection Program for small businesses.
"To us, that was insult to injury to see that they obviously recognized that businesses are suffering, but completely ignored the rural side of it," Hladik said.