WASHINGTON - The Year 2000 Readiness Act that Senator John F. Kerry (D-Mass.), the top Democrat on the U.S. Senate Committee on Small Business, and Chairman Christopher Bond (R-Mo.), introduced on January 26 is now law. The President signed the Act last Friday, officially giving eligible small businesses access to affordable loans so that they can prepare for or respond to the Year 2000 computer problem. The Small Business Administration has 30 days to issue guidelines for the loan program, and then can start implementing the 7(a) Y2K loan program.
To expedite implementation of this Y2K program and get loans to small businesses as soon as possible, the Small Business Year 2000 Readiness Act expands the 7(a) loan program, one of the Small Business Administration's most popular and successful guaranteed lending programs. The terms of 7(a) loans are familiar to lenders and small-business owners alike and, therefore, the loans are easy to apply for and timely to process. The 7(a) loans are structured to be approved or denied, in most cases, in less than 48 hours.
Currently, the 7(a) program is intended to give credit to small businesses to grow their companies. Under the new law, the 7(a) loans can be used until the end of the year 2000 to address Y2K problems ranging from the upgrade or replacement of date-dependent equipment and software to the survival of economic injury caused by Y2K disruptions such as power outages or temporary gaps in deliveries of supplies and inventory.
"It is in our economic best interest to make sure that small businesses are up and running soundly and effectively, creating jobs and providing services, on and after January 1 of the year 2000," said Kerry. “We don't want small-businesses owners rolling the dice to see what happens, waiting to see whether their equipment and facilities will work come the new year. This law gives them an option -- access to affordable loans to assess and remedy their Y2K problems."
To give lenders an incentive to make 7(a) loans to small businesses for Y2K problems and related economic injury, this Act raises the government guaranties of the existing 7(a) program by ten percent. Under special circumstances, it also raises the dollar cap of loan guaranties from $750,000 to $1 million for these Y2K small business loans.