Agenda - Council Work Session - 03/08/2022

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4376 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations section(see section Capital employment.208 The negative outlook the pandemic are rooted in systemic Expenditures in General Provisions: for small businesses has continued:As issues present even before the Other). of November 2021,approximately 66 pandemic. For example,before the • Equity funds. Several commenters percent of small businesses reported economic downturn, only 12 percent of recommended that Treasury permit that the pandemic has had a moderate Black-owned businesses and 19 percent SLFRF funds to be deposited into an or large negative effect on their of Hispanic-owned businesses had equity fund to support long-term racial business,and over a third expect that it annual earnings of over$1 million and economic equity investments.The will take over 6 months for their compared to 31 percent of white-owned eligibility of such use would depend on business to return to their normal level businesses.216 Minority-owned the specific structure and uses of funds. of operations.209 businesses were also overrepresented in Under the statute, SLFRF funds can This negative outlook is likely the industries hit hardest by the economic only support costs incurred until result of many small businesses having downturn(e.g., services,transportation December 31, 2024; see section faced periods of closure and having seen and warehousing,healthcare and social Timeline for Use of SLFRF Funds in declining revenues as customers stayed assistance,administrative and support Program Administration Provisions. home.210 In general, small businesses and waste management,and Further,recipients may calculate the can face greater hurdles in accessing accommodation and food services).217 cost incurred with respect to credit,211 and many small businesses Approximately 22 percent of all investments in revolving loan funds were already financially fragile at the minority-owned business fell into the based on the methodology described in outset of the pandemic.212 hardest hit industries compared to 13 section Treatment of Loans in Program While businesses everywhere faced percent of nonminority-owned Administration Provisions. Projects significant challenges during the businesses.218 funded by a revolving loan fund using pandemic,minority-owned and very Although disparities in annual SLFRF funds would also need to be small businesses have faced additional revenue are not a direct indication of a eligible uses of SLFRF funds. obstacles. Between February and April business's ability to weather an • Environmental quality and climate 2020,the number of actively self- economic downturn,they do highlight resilience. Several commenters employed Black business owners other disparities that make it more recommended eligible uses to enhance decreased by 41 percent.213 During that challenging for these businesses to environmental quality,remediate same time period,Asian and Latino survive the effects of the pandemic. pollution,promote recycling or business owners decreased by 26 and 32 Black-owned startups, for example, face composting,or increase energy percent,respectively, compared to a 17 larger challenges in raising capital, percent decrease in white business including securing efficiency or electrical grid resilience. p g g business loans.219 Whether these projects respond to the owners.214 Female business owners also Summary of the Interim Final Rule and disproportionate impacts of the saw significant impacts,with businesses Final Rule Structure pandemic on certain communities owned by women falling by 25 would depend on the specific issue they percent.215 Summary of Interim Final Rule:As address and its nexus to the public Many of the disparities in how discussed above,small businesses faced health and economic impacts of the minority business owners experienced significant challenges in covering pandemic. payroll,mortgages or rent, and other 208 Daniel Wilmoth,U.S.Small Business operating costs as a result of the public b.Assistance to Small Businesses Administration Office of Advocacy,The Effects of health emergency and measures taken to the COVID-19 Pandemic on Small Businesses,Issue contain the spread of the virus. Under Background Brief No.16(Mar.2021),available at https:// cdn.advocacy.sba.gov/wp-content/uploads/2021/ Sections 602(c)(1)(A)and 603(c)(1)(A), The pandemic has severely impacted 031021123181COVID-19-hnpact-On-Small- recipients may"respond to the public many businesses,with small businesses Business.pdf. health emergency or its negative hit especially hard. Small businesses 209 U.S.Census Bureau,Small Business Pulse economic impacts,"by,among other make up nearly half of U.S. private- Survey,https://portal.census.gov/pulse/data/(last providing things, "assistance to . . . sector employment 205 and play a key visited December 7,2021). g p g 210 Olivia S.Kim et al.,Revenue Collapses and small businesses."Accordingly,the role in supporting the overall economic the Consumption of Small Business Owners in the interim final rule allowed recipients to recovery as they are responsible for two- Early Stages of the COVID-19 Pandemic(Nov. provide assistance to small businesses thirds of net new jobs.206Since the 2020),https://www.nber.org/papers/w28151. to address the negative economic beginning of the pandemic,however, 211 See,e.g.,Board of Governors of the Federal b acts im faced those businesses.A Reserve System,Report to Congress on the l� y 400,000 small businesses have closed, Availability of Credit to Small Businesses(Sept. with many more at risk.207 Sectors with 2017),available at https://www.federalreserve.govl 216 Federal Reserve Bank of Atlanta.2019.Small a large share of small business publications/2017-September-availability-of-credit- Business Credit Survey 2019 Report on Minority- to-small-businesses.htm. Owned Firms.December.fedsmallbusiness.org/ Minority- employment have been among those f g with the most drastic drops in 212 Alexander W.Bartik et al.,The Impact of survey/2019/report-on-minority-owned firms. COVID-19 on small business outcomes and 217 Ding,Lei,and Alvaro Sanchez.2020.What expectations,PNAS 117(30):17656-66(July 28, Small Businesses Will Be Impacted by COVID-19? 205 Board of Governors of the Federal Reserve 2020),available at https://www.pnas.org/content/ Federal Reserve Bank of Philadelphia. System,Monetary Policy Report(June 12,2020), 117130117656. philadelphiafed.org/covid-19/covid-19-equity-in- https://www.federalreserve.govlmonetarypolicyl 213 Robert Fairlie,The impact of COVID-19 on recovery/what-small-businesses-will-be-impacted. 2020-06-mpr-summary.htm. small business owners:Evidence from the first 218 Lucas Misera,An Uphill Battle:COVID-19's 206 U.S.Small Business Administration,Office of 3 months after widespread social-distancing Outsized Toll on Minority-Owned Firms,Federal Advocacy,Small Businesses Generate 44 Percent of restrictions,Journal of economics&management Reserve Bank of Cleveland(October 8,2020), U.S.Economic Activity(Jan.30,2019),https:// strategy(August 27,2020),https://doi.org/10.1"11 https://www.clevelandfed.org/newsroom-and- advocacy.sba.gov/2019/01/30/small-businesses- jems.12400. even ts/publications/comm unity-development- generate-44-percent-of-u-s-economic-activity/. 214 U.S.Small Business Administration,The briefs/db-20201008-misera-report.aspx. 207 Joseph R.Biden,Remarks by President Biden Effects of the COVID-19 Pandemic on Small 219 Robert Fairlie,A.Robb,D.Robinson,Black on Helping Small Businesses(Feb.22,2021), Businesses(March 2021),https://cdn.advocacy. and White:Access to Capital among Minority- https://www.whitehouse.gov/briefing-room/ sba.gov/wp-content/uploads/2021/03/021123181 Owned Startups,NBER Working Paper 28154 speech esremarks/2021/O2/22/remarks-by-president- COVID-1 9-Impact-On-Small-Bu sin ess.pdf. (November 2020),https://www.nber.org/papers/ bidenon-helping-small-businesses/. 215 Robert Fairlie,supra note 213. w28154.