S.20.3-15: Southern Small Business Administration Act (Law'd)

[tmthforu94]

Southern Small Business Administration Act
To establish a Southern Small Business Administration

Be it enacted by the Government of the Southern Region

1. A department shall be established called the "Southern Small Business Administration"
2. The Southern Small Business Administration shall have an annual budget of $7 billion dollars. Money shall be appropriated from regional reserves. 75% shall be used for grants and 25% used for loans.
 shall be appropriated from regional reserves.
3. The Southern Small Business Administration shall administer grants and loans under $100,000 for small businesses that have under $500,000 dollars of net revenue each year.
4. The Southern Small Business Administration shall form immediately upon the passage of this bill.

Sponsor: Tim Turner
Co-Sponsor: Tmthforu94

48 hours for debate. The sponsor is invited to advocate for the bill.

[tmthforu94]

Tim Turner and I collaborated on this bill this afternoon after seeing something similar introduced by Ishan in Lincoln. Last month, the Chamber agreed to allow for a deficit in order to provide relief to those struggling from COVID-19. This bill would set up a regional SBA department to administer grants to Main Streets across the South that are struggling to stay afloat amidst the pandemic. The federal budget in the US for SBA has ranged wide, going up north of $2B. This amount is what we landed on as there is an increased need for support during the pandemic. This bill has my total support.

[thumb21]

Its important that we get small businesses the support they need, especially in these difficult times. I support this bill.

[Holy Unifying Centrist]

I would prefer more of this be in grants or some sort of direct payments as opposed to loans. I feel as if government loans can generally be pretty risky because of a lack of the government's incentive to underwrite risks. Just look at how much student loan debt has been accumulated because the government did not really underwrite those risks and is generous with how it gives out loans.

Also, many small businesses make far more than $100,000 dollars. $100,000 is nothing when you have multiple employees. That value should be significantly higher. I'm thinking at least $500,000, but probably more.

[President Punxsutawney Phil]

Tim Turner and I collaborated on this bill this afternoon after seeing something similar introduced by Ishan in Lincoln. Last month, the Chamber agreed to allow for a deficit in order to provide relief to those struggling from COVID-19. This bill would set up a regional SBA department to administer grants to Main Streets across the South that are struggling to stay afloat amidst the pandemic. The federal budget in the US for SBA has ranged wide, going up north of $2B. This amount is what we landed on as there is an increased need for support during the pandemic. This bill has my total support.

I'd use my own words to formulate initial advocacy of the bill, but the Speaker's words say pretty much everything I would highlight. So there's that.

[tmthforu94]

I would prefer more of this be in grants or some sort of direct payments as opposed to loans. I feel as if government loans can generally be pretty risky because of a lack of the government's incentive to underwrite risks. Just look at how much student loan debt has been accumulated because the government did not really underwrite those risks and is generous with how it gives out loans.

Also, many small businesses make far more than $100,000 dollars. $100,000 is nothing when you have multiple employees. That value should be significantly higher. I'm thinking at least $500,000, but probably more.

Grants are included in the text, both are options. I can’t speak for Tim, but personally I’d be good with an amendment raising the limit allowed for a grant/loan.

[Holy Unifying Centrist]

I would prefer more of this be in grants or some sort of direct payments as opposed to loans. I feel as if government loans can generally be pretty risky because of a lack of the government's incentive to underwrite risks. Just look at how much student loan debt has been accumulated because the government did not really underwrite those risks and is generous with how it gives out loans.

Also, many small businesses make far more than $100,000 dollars. $100,000 is nothing when you have multiple employees. That value should be significantly higher. I'm thinking at least $500,000, but probably more.

Grants are included in the text, both are options. I can’t speak for Tim, but personally I’d be good with an amendment raising the limit allowed for a grant/loan.

I know, but I would like loans to be limited in some fashion.

[diptheriadan]

I would support raising the limit for loans/grants, as well as raising the amount that could be loaned/granted. Increasing the budget for such an administration would logically follow such changes, and it's not like we're hurting for the money to do that. 

[tmthforu94]

Offering an amendment:

Southern Small Business Administration Act
To establish a Southern Small Business Administration

Be it enacted by the Government of the Southern Region

1. A department shall be established called the "Southern Small Business Administration"
2. The Southern Small Business Administration shall have an annual budget of $750 million dollars. Money shall be appropriated from regional reserves.
3. The Southern Small Business Administration shall administer grants and loans under $5100,000 for small businesses that have under $5100,000 dollars of net revenue each year.
4. The Southern Small Business Administration shall form immediately upon the passage of this bill.

24 hours for objections.

[tmthforu94]

The amendment is adopted, debate resumes.

Personally I'm OK with it as is, I would have faith that the regional SBA will take this debate as advice to put preference on grants, but I'm a bit lost on language that would require it, unless we just want a line that says shall administer grants and loans, with preference towards grants, under......"? Would that satisfy people more?

[diptheriadan]

Proposing this amendment:

Southern Small Business Administration Act
To establish a Southern Small Business Administration

Be it enacted by the Government of the Southern Region

1. A department shall be established called the "Southern Small Business Administration"
2. The Southern Small Business Administration shall have an annual budget of $7 billion750 million dollars. Money shall be appropriated from regional reserves.
3. The Southern Small Business Administration shall administer grants and loans under $250,000100,000 for small businesses that have under $1 million500,000 dollars of net revenue each year.
4. The Southern Small Business Administration shall form immediately upon the passage of this bill.

Anecdotally speaking, my father works in a small business that operates solely in Nashville. It's yearly revenue is about that of a million dollars and employs ~20 people, most working in the shop which he manages. Most of the equipment that they need to do their work costs several tens of thousands of dollars, some even exceeding a hundred thousand. That, combined with the fact that business is slowing and material is becoming harder to find and more expensive (much of it comes from overseas) is making staying afloat a challenge. His is an extreme case, but it's one I feel the bill ought to cover.

Also, apologies in advance to tmth if this kinda slaps him in the face. I wasn't sure whether to object since I wasn't against the idea of the amendment (raising the limit and quantity loaned/granted), just the specifics.

[tmthforu94]

No apologies necessary, thanks for offering it! I'm cool with Clause 3 though it makes me think how we can ensure accountability, I need to think carefully on Clause 2. SBA is a noble cause by $7 billion is a lot compared to the relative budget, and this needs to be factored in with other spending we will be doing related to COVID-19 relief.

24 hours for objections to Dip's amendment.

[reagente]

Just curious, where did the number $7 billion come from? Is that based on some number of small businesses we expect to qualify for loans, or was that just chosen as roughly 10 times the originally proposed amount?

[diptheriadan]

Just curious, where did the number $7 billion come from? Is that based on some number of small businesses we expect to qualify for loans, or was that just chosen as roughly 10 times the originally proposed amount?

There's not much data in regards to the number of small businesses based on their yearly revenue, so it's just a guess.

[Holy Unifying Centrist]

I support diptheriadan's amendment.

However, I will not be voting for this bill unless an amendment is passed that makes loans be severely limited. I do not think the government does a good job with loaning money because, as I said earlier, government's lack a direct incentive to appropriately underwrite the risk/chance of the private business not being able to pay the loan back. Government has a lack of "skin in the game" whenever it loans out money, so to speak.

I am not sure what a good restriction/guideline would be. Perhaps 75% of the money could be earmarked for grants, and 25% of the money could be earmarked for loans. But I don't necessarily think that particular restriction is good policy

[tmthforu94]

Dip's amendment is adopted. DTC's recommendation is OK to me so I'll go ahead and offer the amendment, 24 hours for objections:

Southern Small Business Administration Act
To establish a Southern Small Business Administration

Be it enacted by the Government of the Southern Region

1. A department shall be established called the "Southern Small Business Administration"
2. The Southern Small Business Administration shall have an annual budget of $7 billion dollars. Money shall be appropriated from regional reserves. 75% shall be used for grants and 25% used for loans.
3. The Southern Small Business Administration shall administer grants and loans under $250,000 for small businesses that have under $1 million dollars of net revenue each year.
4. The Southern Small Business Administration shall form immediately upon the passage of this bill.

[President Punxsutawney Phil]

No objection.
The amendment is judged friendly.

[tmthforu94]

The amendment has been adopted. I am calling for a final vote.

[President Punxsutawney Phil]

No objection.

[tmthforu94]

A final vote has started, please vote AYE, NAY or ABSTAIN.


Aye

[GM Team Member and Senator WB]

Aye.

[thumb21]

Aye

[diptheriadan]

Aye

[tmthforu94]

This has enough votes to pass, delegates have 24 hours to change their votes.

[reagente]

aye