Mr. President, in the fifteen months since Hurricane Katrina decimated Gulf Coast communities, Senators Snowe, Landrieu, Vitter and I have worked to produce a comprehensive package to reform the SBA’s disaster loan program. The SBA’s failed response in a time of unmatched need demonstrated to everyone that this program is broken and needs fixing.
Immediately after Hurricane Katrina hit, I introduced an amendment with Senator Landrieu to the FY 2006 Commerce, Justice and Science appropriations bill to address the needs of Gulf Region small business and home owners. The amendment was adapted with input from Chair Snowe, and a subsequent bipartisan amendment passed the Senate with a vote of 96-0. Although the entire Senate supported the amendment, it was stripped out of the bill in Conference.
On September 30, 2005, I again worked with Chair Snowe and Senators Landrieu and Vitter to introduce the Small Business Hurricane Relief and Reconstruction Act of 2006 (S. 1807). Although this bill presented a bipartisan, comprehensive approach to hurricane relief, it stalled in the face of the Administration’s opposition. In June, I introduced the Small Business Disaster Loan Reauthorization and Improvements Act of 2006, (S.3487), which once again attempted to comprehensively address the shortcomings of this program. Finally, in August, and with continued opposition from the Administration, the Committee unanimously reported S.3778, the Small Business Reauthorization and Improvements Act of 2006, which again put forward a bipartisan, comprehensive fix for this program.
Many of the provisions included in the bill we are introducing today were included in one or more of these previous proposals. The bill includes directives for the SBA to create a private disaster loan program, to allow for lenders to issue disaster loans. To ensure that these loans are borrower friendly, we provide authorization for appropriations so that the agency can subsidize the interest rates. In addition, the Administrator is authorized to enter into agreements with private contractors in order to expedite loan application processing for direct disaster loans.
The bill also includes language directing SBA to create an expedited disaster assistance loan program to provide businesses with short term loans so that they may keep their doors open until they receive alternative forms of assistance. The days immediately following a disaster are crucial for business owners—statistics show that once they close their doors, they likely will not open them again. These short term loans should help prevent those doors from closing.
A presidential declaration of Catastrophic National Disaster will allow the Administrator to offer economic injury disaster loans to adversely affected business owners beyond the geographic reach of the disaster area.
Non-profit entities working to provide services to victims should be rewarded and given access to the capital they require to continue their services. To this end, the Administrator is authorized to make disaster loans to non-profit entities, including religious organizations.
Construction and rebuilding contracts being awarded are likely to be larger than the current $2 million threshold currently applied to the SBA Surety Bond Program which helps small construction firms gain access to contracts. This bill increases the guarantee against loss for small business contracts up to $5 million and allows the Administrator to increase that level to $10 million, if deemed necessary.
The bill also provides for Small Business Development Centers to offer business counseling in disaster areas, and to travel beyond traditional geographic boundaries to provide services during declared disasters. To encourage Small Business Development Centers located in disaster areas to keep their doors open, the maximum grant amount of one hundred thousand dollars is waived.
So that Congress may remain better aware of the status of the Administration’s disaster loan program, this bill directs the Administration to report to the Committee on Small Business and Entrepreneurship of the Senate and to the Committee on Small Business of the House of Representatives regularly on the fiscal status of the disaster loan program as well as the need for supplemental funding. The Administration is also directed to report on the number of federal contracts awarded to small businesses, minority owned small businesses, women owned businesses, and local businesses during a disaster declaration.
Finally Mr. President, gas prices continue to fluctuate, and fuel dependent small businesses are struggling with the cost of energy. This bill provides relief to small business owners during times of above average energy price increases, authorizing energy disaster loans through the Small Business Administration and the United States Department of Agriculture to companies that dependent on fuel.
Residents of the Gulf Coast continue to rebuild from last year’s hurricane season. By all accounts, Administrator Preston has implemented policies that are helping Gulf Coast victims get back on their feet. However, the SBA needs the tools offered in this bill in order to comprehensively address the needs of business owners following a large scale disaster. As the 109th Congress prepares to adjourn, it is unconscionable that we have not yet put in place the reforms needed for this program to function effectively. I urge my colleagues in the final days of this session to support this legislation, so that God forbid another region has to deal with a disaster the size and scope of the 2005 Gulf Coast hurricanes, the SBA will be fully able to provide the assistance that homeowners and business owners require.
To read the press release on this legislation, please click here.