Massachusetts Rep. Ayanna Pressley is partnering with California Sen. Kamala Harris to help small businesses from historically underrepresented communities maintain their financial vitality during the COVID-19 pandemic.
“Our smallest neighborhood businesses are the backbones of our communities, but so far too many have been left out and left behind by federal relief efforts,” Pressley said in a statement. “Without deliberate action, this will widen the racial and gender wealth gap.”
Last week, the two Democrats proposed the Saving Our Street (SOS) Act, a $124.5 billion grant program created to aid what they call “micro-businesses”.
Since the proposal went public, Pressley and Harris reunited over Instagram live to talk about the program. They emphasized that most of the funding should go to small businesses that are normally left out.
“75% of the funds must be distributed to businesses that have been underrepresented,” Pressley said.
The two congresswomen are focused on the scale, urgency, impact and equity of the program. They added that the program would require transparent reporting from both lenders and recipients of the grant to ensure resources are allocated appropriately. The grants would benefit people of color, women, veterans, the disabled and more.
Pressley and Harris’ proposal is a response to the flawed Paycheck Protection Program (PPP), a plan that forgives the loans of small businesses that are paying employees during the pandemic.
PPP distributed most of its $350 billion fund to larger businesses with access to resources to apply for the loans fast, causing the aid to run out before it could be distributed to the smaller, minority-owned businesses.
The SOS Act would service businesses that have up to nine employees, 20 employees for establishments in low-income communities. To qualify, the companies would have to commit to providing healthcare benefits for employees. In addition, companies would have to prove a monthly 20 percent financial loss through statements since the start of the pandemic and cannot make over $1 million in gross revenue per year.
Small businesses would apply directly to the Treasury Department via its current IRS payment system. The grants do not have to be paid back, unlike with PPP.
“They can’t afford to take on debt, and programs like PPP are not a solution for businesses that have no idea IF they will ever be able to re-open, let alone when,” Jen Faigel, executive director of CommonWealth Kitchen said in a statement. “They need grants, not loans. Without a bailout, these businesses, that are the heartbeat of every main street district in every community across the country, will close forever, and the fabric of our cities will be lost.”
Small businesses can qualify up to $250,000 in grants through the SOS program.
