Mr. President, June brings the beginning of the 2006 Atlantic hurricane season, and according to the National Oceanic and Atmospheric Administration, we can expect it to be a busy one. The Administration is predicting thirteen-to-sixteen named storms, with as many as four-to-six predicted to become major hurricanes of category three strength or higher.

As our Gulf Coast communities learned last fall, it only takes one of these storms to utterly destroy the homes, businesses and lives of millions of Americans. We owe it to the victims of Hurricanes Katrina, Rita and Wilma, as well as to the unsuspecting victims of future disasters, to fix the Federal disaster loan program and build it to be responsive to the needs of disaster victims.

That’s why I am introducing the Small Business Disaster Loan Reauthorization and Improvement Act of 2006. This bill seeks to improve coordination between responding agencies in the immediate aftermath of a disaster. The priority of first responders should be addressing the needs of victims, and the laws establishing disaster response should allow for maximum agency collaboration in addressing those needs.

To this end, we have directed the Administrator of the Small Business Administration and the Director of the Federal Emergency Management Agency to coordinate disaster assistance application periods when possible. The Small Business Administration is directed to address any inconsistencies between the federal regulations and the Administration’s standard operating procedures that govern the disaster loan program. The Administrator is also directed to work to the maximum extent practicable to gain speedy access to all relevant tax records for loan applicant consideration, and when considering applications, is directed to consider an applicant’s credit rating from the day prior to the disaster’s occurrence.

The Comptroller General is directed to study the current disaster assistance application and referral process that has resulted in an approval rate of only 35% of total disaster loan applicants. The Administrator is also directed to report on how this process can be improved. To increase awareness of available disaster loan assistance, the bill directs the Administrator to develop a proactive marketing plan that will get information on disaster loans in the hands of those who need it. The bill includes an additional study to be conducted by the Comptroller General on industries that may have difficulty accessing disaster loans.

In addition to reauthorizing the disaster loan program for a period of three years beginning in 2007, this bill provides the increased capital that homeowners and small business owners need and currently have trouble accessing following a major disaster. 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. In addition, private lenders are encouraged to make disaster loans through the 7(a) and 504 lending programs with reduced fees, and the Administrator is authorized to enter into agreements with private contractors in order to expedite loan application processing for direct disaster loans.

Disaster victims are often in need of capital prior to when traditional assistance programs are available. To address this need, this bill establishes a process for providing Federal bridge loans, allowing states to redirect funding previously designated for Community Development Block Grants and use these funds to provide bridge loans and grants to disaster victims. Having this waiver in place will allow states to ensure that victims have the speedy access to capital while they wait for alternative sources of assistance.

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.

So that businesses are not limited during major disasters by a loan cap that is not sufficient to meet their needs, the bill increases the aggregate amount of loans available to $10,000,000 during a declared major disaster or a catastrophic national disaster.

This bill strengthens the Stafford Act by requiring a 10 percent goal for local firms to participate in the recovery and reconstruction effort. The bill also encourages the utilization of expedited procurement tools for small, small disadvantaged, service-disabled, and historically underutilized businesses.

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 allows faster payments to small firms in order to increase their ability to gain access to bonds. To make bonding more attractive to surety providers in the disaster area, the administrator may wave fees for sureties offering bonding in the disaster area and allows the sureties to use the state-approved rates for bonds awarded in the disaster area.

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.

Many small businesses depend on the contributions of America’s military reservists, and have been struggling through the months that these brave men and women have served their country through active duty. This bill authorizes the Administrator to provide grants to the smallest of these firms to assist them as they seek to remain open.

Gas prices continue to soar, 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, and they do so despite the slow and inadequate response from their Federal Government. By increasing access to capital for small businesses suffering as a result of a disaster, and by ensuring that Federal agencies charged with disaster response are doing their jobs in a coordinated manner that puts the needs of victims first, we can ensure that the Federal Government is better prepared to respond to future disasters.

Thank You.

To read the press release, click here.