While Congress is poised to pass a $10-billion Covid-19-aid bill that would help further vaccine production and maintain testing capacity, once again lawmakers are planning to slash small-business aid to pay for it.

A bipartisan group of Senate negotiators this week reportedly agreed on a spending deal that, if passed, would further fund the U.S. response to the coronavirus pandemic. To pay for it, in part, lawmakers propose cutting funding for two vital small-business aid programs: the Shuttered Venue Operators Grants (SVOG) and the Economic Injury Disaster Loans (EIDL). Those programs, which respectively offer grants and low-interest loans, support shuttered venues like concert halls and movie theaters and small businesses suffering financially amid Covid-19 disruptions.

In an overview of the agreement, which the full Senate is expected to vote on this week, lawmakers noted that they would rescind funding for the Small Business Administration's SVOG, with the exception of a small amount to cover pending appeals and reconsiderations. In August, the SBA launched a supplemental SVOG program, with $7.2 billion on offer for recipients who had already received an initial grant from the first iteration of the program. The first iteration of the SVOG, which held $16.25 billion for venues, began on April 26, 2021 and only doled out $9 billion to 11,500 venues before sunsetting on August 20.

Lawmakers noted in the overview that "all applications for initial awards and first supplementals facilitated via the program have been fulfilled." But that's not quite right, says Michael Strickland, the founder and chair of Bandit Lites, a Knoxville, Tennessee-based lighting-design and installation company.

While it's true that the supplemental program has been around for about six months -- long enough for venues to tap it again -- businesses in the events and entertainment world had been holding out hope that the excess amount sitting in the SVOG, which is estimated at around $2.2 billion, would go to support a new piece of legislation dubbed the Music Act. This bill, which was introduced in December by Senator Marsha Blackburn (R-TN) and maintains bipartisan support, would aid event-services businesses and performers who were also waylaid by the pandemic but were not eligible for the SVOG program.

"Thousands of us are left behind, with tremendous debts from 16 months of zero income," says Strickland. While these businesses were eligible for a forgivable loan from the Paycheck Protection Program, the extent of business stoppages tended to far exceed the amount of funding for which they were eligible. Plus, plenty of businesses in this industry don't have full-time employees, which was a key factor in determining how much of a PPP loan businesses received. 

As for the EIDL, interest has been swift, since other pandemic-era relief offerings like the PPP and the Restaurant Revitalization Fund have ceased -- especially since September, when the SBA lifted the cap on loans to $2 million, from $500,000. The SBA's EIDL loans have 30-year maturities and interest terms ranging from 2.75 percent for nonprofits to 3.75 percent for businesses.

Lawmakers note that the proposed rescission of unspent American Rescue Plan Targeted EIDL Advance funding still leaves enough in the till to accommodate pending loan modifications and the recently announced six-month deferment on loan payments. Passed on March 11, 2021, the $1.9 trillion Rescue plan authorized $15 billion in replenished funds for Targeted Economic Injury Disaster Loan (EIDL) Advance loans, which at the time amounted to grants of $10,000 each and were open only to small businesses in low-income communities that have been most affected by the pandemic. 

But there's a very big "but." This program's unspent funding has already been tapped.

The infrastructure bill, passed in August, reclaims $38 billion in unspent funding, which was initially earmarked for small-business relief programs. That includes $17.6 billion from the EIDL program, $13.5 billion from the Targeted EIDL Advance, $4.7 billion from the PPP, and $1.4 billion from the Economic Stabilization Program. Another $992 million got yanked from the SBA's business loans program account. 

While no right-minded business owner would stand in the way of additional funding for Covid testing and vaccine generation, which necessarily helps businesses keep their workers healthy and insurance costs down, the funding mechanism for this additional aid appears faulty, to say the least. It should be noted that earlier negotiations over this new Covid aid package involved tapping unspent aid that was granted to the states. It's unclear whether redirecting those funds might be a better course than sapping small-business funding. What is clear: Testing is important, the pandemic is not over, and businesses still need help.