WASHINGTON, D.C. - In her capacity as Chair of the Senate Committee on Small Business and Entrepreneurship, U.S. Senator Olympia J. Snowe (R-ME) along with Ranking Member John Kerry (D-MA), and Committee Members Senator Mary Landrieu (D-LA) and Senator David Vitter (R-LA) today announced that they have introduced the Small Business Disaster Response and Loan Improvements Act of 2006 (S. 4097), comprehensive bipartisan legislation that builds on previous proposals to provide immediate and meaningful relief to disaster victims.
“As Chair of the Committee on Small Business and Entrepreneurship, I remain committed to doing everything in my power to provide the necessary support to help sustain our economy and provide small businesses with the tools they need to recover from disasters, both natural and man-made. We must ensure that victims of future disasters have access to the resources they need to restore their lives, their businesses and their dreams,” said Senator Snowe.
“As the Gulf Coast continues to rebuild, it’s undeniable that small business owners need more help than they’ve been getting from Washington. This bill increases access to capital for small businesses, and ensures that federal agencies are putting the needs of victims first after future disasters. Working together, we have come up with this bipartisan plan to make sure the federal government is better prepared to respond to future disasters,” said Senator Kerry.
“Our business owners have told us loud and clear that we should not only make it a priority to address the pressing needs on the ground, but we need to also make sure SBA is better prepared, more efficient and more responsive the next time a disaster strikes,” said Senator Landrieu. “This bill makes significant strides in the right direction. It implements key reforms in the way SBA responds to disasters. I commend my fellow members of the Small Business and Entrepreneurship Committee for continuing to work closely with me to make sure the SBA’s failures following hurricanes Katrina and Rita are not repeated.”
“These loan improvements could not come at a more critical time as small businesses in Louisiana are still recovering from the aftermath of Hurricanes Rita and Katrina,” saidVitter. “I am optimistic that these new disaster loans and reforms in the disaster loan program will provide much-needed relief not only to those hardworking families struggling to recover, but also the greater Louisiana economy.”
The Small Business Disaster Response and Loan Improvements Act of 2006 would:
- Increase the maximum size of an SBA disaster loan from $1.5 million per loan to $5 million per loan and makes it possible for non-profit institutions to be eligible for disaster loans.
- Establish a Private Disaster Loan (PDL) program that allows for PDLs to be made to disaster victims by private banks, which would have to apply to the SBA for eligibility. A business will be eligible for a PDL if the county in which the business is located was declared a disaster area anytime in the last 24 months. The business will not have to show a nexus between its need for a loan, and the disaster that occurred. It will be enough to be located in that county. The SBA will provide an 85 percent guarantee for the loans.
- Provide authorization for the SBA to enter into agreements with qualified private contractors to process disaster loans. It requires the SBA to provide Congress with a report on how the disaster loan application process can be improved, including methods to expedite loan processing and verification for sources vital to rebuilding efforts.
- Require the SBA to promulgate rules within one year that would create a new “expedited disaster assistance business loan program.” These short-term loans would have low interest rates similar to regular disaster loans. The program is intended to provide businesses with short-term assistance while they await SBA disaster loans or insurance payouts following future disasters. This program would address one of the major issues following Hurricanes Katrina and Rita – lack of access to immediate capital to keep businesses afloat.
- Create a “Catastrophic National Disaster,” which will allow the SBA to issue nationwide economic injury disaster loans to small businesses affected by the disaster.
- Allow the Disaster Loan Program to provide relief to small businesses when energy prices reach a certain threshold. This year the Committee revitalized and revamped the SBA’s programs through the Small Business Reauthorization and Improvements Act of 2006 (S. 3778) – comprehensive bipartisan legislation authored by Senators Snowe and Kerry which passed the Committee unanimously and featured sweeping reforms to improve the efficiency of the SBA, its programs and their reach to underserved communities. It awaits a vote of the full Senate.
“This legislation includes disaster provisions which will provide the SBA with the tools necessary to fully assist and aid America’s small businesses in the wake of a disaster,” continued Senator Snowe. “I have worked closely with a bipartisan group of Senators – including Senators Kerry, Landrieu and Vitter in addition to the SBA – to design this disaster legislation and I am pleased to announce that the product of our efforts has been introduced today. This legislation will remedy the problems that prevented or delayed the agency’s front-line employees working in the disaster zones from aiding victims during the 2005 Gulf Coast Hurricanes, and provides the SBA with the ability to provide a more comprehensive and aggressive response to future disasters.”
To read Kerry's floor statement on the legislation, click here.