[Pages S10980-S10983]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

SMALL BUSINESS DISASTER RESPONSE AND LOAN IMPROVEMENT ACT OF 2007

Mr. REID. Mr. President, I ask unanimous consent that the Senate
proceed to the consideration of Calendar No. 139, S. 163, the Small
Business Disaster Response and Loan Improvement Act of 2007; that the
committee-reported amendment be withdrawn, and that the substitute
amendment that is at the desk be considered; that the Bond and Coburn
amendments, which are at the desk, be considered and agreed to, en
bloc; that the substitute amendment, as amended, be agreed to; that the
bill, as amended, be read a third time and passed; that the motions to
reconsider be laid upon the table, en bloc; and that any statements
relating to the bill be printed in the Record, with no intervening
action or debate.
The PRESIDING OFFICER. Without objection, it is so ordered.
The committee-reported amendment was withdrawn.
The amendment (No. 2650) was agreed to.
(The amendment is printed in today's Record under ``Text of
Amendments.'')
The amendments (Nos. 2651 and 2652) were agreed to, as follows:

Amendment No. 2651 to Amendment No. 2650

(Purpose: To strike the title relating to energy emergencies)

On page 50, strike line 15 and all that follows through
page 60, line 3.

Amendment No. 2652 to Amendment No. 2650

(Purpose: To require appropriate reporting regarding the number of
full-time employees for either the Office of Disaster Assistance or the
Disaster Cadre of the Small Business Administration, to provide
appropriate assistance in the event of a catastrophic national
disaster, and for other purposes)

On page 24, line 2, strike ``shall'' and insert ``may''.
On page 24, strike line 9, and all that follows through
page 28, line 5, and insert the following:
``(B) Report.--In carrying out this subsection, if the
number of full-time employees for either the Office of
Disaster Assistance or the Disaster Cadre of the
Administration is below the level described in subparagraph
(A) for that office, not later than 21 days after the date on
which that staffing level decreased below the level described
in subparagraph (A), the Administrator shall submit to the
Committee on Appropriations and the Committee on Small
Business and Entrepreneurship of the Senate and the Committee
on Appropriations and Committee on Small Business of the
House of Representatives, a report--
``(i) detailing staffing levels on that date;
``(ii) requesting, if practicable and determined
appropriate by the Administrator, additional funds for
additional employees; and
``(iii) containing such additional information, as
determined appropriate by the Administrator.''.

TITLE II--DISASTER LENDING

SEC. 201. CATASTROPHIC NATIONAL DISASTER DECLARATION.

Section 7(b) of the Small Business Act (15 U.S.C. 636(b))
is amended by inserting immediately after paragraph (10), as
added by this Act, the following:
``(11) Catastrophic national disasters.--
``(A) In general.--The President may make a catastrophic
national disaster declaration in accordance with this
paragraph.
``(B) Promulgation of rules.--
``(i) In general.--Not later than 6 months after the date
of enactment of this paragraph, the Administrator, with the
concurrence of the Secretary of Homeland Security

[[Page S10981]]

and the Administrator of the Federal Emergency Management
Agency, shall promulgate regulations establishing a threshold
for a catastrophic national disaster declaration.
``(ii) Considerations.--In promulgating the regulations
required under clause (i), the Administrator shall establish
a threshold that--

``(I) is similar in size and scope to the events relating
to the terrorist attacks of September 11, 2001, and Hurricane
Katrina of 2005;
``(II) requires that the President declares a major
disaster before making a catastrophic national disaster
declaration under this paragraph;
``(III) requires consideration of--

``(aa) the dollar amount per capita of damage to the State,
its political subdivisions, or a region;
``(bb) the number of small business concerns damaged,
physically or economically, as a direct result of the event;
``(cc) the number of individuals and households displaced
from their predisaster residences by the event;
``(dd) the severity of the impact on employment rates in
the State, its political subdivisions, or a region;
``(ee) the anticipated length and difficulty of the
recovery process;
``(ff) whether the events leading to the relevant major
disaster declaration are of an unusually large and calamitous
nature that is orders of magnitude larger than for an average
major disaster; and
``(gg) any other factor determined relevant by the
Administrator.
``(C) Authorization.--If the President makes a catastrophic
national disaster declaration under this paragraph, the
Administrator may make such loans under this paragraph
(either directly or in cooperation with banks or other
lending institutions through agreements to participate on an
immediate or deferred basis) as the Administrator determines
appropriate to small business concerns located anywhere in
the United States that are economically adversely impacted as
a result of that catastrophic national disaster.
``(D) Loan terms.--A loan under this paragraph shall be
made on the same terms as a loan under paragraph (2).''.
On page 28, strike lines 15 through 18 and insert the
following:
``(A) the term `disaster area' means any area for which the
President declared a major disaster (as that term is defined
in section 102 of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C. 5122)) that subsequently
results in the President making a catastrophic national
disaster declaration under subsection (b)(11);
On page 34, lines 8 and 9, strike ``a disaster declaration
is made'' and inserting ``the President makes a catastrophic
disaster declaration under paragraph (11) of section 7(b) of
the Small Business Act (15 U.S.C. 636(b)), as added by this
Act,''
On page 34, lines 20 and 21, strike ``under section 7(b) of
the Small Business Act (15 U.S.C. 636(b))'' and insert
``under paragraph (11) of section 7(b) of the Small Business
Act (15 U.S.C. 636(b)), as added by this Act''.

Mr. KERRY. Mr. President, this month marks the 2-year anniversary of
Hurricane Katrina, and still thousands of small business owners in New
Orleans and across the gulf coast are still struggling to keep their
doors open, keep their employees working, and get the economy back on
its feet.
Since the days immediately following the storm, I have worked with
Senators Snowe, Landrieu, and Vitter to produce a comprehensive package
to reform the SBA's Disaster Assistance program. Nearly 2 years of
bipartisan negotiations have produced a piece of legislation that has
broad bipartisan support as well as the support of the administration.
Today that legislation will pass the Senate, and is one step closer to
authorizing the tools needed by the SBA to respond to large scale
disasters.
This bill includes directives for the SBA to create a private
disaster loan program, to allow for lenders to issue guaranteed
disaster loans in the aftermath of a catastrophic disaster. 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 will be available following a disaster of catastrophic
proportions so that processing delays such as the ones experienced
after the 2005 gulf coast storms will not result in widespread business
failure.
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 the event of a large-scale disaster, businesses
located far from the physical reach of the disaster can be affected by
the magnitude of a localized destruction. We saw this when the
terrorist attacks of September 11, 2001 affected businesses from coast
to coast, and we saw it again with the 2005 gulf coast hurricanes.
Should another catastrophic disaster strike, the President should have
the authority to provide businesses across the country with access to
the same low-interest economic injury loans available to businesses
within the declared disaster area.
Nonprofit 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 required.
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
$100,000 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.
Though it took many, many months to pass this much-needed
legislation, I am confident that our extensive negotiations have
produced a piece of legislation that, when enacted, will provide the
tools that the administrator requires to swiftly and effectively
respond to future disasters, both large and small. I thank Ranking
Member Snowe as well as Senators Landrieu, and Vitter for their
extraordinary efforts over the past 2 years. I also thank Senators Bond
and Coburn for their ability to see the need for this important
legislation and to work through disagreements in order to get this bill
passed. I look forward to working with the House of Representatives to
address any differences that remain between the House and Senate
versions of the bill so that we can put in place a more comprehensive
disaster response program at the SBA as quickly as possible.
Ms. LANDRIEU. Mr. President, as we all know, there was a tremendous
amount of criticism of the Federal Government's response to Hurricanes
Katrina and Rita of 2005. Things are better now, and the region is
slowly recovering. But as I stand here tonight, we are exactly 63 days
into the 2007 Atlantic hurricane season. Two years ago, the U.S. Small
Business Administration's, SBA, response to Hurricanes Katrina and Rita
was too slow and lacking in urgency, threatening the very survival of
impacted businesses and homeowners. This failure occurred because SBA
lacked the necessary tools and resources to respond swiftly and
effectively to a large-scale disaster. Thanks in part to the efforts of
Administrator Steven Preston, much has been done to improve the SBA
disaster assistance program in the past

[[Page S10982]]

year. However, many in Congress remain concerned that despite these
efforts, the agency lacks the additional legislative authority and
resources required to respond to a large-scale disaster. This is
because we must be sure that if we have another disaster, the Federal
Government's response will be better this time around. Disaster
response agencies have to be better organized, more efficient, and more
responsive in order to avoid the problems, the delays, mismanagement,
and the seeming incompetence that occurred in 2005.
I am proud that legislation, of which I am an original cosponsor, is
passing the Senate tonight. This is because I strongly believe that we
cannot afford to adjourn for August, the heart of hurricane season,
without moving this important legislation forward--legislation which
would immediately provide SBA with the resources it needs to
effectively respond to natural or manmade disasters. In particular,
this legislation improves the disaster response of one agency that had
a great deal of problems last year, the SBA. This bill, S. 163, the
Small Business Disaster Response and Loan Improvements Act, makes major
improvements to the SBA's disaster response and provides them with
essential tools to ensure that they are more efficient and better
prepared for future disasters--big and small.
I should also note that this bill is a result of intensive bipartisan
work over 2 years and was introduced shortly before the 109th Congress
adjourned as S. 4097 by Senator Snowe. Unfortunately, there was no
action on that bill, so it was reintroduced in January 2007, at the
start of the 110th Congress, by Senator Kerry as S. 163. On May 7,
2007, the Committee on Small Business and Entrepreneurship unanimously
reported out S. 163 and sent it to the full Senate for consideration.
This bipartisan legislation features comprehensive SBA reforms as
outlined in the attached summary. S. 163 also has the full support of
the SBA, who assisted the committee in drafting many of the provisions
as well as the support of our Louisiana business community. As
mentioned above, although this bill was reported out of committee 86
days ago, S. 163 was blocked from passage, most recently on July 17 due
to a Republican objection. The committee worked closely with the
Republican Senator to address his specific concerns, but unfortunately
after this hold was lifted last night, it appeared as if there would be
an additional hold from the Republican side. Given the urgent nature of
this legislation, in addition to the fact that the House of
Representatives passed companion legislation on April 18, 2007, my
colleagues and I were pleased that we could work out these remaining
issues and pass this bill tonight because stalling this legislation
would send the wrong signal to America's small businesses.
As mentioned previously, this bill is reflective of my priorities as
well as those from Senators Kerry and Snowe, respectively chair and
ranking member of the Senate Small Business Committee. For my part, I
have heard loudly and clearly from our impacted businesses that SBA
reforms should be implemented as soon as possible. In fact, as of
August 29, 2007, these reforms will be 2 years overdue. That is why I
have worked tirelessly alongside my colleagues on the Small Business
Committee to secure passage of this legislation. Like my colleagues, I
have led when appropriate, pushed back when pushed, and negotiated when
needed so that S. 163 could pass the Senate before we adjourn for
August recess.
This legislation offers new tools to enhance SBA's disaster
assistance programs. In every disaster, the SBA disaster loan program
is a lifeline for businesses and homeowners who want to rebuild their
lives after a catastrophe. When Katrina hit, our businesses and
homeowners had to wait months for loan approvals. I do not know how
many businesses we lost because help did not come in time. Because of
the scale of this disaster, what these businesses needed was immediate,
short-term assistance to hold them over until SBA was ready to process
the tens of thousands of loan applications it received.
That is why this legislation provides the SBA Administrator with the
ability to set up an expedited disaster assistance business loan
program to make short-term, low-interest loans to keep them afloat.
These loans will allow businesses to make payroll, begin making
repairs, and address other immediate needs while they are awaiting
insurance payouts or regular SBA disaster loans. However, I realize
that every disaster is different and could range from a disaster on the
scale of Hurricane Katrina or 9/11, to an ice storm or drought. This
legislation gives the SBA additional options and flexibility in the
kinds of relief they can offer a community. When a tornado destroys 20
businesses in a small town in the Midwest, SBA can get the regular
disaster program up and running fairly quickly. You may not need short-
term loans in this instance. But if you know that SBA's resources would
be overwhelmed by a storm--just as they were initially with Katrina--
these expedited business loans would be very helpful.
This legislation also would direct SBA to study ways to expedite
disaster loans for those businesses in a disaster area that have a
good, solid track record with the SBA or can provide vital recovery
efforts. We had many businesses in the gulf coast that had paid off
previous SBA loans, were major sources of employment in their
communities, but had to wait months for decisions on their SBA disaster
loan applications. I do not want to get rid of the SBA's current
practice of reviewing applications on a first-come first-served basis,
but there should be some mechanism in place for major disasters to get
expedited loans out the door to specific businesses that have a
positive record with SBA or those who could serve a vital role in the
recovery efforts. Expedited loans would jump-start impacted economies,
get vital capital out to businesses, and retain essential jobs
following future disasters.
This bill also makes an important modification to the collateral
requirements for disaster loans. The SBA cannot disburse more than
$10,000 for an approved loan without showing collateral. This is to
limit the loss to the SBA in the event that a loan defaults. However,
this disbursement amount has not been increased since 1998 and these
days, $10,000 is not enough to get a business up and running. That is
why this bill increases this collateral requirement to $14,000 and
gives the administrator the ability to increase that amount, in the
event of another large-scale disaster. I believe this is a reasonable
and fiscally responsible increase, and at the same time gives the
administrator flexibility for future disasters which will inevitably
occur.
As you may know, I pushed to get language in the last hurricane
supplemental appropriations bill in June 2006 to require SBA to develop
a disaster plan and report to Congress on its contents by July 15,
2006. SBA provided this status report in July, and I am pleased that,
due to my request, the agency provided the completed disaster response
plan to our committee on June 1, 2007. That said, it is one thing to
draft up a plan but it is not worth the time and effort if there is no
one to monitor its implementation and update it when needed. For this
reason, I included a provision in this bill to require the
administrator to designate one agency employee, who would report
directly to him/her, to be responsible for this plan. This disaster
planning designee would be responsible for the plan, and more
importantly, would be accountable to Congress if it fails. Following
Hurricanes Katrina and Rita, not only is execution important but also
just as important is clear accountability if these best laid plans
fail.
The Small Business Disaster Response and Loan Improvements Act will
provide essential tools to make the SBA more proactive, flexible, and
most important, more efficient during future disasters. Again, I look
forward to working with both Senator Snowe and Senator Kerry in the
coming weeks to begin discussions with our House colleagues to resolve
differences on both the Senate-passed bill and the House-passed bill.
The goal of both these bills is to ensure that the SBA has everything
it needs to better respond following future disasters, so I am hopeful
that we can work out a reasonable agreement.
I ask unanimous consent that a copy of a June 29, 2007, letter of
support from Administrator Preston, along with a July 31, 2007, letter
from Greater New Orleans, Inc. be printed in the

[[Page S10983]]

Record at the conclusion of my statement.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Small Business Administration,

Washington, DC, June 29, 2007.
Hon. John F. Kerry,
Chairman, Committee on Small Business and Entrepreneurship,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: I am writing to express my thanks for
the efforts you and your colleagues have made to work with
the U.S. Small Business Administration and to address the
Administration's concerns with some of the provisions in S.
163, ``The Small Business Disaster Response and Loan
Improvements Act of 2007''.
At this point, if amended by the Bond Amendment, the
Administration has no objections to Senate passage of S. 163.
However, the Administration would request a longer extension
of the authorization language in Section 3 to avoid the need
for concern over unintended expiration of programs and
activities. We would also recommend clarifying that the
Administrator would have flexibility under Section 205 to
designate portions of a declared catastrophic national
disaster area as a HUBZone area, without extending this
designation to an entire disaster area.
We look forward to working with you when the bill goes into
conference discussions with the U.S. House of
Representatives. If you have any questions or comments,
please contact me directly.
Sincerely yours,
Steven C. Preston,
Administrator.
____

Greater New Orleans, Inc.,

New Orleans, LA, July 31, 2007.
Hon. John Kerry,
Chairman, Senate Committee on Small Business and
Entrepreneurship, Russell Senate Office Building,
Washington, DC.
Hon. Olympia Snowe,
Ranking Member, Senate Committee on Small Business and
Entrepreneurship, Russell Senate Office Building,
Washington, DC.
Dear Chairman Kerry and Ranking Member Snowe: Greater New
Orleans, Inc., the 10-parish economic development
organization for the New Orleans, Louisiana region, would
like to express strong support of S. 163, The Small Business
Disaster Response and Loan Improvements Act of 2007 reported
unanimously by the Senate Small Business Committee in May of
this year, after months of thorough committee deliberations.
In our assessment, S. 163 sponsored by Senator Kerry and
co-sponsored by five other Senators represents significant
legislation to improve SBA's response to future storm events,
as part of overall Congressional efforts to improve the
federal government's role, learning from the catastrophic
hurricanes of 2004 and 2005.
More specifically, the legislation would provide a new
level of SBA response for catastrophic disasters, expedited
assistance to small businesses, adjustment of the loan
guarantee levels and loan caps, a better coordination process
with FEMA, increased response resources, improved access and
overall accountability of SBA services. These policy changes
will go a long way to helping local communities get back on
their feet in future federally declared disasters.
Two years after the tragedy of Hurricane Katrina, our
region is still struggling to restore our population, housing
stock, healthcare services, infrastructure, and basic
economy. 18,000 small businesses in our area were directly
impacted by the hurricane, experiencing significant physical
and economic damages. As these businesses fight to restore
operations, hire adequate staff, find affordable insurance,
and meet payroll, it seems appropriate to have their trials
and tribulations be cause for new federal policies.
By many accounts and measures the SBA capacity, resources,
process and policies following Hurricane Katrina were
inadequate to meet the needs of the devastated business
community. However, rather than complain about the past, it
would be more productive to make every effort to improve the
SBA disaster program and protocols, changes requiring
aggressive congressional action. It appears that S. 163 is a
significant step in that direction.
We applaud your leadership of this issue, and that of our
Louisiana Senators Landrieu and Vitter, in forwarding this
important legislation to step up federal efforts and capacity
in future storms to protect our nation's assets and citizens
who may be impacted in the coming months and years. As we
approach the peak of the 2007 hurricane season, we urge the
full Senate to expedite this legislation in order to pass
these vital SBA reforms.
Thank you for your consideration.
Sincerely,
Mark C. Drennen,
President & CEO.

The bill (S. 163), as amended, was ordered to be engrossed for a
third reading, was read the third time, and passed.
(The bill will be printed in a future edition of the Record.)

____________________