About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline

1 1 (May 01, 2020)

handle is hein.crs/govdafc0001 and id is 1 raw text is: 








    i% -N\     x






Applicability of Federal Civil Rights Laws to

Recipients of CARES Act Loans



May 1, 2020
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) authorizes the Small Business
Administration (SBA) to provide economic assistance temporarily to cligibic organlzaons. Section 1102
of the CARES Act establishes the Paycheck Protection Program (PPP), which enlarges the SBA's
authority to guarantee loans under Section 7(a) of the Small Business Act. Section I   10 of the CARES
Act broadens SBA's authority to distribute Economic Injury Disaster Loans (EIDL) under Section 7(b)(2)
of the Small Business Act. Applicants for the latter loan can receive an emergency grant advance that the
recipient does not have to repay, even if the loan is denied. Congress expanded the funding for these
accounts in the Paychcck Protection Program and Health Care Enhancement Act.
This extension of federal funds to new recipients raises questions about what obligations may accompany
the issuance of such loans. Various fcdcra civil rights laws condition the receipt of federal funds on
recipients' adherence to certain antidiscrimination mandates. This Sidebar examines the potential
application of these civil rights laws to recipients of EIDL grants and PPP and EIDL loans. It also
considers potential limits on the scope of these obligations.

The Small Business Act and the CARES Act
The SBA guarantees loans for certain small businesses under Section 7(a) of the Small Business Act.
SBA-guaranteed loans are then distbuted to recipients by third-party lenders. The CARES Act amends
Section 7(a) to authorize the SBA to guarantee loans under the PPP for a broader pool of entities. Subject
to various conditions and limitations, PPP loans are forgivable if recipients keep their employees on
payroll and use the funds for payroll, rent, mortgage interest, or utilities. The CARES Act also amends
Section 7(b)(2) of the Small Business Act, which authorizes SBA to distribu te loans directly to eligible
organizations that suffer economic injury due to a disaster. It also expands eligibility for these EIDL loans
and awards applicants grant advances that need not be repaid (even if a loan application is not approved).

SBA Regulations and Civil Rights Laws

Federal civil rights laws prohibit various types of discrimination in any program or activity that receives
federal financial assistance. For instance, Title VI of the Civil Rights Act of 1964 (Title VI) prohibits

                                                                Congressional Research Service
                                                                  https://crsreports.congress.gov
                                                                                     LSB10459

CRS LegzA Sidebar
Prepare'd for M, embers and
C o m m it'e e s  o ;  C o q g re s s  ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Contact us for annual subscription options:

Already a HeinOnline Subscriber?

profiles profiles most