WASHINGTON – U.S. Senator Mary L. Landrieu, D-La., Chair of the U.S. Senate Committee on Small Business and Entrepreneurship and Senator Thad Cochran, R-Miss., today introduced a bill designed to make U.S. Small Business Administration (SBA) disaster programs more responsive to the needs of small businesses impacted by disasters. The bill is also cosponsored by Senator Kirsten Gillibrand, D-NY, and Senator Mark Pryor, D-Ark.
The Small Business Disaster Recovery Act, S.415, builds off of successful SBA disaster reforms that Sen. Landrieu enacted following Hurricanes Katrina and Rita of 2005 and the Deepwater Horizon disaster in 2010 that made significant improvements to the way the Small Business Administration (SBA) responds to disasters.
“When a disaster strikes, every day that a small business remains shut down is a day closer to their doors shutting for good,” said Senator Landrieu. “This bill will help cut through bureaucracy for business owners seeking smaller amounts of disaster funding, while at the same time allow seasoned business counselors to cross state lines if they are needed after large scale disasters. I believe that these commonsense disaster reforms, which will not have a cost to taxpayers, will greatly benefit businesses impacted by future disasters. ”
“Our goal is to make the government response to disasters more efficient and nimble. We’re offering commonsense, fiscally responsible proposals to make it easier for small businesses to reopen and get back to work following a disaster. This will help them keep people employed, provide vital services and stabilize the local economy,” Senator Cochran said.
The Small Business Disaster Recovery Act has already received endorsements from the Association of Small Business Development Centers and the International Economic Development Council. It also has received support from the Southwest Louisiana Economic Development Alliance, the St. Tammany Economic Development Foundation, the Northeast Louisiana Economic Partnership, and the Bay Area Houston Economic Partnership.
The bill would clarify that, for SBA disaster business loans less than $200,000, the SBA cannot use a business owner’s primary residence as collateral if there are other suitable business assets available to use as collateral towards securing the loan. This addresses instances where business owners were being required to put up a $300,000 or $400,000 personal home as collateral for a $200,000 disaster loan even though they had sufficient business assets to secure the loan.
It also authorizes SBA to allow out-of-state small business development centers (SBDCs) to provide assistance in presidentially-declared disaster areas. This addresses an issue that occurred after Hurricane Katrina and Hurricane Sandy in 2012 where local SBDCs were severely impacted but out-of-state SBDCs were not allowed, because of geographic limitations, to assist as their local counterparts got back on their feet. The concept is similar to how private sector utility companies share linemen after major disasters.
In December 2012, Sen. Landrieu held a hearing to assess SBA’s response to Hurricane Sandy. Many issues were discussed, including the two that the bill addresses. More information can be found here.