Mr. KERRY. Good morning. Thank you all for being here, particularly those who are pulling double duty, participating for the second day in a row. As I said yesterday, I encourage all of you to use this format to air the issues affecting these critical loan and venture capital programs and to have a healthy and constructive dialogue with us. Chair Snowe, I again thank you for holding these roundtables to review the SBA's loan and venture capital initiatives.

Yesterday the Committee built a very good record on the needed changes and demands of the 7(a) Loan Guarantee Program and the Microloan Program. Today we will review the Certified Development Company or 504 Loan Guaranty Program, the Disaster Loan Program, the New Markets Venture Capital (NMVC) Program, and the Small Business Investment Company (SBIC) Program. Of course, the priority for the Certified Development Companies (CDCs) that make 504 loans is reauthorization of the 504 program before it expires on September 30th. No matter how good the intentions of our side and the House Committee on Small Business to pass reauthorization bills on time, on occasion, a small business bill gets saddled with extraneous controversial provisions that delay passage. This program spurs business investment, which is sorely missing from our economic recovery, and creates jobs. I pledge to work with Chair Snowe to pass this year's SBA reauthorization bill by September 30th.

As part of reauthorization of the 504 program, I urge the Committee to include the Child Care Lending Pilot of Act 2003, which would make it possible for eligible non-profit child care providers to receive 504 loans to establish, improve or expand facilities. We have a shortage of good childcare facilities in this country, and it is a problem for our families, a problem for our businesses, and a problem for our economy. The 504 program could increase the number of providers available for the working moms and dads.

The Census Bureau estimates that there are approximately 24 million school age children with parents who are in the workforce or pursuing education, and the numbers are growing. In Massachusetts alone, where non-profit child care centers make up more than 60 percent of all providers and serve families who receive child care subsidies, 20,000 children are waiting for assistance to receive care. With more capacity, we could make sure those kids have a clean, safe and affordable place to go while their parents are at work. I thank the many senators who have cosponsored this bill and ask Committee Chair Snowe to cosponsor this bill and to work with me to include the bill in the reauthorization package. I also ask unanimous consent for several letters of support from lenders and child advocates be included as part of the record.

The disaster loan program has helped millions of homeowners and business owners in this country over the years. It was critical in helping the nation to recover from the terrorist attacks of September 11th, 2001, and I thank Herb Mitchell and his team for all the help they've provided to thousands of disaster victims throughout the country.

As important as this program is, I have some concerns that I would like addressed as part of SBA's reauthorization. One is the sale of disaster loans in SBA's asset sales. Members of the Senate and House have raised concerns with the SBA for several years about this policy, questioning whether it is appropriate to sell these loans and how to address complaints from disaster loan borrowers who feel they have been harassed and treated unfairly by the companies that buy the loans. A frequent example arises when a borrower seeks to restructure his or her disaster loan on a home when refinancing the home mortgage in this low-interest rate market. The holders of the loans are reportedly inflexible when borrowers ask for changes. SBA has diminished the number and severity of complaints raised and the Administration has blocked Congressional attempts to put moratoriums on the loans, arguing that the complaints are very few in proportion to the tens of thousands of loans sold. However, as GAO can confirm at today's roundtable, SBA did not track all complaints, only those from Congress, and so it does not have an accurate assessment of the severity of the problem. Further, GAO found that most of the disaster loans being sold are performing, that is, the borrowers are paying the amount owed plus interest when it comes due. This is counter to SBA's claims that the asset sales were to shed the Agency of poor performing or non-performing loans that require a disproportionate amount of staff time to handle. I recommend that the moratorium on the sale of disaster loans be kept in place until SBA can address the concerns GAO identified in its study, as well as those raised by Congress and borrowers. I request that if SBA plans to start asset sales again, that it notify its oversight Committees immediately.

Further, as part of reauthorization, I recommend requiring the SBA to adopt electronic fingerprinting to run background checks on all SBA loan applicants, and particularly on those applying for disaster loans. Disaster loans are especially time-sensitive to the applicants, and they cannot and should not have to wait months for a review because they submit paper fingerprints when electronic fingerprints can be processed in 48 hours or less according to the FBI. The technology exists and has been in use for other Federal departments for a couple of years, so SBA should try to adopt this system as soon as possible.

Last, I would like to see the Small Business Drought Relief Act of 2003 included in the reauthorization package. I thank you, Chair Snowe, and Senator Bond for joining me in passing this common-sense bill in the Senate . It has bi-partisan support both in Congress and among governors. The Administration has approved the bill, and it has been voted out of the Senate by unanimous consent. I ask that several letters of support from individual governors and the Southern Governor's Association be placed in the reauthorization record.

Today we will also review SBA's venture capital programs, the Small Business Investment Company (SBIC) program and the New Markets Venture Capital program. I look forward to hearing recommendations from the National Association Small Business Investment Companies regarding the adjustment they need to their fee formula to accommodate an increased subsidy cost projected by OMB for FY2004 and for potential future increases. Their role in our economy continues to be important as traditional venture capital has all but disappeared, shrinking from $106 billion in 2000 to only $6 billion in 2002. We need equity for our fastest growing and most revolutionary small businesses because they are the biggest job creators. Luckily, SBICs continue to make more than 50 percent of all venture capital deals in the United States.

Last, but certainly not least, the Committee will also review the New Markets Venture Capital program. I thank Committee Chair Snowe for her support of this innovative venture capital initiative over the past years and look forward to working with her improve the management of resources devoted to it at the Agency.

However, the first priority is for SBA to complete its review of the remaining conditionally approved New Markets Venture Capital companies as soon as possible. I call on SBA's Office of General Counsel to make this a priority. It is unacceptable that SBA criticized the NMVC firms for not raising their matching private capital when, in reality, these applicants had raised their money and submitted their proposals and it was SBA's delay in the review process that prevented their final approval. Enough finger pointing and delay. Small businesses in need of this type of venture capital are the ones suffering from the broken process. I call upon Administrator Barreto to make this a priority and promptly review the remaining applications. SBA should be able to handle the review of seven firms if they can handle the licensing of 13 new SBICs this year.

Next, I would like the $24 million entrusted to SBA for a second round of New Markets Venture Capital funding restored. This initiative has great potential to spur local job creation and economic activity of fast growing small-businesses in the nation's poorest rural and urban areas - areas overlooked by traditional venture capitalists. As reported Monday in the "CBS Market Watch" article, the Administration is being penny-wise and pound-foolish in cutting programs like this when the economy needs all the help it can get.

Madam Chair, I thank you and your staff for all your work in reauthorizing the SBA's programs and for your collaborative spirit. To all the participants, thank you again for participating in the Committee's roundtables this week, and please let us hear your comments, your concerns and your recommeded changes now, or in writing for the reauthorization record. We want SBA's programs to continue to improve and evolve for the best of small businesses and the nation's economy. I ask that my statement be included in the record.