Mr. KERRY. Mr. President, today I rise to introduce legislation that helps to address the significant price increase of heating fuels and the adverse impact those prices are having on our 24 million small businesses and the self-employed. I thank my colleagues who are cosponsors. Senators Lieberman, Snowe, Bingaman, Landrieu, Johnson, Domenici, Levin, Wellstone, Jeffords, Harkin, Schumer, Clinton, Kohl, Edwards, Leahy, Baucus, and Collins.

As so many of my colleagues know, many small businesses are dependent upon heating oil, propane, kerosene and natural gas. They are dependent either because they sell or distribute the product, or because they use it to heat their facilities or as part of their business. The significant and unforseen rise in the price of these fuels over the past two years, compounded by cold snaps and slowed economic conditions this winter, threatens their economic viability.

The financial falter or failure of small businesses has the potential to extend far beyond the businesses themselves, and we simply can't afford that. Jobs alone make this a reason to mitigate the small business disruptions or failures because they provide more than 50 percent of private-sector jobs. And the self-employed, who largely work out of their homes, and number 16 million according to the National Association for the Self-Employed, NASE, represent more than 7 percent of the nation's workforce.

My bill, the Small Business Energy Emergency Relief Act of 2001, would provide emergency relief, through affordable, low-interest Small Business Administration Disaster loans, to small businesses adversely affected by, or likely to be adversely affected by, significant increases in the prices of four heating fuels--heating oil, propane, kerosene, and natural gas.

Who are these business owners? They are the self-employed who work out of their homes and can't turn down the thermostat to 55 degrees while they are at the office from 8 am to 6 pm. They are the home heating oil distributers who see the price of their inventory skyrocket beyond the reach of their credit lines and cash flows. They are the Mom-and-Pop stores, local restaurants and corner cafes that need to keep a warm place for folks to enjoy. They are the small day-cares for children and nursing homes for the elderly.

According to Department of Energy statistics, the cost of heating fuel has been highly volatile in recent years. For example,

The cost of heating oil nationally climbed 72 percent from February 1999 to February 2000.

The cost of natural gas nationally climbed 27 percent from September 1999 to September 2000.

And the cost of propane climbed 54 percent from January 2000 to January 2001.

While these national fluctuations capture the larger market trends, they do not demonstrate how some localities have been even harder hit by unpredictable and sudden price spikes because of a greater dependence on a single fuel, insufficient inventories, distribution problems and other reasons. Last year in New England, for example, the threat of a relatively common cold winter snap put such serious pressure on the insufficient supply of heating oil that Massachusetts declared a state of emergency. With consumers at the mercy of a market--need up and supply down--the price of heating oil soared. In a matter of weeks, the average price per gallon of heating oil fuel went up 60 percent, from $1.12 to $1.79. When operating costs rise gradually, small businesses have time to plan and adjust their pricing and operations accordingly. Rapid shifts in operating costs, however, can disrupt a small company's business plans causing short-term cash flow difficulties. It is the kind of volatility that can make planning month to month as difficult as planning year to year.

Here's the situation. For those businesses in danger of or suffering from significant economic injury caused by crippling increases in the costs of heating fuel, they need access to capital to mitigate or avoid serious losses. However, commercial lenders typically won't make loans to these small businesses because they often don't have the increased cash flow to demonstrate the ability to repay the loan. In fact, the Massachusetts Oilheat Council in Wellesley Hills, which is a state trade association that represents the heating oil industry, and whose members deliver more than 60 percent of the heating oil to homes and businesses across the state, retailers of heating oil faced not only "stretched credit lines" but even "negative cash flows." Who is going to give you a loan when you have a negative cash flow?

To exacerbate the situation, banks have tightened their lending to small businesses by 45 percent over the past three months. According to the Federal Reserve Board's quarterly survey on lending practices that was released Monday, February 5th, banks surveyed said they have tightened credit to small businesses, particularly on riskier loans, by making borrowing more expensive and requiring customers to have less outstanding debt. They have changed their lending policies because they are concerned about "a less favorable or more uncertain economic outlook ..... and a reduced tolerance for risk." While the banks say that only a handful of borrowers canceled their plans under the stricter lending policies, I think the Federal Reserve Board's survey reinforces the need for this legislation.

You see, Mr. President, commercial lenders are unlikely to make the type of loans we're talking about without an added incentive, such as a Federal loan guarantee. And last year I supported that approach to help small businesses deal with the heating oil problem by enlisting the SBA, its lending partners, and relevant trade associations to use and publicize the SBA 7(a) government guaranteed loan program to make loans to affected small businesses. In the 7(a) loan program, the bank makes the loan, and the SBA guarantees 75 to 80 percent so that if the borrower can't repay the loan, the bank isn't on the hook for every outstanding dollar.

I wrote to the SBA. I called the Massachusetts Bankers Association, and I called individual bank presidents and asked them to use this tool for affected small businesses and to aggressively market the availability of the 7(a) loans and SBA's other programs. Some of the publications helped to spread the word, including the Boston Business Journal and the Boston Herald. It was a real team effort.

While tapping into the SBA's guaranteed loan programs was helpful for some, and one part of the solution, the heating fuel price spike has turned out to be more than a one-year anomaly and so there is a need to go a step further--we need to make capital accessible to even more small businesses. We can do that through the SBA's Economic Injury Disaster Loans.

Economic injury disaster loans give affected small business necessary working capital until normal operations resume, or until they can restructure or change the business to address the market changes. These are direct loans, made through the SBA, at subsidized interest rates, of 4 percent or less, versus the current Federally guaranteed lending rate of Prime + 2 1/4 percent, 10 3/4 percent on Monday. Paying 4 percent versus almost 11 percent in interest makes a big difference to that small business owner. Further, SBA tailors the repayment of each economic injury disaster loan to each borrower's financial capability, enabling them to avoid the robbing Peter to pay Paul syndrome, as they juggle bills.

Clearly, these loans are much more affordable for the already struggling small businesses, and, since time is of the essence, the infrastructure is already in place to quickly distribute the loans. SBA delivers disaster loans through four specialized Disaster Area Offices located in New York, Georgia, Texas and California. In addition, the 70 SBA District Offices can help small businesses learn the program and direct the paperwork to the disaster offices. And there are the Small Business Development Centers in every state, with a network of more than 1,000 service locations, the Business Information Centers, and the Women's Business Centers to help small businesses seeking information about and applying for these loans.

Building on the SBA's Disaster Loan Program so that small businesses adversely affected by the heating fuel prices are eligible to apply for economic injury loans complements our efforts last year. I encourage SBA's lending partners to continue to publicize and provide guaranteed loans to affected small businesses. It creates a comprehensive approach to helping small businesses across the nation get the assistance they need, and gives us one more way to assist in the success of our small businesses. And again, economic injury disaster loans are a reasonable approach to the problem.

By providing assistance in the form of loans which are repaid to the Treasury, the SBA disaster loan program helps reduce the Federal emergency and disaster costs, compared to other forms of disaster assistance, such as grants.

On practical terms, SBA considers economic injury to be when a small business is unable, or likely to be unable, to meet its obligations as they mature or to pay its ordinary and necessary operating expenses. To be eligible to apply for an economic injury loan, you must be a small business , you must have used all reasonably available funds, and you must be unable to obtain credit elsewhere.

Under this program, the disaster must be declared by the President, the SBA Administrator, or a governor at the discretion of the Administrator. Small businesses will have six months to apply from November 1, 2000 or, for future disasters, from the day a disaster is declared.

This legislation will help those who have nowhere else to turn. We've got the tools at the SBA to assist them, and I believe it's more than justified, if not obligatory, to use the economic injury disaster loan program to help these small businesses.

The volatile price jumps of heating fuels are tied to international factors relating to larger energy issues--among them the supply and demand of crude oil--and therefore beyond the control of small business owners. While you have scholars and industry experts making prognostications about whether the price spikes were temporary or here for the long haul, I have grown weary of long-term prognostications. As Yogi Berra is alleged to have said, "Predictions are always difficult, especially about the future."

I believe small business owners can be cautious and budget for the proverbial rainy day, but I think it is unreasonable to expect that they can anticipate, and afford to budget enough money to cover, price jumps of 60 to 100 percent. And who can predict the weather, particularly cold snaps during historically mild winter conditions? These price spikes are largely unforeseeable, even though there will always be the people who say, "I told you so."

Introducing this legislation is only a first step. We need to consider it in Committee, Congress to pass it, and the President to sign if before it is too late to help struggling small business owners. I thank Senator Bond for his cooperation on this legislation, particularly his willingness to expedite judicious consideration by the Small Business Committee.

I urge my colleagues to support this legislation. SBA's programs make recovery affordable, and with the right support, can help mitigate the cost of significant economic disruption in your states caused when affected small businesses falter or fail, leading to job lay-offs and unstable tax bases.

I ask unanimous consent that the text of the bill and a letter to Aida Alvarez be printed in the Record.