1.This Act may be cited as
the Small Business Disaster Recovery
Assistance Improvements Act of 2006
.
2.Congress finds that—
(1)43 percent of
businesses that close following a natural disaster never reopen;
(2)an additional 29
percent of businesses close down permanently within 2 years of a natural
disaster;
(3)businesses
affected by a natural disaster require, within the first 60 days following the
disaster, immediate access to capital and technical assistance to fully recover
and prosper;
(4)in the aftermath
of Hurricanes Katrina and Rita of 2005, due to initial Administration response
issues, as well as extensive destruction in the region and wide distribution of
affected business owners around the country—
(A)Administration
loan approvals took longer than 3 months, on average, for homeowner disaster
loans, and longer than 2 months, on average, for business disaster loans;
and
(B)closings on
disaster loans added an additional month to the process;
(5)the
Administration requires new tools and authority to be more effective in
responding to major disasters and to be responsive to the needs of affected
small business concerns and homeowners;
(6)for major
disasters, State-administered bridge loan programs can serve as an effective
means of providing immediate capital, to allow businesses to make repairs, make
payroll, and continue operations, as demonstrated by the fact that—
(A)following the
2004 hurricanes in Florida, the Florida State Bridge Loan Program was a
successful program in providing immediate capital to struggling businesses,
providing 1,679 small business concerns with $35,400,000 in bridge
loans;
(B)following the
2005 impacts of Hurricanes Katrina and Rita on the Louisiana Gulf Coast, the
Louisiana Bridge Loan Program was a successful program in providing immediate
capital to struggling businesses, providing 407 small business concerns with
$9,750,000 in bridge loans;
(C)following the
2005 impact of Hurricane Katrina on the Mississippi Gulf Coast, the Mississippi
Bridge Loan Program was a successful program in providing immediate capital to
struggling businesses, providing 464 small business concerns with $11,233,850
in bridge loans; and
(D)following the
2005 impact of Hurricane Wilma on the Florida Gulf Coast, the Florida State
Bridge Loan Program was a successful program in providing immediate capital to
struggling businesses, providing 593 small business concerns with $12,900,000
in bridge loans;
(7)in the aftermath
of Hurricane Katrina of 2005 and Hurricane Rita of 2005, small business
development centers had difficulties entering and utilizing disaster recovery
centers of the Administration, resulting in delays of technical assistance
service to affected businesses; and
(8)there is a need
for greater cooperation between the Federal Government and State governments on
bridge loans programs to respond to major disasters.
3.In this Act—
(1)the terms
Administration and Administrator mean the Small
Business Administration and the Administrator thereof, respectively;
(2)the term
approved State Bridge Loan Program means a State Bridge Loan
Program approved under section 5(b);
(3)the term
major disaster has the meaning given the term in section 102 of
the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C.
5122);
(4)the term
small business concern has the meaning given the term in section 3
of the Small Business Act; and
(5)the term
State means any State of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, the Northern Mariana Islands, the
Virgin Islands, Guam, American Samoa, and any territory or possession of the
United States.
4.Emergency bridge
loans and grants after major disastersSection 7(b) of the Small Business Act (15
U.S.C. 636(b)) is amended by inserting immediately after paragraph (3) the
following:
(4)Emergency
bridge loans and business recovery grants after major disasters
(A)In
this paragraph—
(i)the term
disaster area means an area for which a major disaster was
declared, during the period of such declaration; and
(ii)the term
major disaster has the meaning given the term in section 102 of
the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C.
5122).
(B)
(i)In
this subparagraph, the term qualified small business concern means
a small business concern—
(I)located in a
disaster area; and
(II)that is directly
adversely affected by the major disaster for which such disaster area was
declared.
(ii)The Administrator shall make such loans under this
subparagraph (either directly (including through a district office of the
Administration located in a disaster area) 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 a qualified
small business concern, to provide assistance until such small business concern
is able to obtain funding through insurance claims, other Federal assistance
programs, or other sources, based on such criteria as the Administrator may set
by rule, regulation, or order.
(iii)
(I)A
loan under this subparagraph may have no prepayment penalty.
(II)For
not more than 6 months after the date on which a loan is made under this
subparagraph, the interest rate on such a loan may be the same as for a loan
under paragraph (2).
(III)A
loan under this subparagraph may include as a term that such loan may be
transferred to a local bank or other financial institution in a disaster
area.
(IV)The borrower for a loan under this subparagraph shall
certify the intent of such borrower to participate in technical assistance
consultation (either with a local small business development center or other
technical assistance group approved by the Administrator) before the borrower
may utilize funds received under the loan.
(iv)A loan under this subparagraph may be used for—
(I)paying salaries,
bills, and other existing financial obligations;
(II)making minor
repairs;
(III)purchasing
inventory; or
(IV)paying other
costs.
(v)Notwithstanding any other provision of law, the
Administrator may make a loan under this subparagraph of not more than $150,000
to a qualified small business concern.
(vi)
(I)The Administrator, or a bank or other lending
institution, may defer payments of principal and interest on a loan under this
subparagraph for not more than 180 days after the date on which the loan is
made.
(II)Capitalization
of interestIf payments are deferred under subclause (I), any
interest accrued during the period for which such payments are deferred shall
be capitalized.
(vii)In making any loan under this subparagraph—
(I)the borrower
shall be made aware that such loans are for those directly adversely affected
by the major disaster; and
(II)if such loans
are made in cooperation with a bank or other lending institution, the lender
shall document for the Administrator how the borrower was directly adversely
affected by the major disaster.
(viii)
(I)For any major disaster, not later than 6 months after the
date on which such disaster is declared, and every 6 months thereafter until
the date that is 18 months after the date on which such disaster is declared,
the Inspector General of the Administration shall submit a report to the
Committee on Small Business and Entrepreneurship of the Senate and the
Committee on Small Business of the House of Representatives regarding loans
described in clause (vii)(II), including verification that the program is being
administered appropriately and that such loans are being used for purposes
authorized by this subparagraph.
(II)Not
later than 12 months after the date on which a final report for a major
disaster is submitted by the Inspector General under subclause (I), the
Comptroller General of the United States shall conduct a review of the loan
program authorized under this subparagraph and submit a report to the Committee
on Small Business and Entrepreneurship of the Senate and the Committee on Small
Business of the House of Representatives containing the findings of the review
and any recommendations.
(C)
(i)In
this subparagraph, the term eligible small business concern means
a small business concern—
(I)directly
adversely affected by a major disaster;
(II)that has been
declined for other assistance under this subsection and from private lending
institutions and State-provided bridge loans;
(III)that certifies
that it intends—
- (aa)to
reopen in the disaster area for which the major disaster described in subclause
(I) was declared; and
- (bb)to
participate in technical assistance consultation (either with a local small
business development center or other technical assistance group approved by the
Administrator).
(ii)The
Administrator shall make such grants under this subparagraph as the
Administrator determines appropriate to an eligible small business concern, to
assist such small business concern in recovery from a major disaster.
(iii)The Administrator may make a grant in an amount not more
than $25,000 under this subparagraph.
(iv)Documentation
of technical assistanceAn eligible small business concern
receiving a grant under this subparagraph shall submit to the Administrator
documentation indicating that such small business concern received technical
assistance support through a small business development center or other
technical assistance provider determined appropriate by the
Administrator.
(D)Authorization
of appropriationsThere are authorized to be appropriated to the
Administration such sums as are necessary to carry out this
paragraph.
.
5.State bridge
loan guarantee
(a)After
issuing guidelines under subsection (c), the Administrator may guarantee loans
made under an approved State Bridge Loan Program.
(b)
(1)A
State desiring approval of a State Bridge Loan Program shall submit an
application to the Administrator at such time, in such manner, and accompanied
by such information as the Administrator may require.
(2)The
Administrator may approve an application submitted under paragraph (1) based on
such criteria as the Administrator may establish under this section.
(c)
(1)Not later than 90 days after the date of enactment of
this Act, the Administrator shall issue to the appropriate economic development
officials in each State, the Committee on Small Business and Entrepreneurship
of the Senate, and the Committee on Small Business of the House of
Representatives, guidelines regarding approved State Bridge Loan
Programs.
(2)The
guidelines issued under paragraph (1) shall—
(A)identify
appropriate uses of funds under an approved State Bridge loan Program;
(B)set terms and
conditions for loans under an approved State Bridge loan Program;
(C)address
whether—
(i)an
approved State Bridge Loan Program may charge administrative fees; and
(ii)loans under an
approved State Bridge Loan Program shall be disbursed through local banks and
other financial institutions; and
(D)establish the
percentage of a loan the Administrator will guarantee under an approved State
Bridge Loan Program.
6.Authority to
make expedited 7(a) disaster loans to small business concernsSection 7(a) of the Small Business Act (15
U.S.C. 636(a)) is amended by adding at the end the following:
(32)
(A)In
this paragraph—
(i)the term
disaster area means an area for which a major disaster was
declared, during the period of such declaration;
(ii)the term
major disaster has the meaning given the term in section 102 of
the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C.
5122); and
(iii)the term
essential small business concern in good standing means a small
business concern that the Administrator, in consultation with appropriate
officials in district offices of the Administration determines has the ability
to repay the subject loan, and—
(I)is in good
standing and has a history of compliance with the terms of a program of the
Administration (including having repaid, or being in the process of repaying, a
loan under a program of the Administration, as required under the terms of such
loan); or
(II)has a bona fide
reason for receiving an expedited loan under this paragraph (including being a
major source of employment in a disaster area or essential to economic recovery
of the area, such as by supplying building materials, housing, or debris
removal services).
(B)Notwithstanding any other provision of law, the
Administrator may make a loan under this subsection to an essential small
business concern in good standing under expedited procedures, including
expedited loss verification, loan processing, and approval.
(C)Authorization
of appropriationsThere are authorized to be appropriated to the
Administrator, such sums as are necessary to carry out this
paragraph.
.
7.
(a)Section 7(a)(3)(A) of the Small Business Act is amended
by striking $1,500,000 (or if the gross loan amount would exceed
$2,000,000
and inserting $2,250,000 (or if the gross loan amount
would exceed $3,000,000
.
(b)Section 7(c)(6) of the
Small Business Act (15 U.S.C. 636(c)(6)) is amended—
(1)by striking
$500,000
each place such term appears and inserting
$2,250,000
;
(2)by striking
$100,000
and inserting $250,000
; and
(3)by striking
$20,000
and inserting $50,000
.
(c)Chapter I of the Emergency Supplemental Appropriations
for Relief From the Major, Widespread Flooding in the Midwest Act of 1993
(Public Law 103-75; 107 Stat. 740) is amended by striking :
Provided further, That notwithstanding any other provision of
law, the $500,000 limitation on the amounts outstanding and committed to a
borrower provided in paragraph 7(c)(6) of the Small Business Act shall be
increased to $1,500,000 for disasters commencing on or after April 1,
1993
.
8.Increasing collateral
requirementsSection 7(c)(6)
of the Small Business Act (15 U.S.C. 636(c)(6)) is amended by striking
$10,000
and inserting $20,000
.
9.Catastrophic regional
or national disastersSection
7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)) is amended—
(1)by redesignating
subparagraphs (A), (B), (C), and (D) as clauses (i), (ii), (iii), and (v),
respectively;
(2)by striking
(2) to make such loans
and inserting (2)(A) to make such
loans
;
(3)in subparagraph
(A), as so designated by this section—
(A)by striking
or
at the end of each of clauses (i), (ii), and (iii), as so
redesignated by paragraph (1) of this section;
(B)by inserting
after clause (iii), as so redesignated by paragraph (1) of this section, the
following:
(iv)a catastrophic regional or
national disaster, as declared by the Secretary of Homeland Security, that is
an actual or potential high-impact event that requires a coordinated and
effective response by an appropriate combination of Federal, State, local,
tribal, nongovernmental, or private-sector entities in order to save lives and
minimize damage and provide the basis for long-term community recovery and
mitigation activities; or
;
and
(C)in clause (v), as
so redesignated by paragraph (1) of this section, by striking
subparagraph (A), (B), or (C)
and inserting clause (i),
(ii), (iii), or (iv)
; and
(4)by adding at the
end the following:
(B)Notwithstanding subsection (c)(6), in
the case of a catastrophic regional or national disaster declared under
subparagraph (A)(iv) of this paragraph, the Administrator may increase the
maximum amount that may be outstanding and committed to borrower under this
paragraph to
$10,000,000.
.
10.Full-time
disaster planning staff
(a)Increase in
small business administration full-time disaster planning
staffThe Administrator shall hire a full-time disaster planning
specialist in the Office of Disaster Assistance of the Administration.
(b)The
disaster planning specialist hired under subsection (a) shall be responsible
for—
(1)creating and
maintaining the comprehensive disaster response plan of the
Administration;
(2)ensuring
in-service and pre-service training procedures for the disaster response staff
of the Administration;
(3)coordinating
Administration training exercises, including mock disaster responses, with
other Federal agencies; and
(4)other
responsibilities, as determined by the Administrator.
(c)Authorization
of appropriations
(1)There are authorized to be appropriated to the
Administration such sums as are necessary to carry out this section.
(2)Amounts made available under this section shall remain
available until expended.
11.Additional
authority for district offices of the AdministrationSection 7(b) of the Small Business Act (15
U.S.C. 636(b)) is amended by inserting immediately after paragraph (4), as
added by this Act, the following:
(5)In the event of 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)), the Administrator may authorize a district
office of the Administration to process loans under paragraph (1) or
(2).
.
12.Economic injury
disaster loans to nonprofits
(a)Section 7(b)(2)(A) of
the Small Business Act, as redesignated by this Act, is amended—
(1)in the matter
preceding clause (i)—
(A)by inserting
after small business concern
the following: , private
nonprofit organization,
; and
(B)by inserting
after the concern
the following: , organization,
; and
(2)in clause (v), by
inserting after small business concerns
the following: ,
private nonprofit organizations,
.
(b)Section 7(c) of the Small Business Act (15 U.S.C.
636(c)) is amended in paragraph (5)(C), by inserting ,
organization,
after business
.
13.Small business
development center portability grantsSection 21(a)(4) of the Small Business Act
(15 U.S.C. 648(a)(4), as amended by this Act, is amended by adding at the end
the following:
(E)In the event of 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)), the Administrator may waive the maximum
amount of $100,000 for grants under subparagraph (C)(viii), and such grants
shall be made available for small business development centers assisting small
business concerns adversely affected by such major
disaster.
.
14.Disaster loan
program monthly accounting report
(a)In this section, the term applicable
period means the period beginning on the date on which the President
declares a major disaster and ending on the date that is 30 days after the
later of the closing date for applications for physical disaster loans for such
disaster and the closing date for applications for economic injury disaster
loans for such disaster.
(b)Not later than the 5th business day of each month during
the applicable period for a major disaster, the Administrator shall provide to
the Committee on Small Business and Entrepreneurship and the Committee on
Appropriations of the Senate and to the Committee on Small Business and the
Committee on Appropriations of the House of Representatives a report on the
operation of the disaster loan program authorized under section 7 of the
Small Business Act (15 U.S.C. 636) for
such disaster during the preceding month.
(c)Each report under subsection (b) shall include—
(1)the daily average
lending volume, in number of loans and dollars, and the percent by which each
category has increased or decreased since the previous report under subsection
(b);
(2)the weekly
average lending volume, in number of loans and dollars, and the percent by
which each category has increased or decreased since the previous report under
subsection (b);
(3)the amount of
funding spent over the month for loans, both in appropriations and program
level, and the percent by which each category has increased or decreased since
the previous report under subsection (b);
(4)the amount of
funding available for loans, both in appropriations and program level, and the
percent by which each category has increased or decreased, noting the source of
any additional funding;
(5)an estimate of
how long the available funding for such loans will last, based on the spending
rate;
(6)the amount of
funding spent over the month for staff, along with the number of staff, and the
percent by which each category has increased or decreased since the previous
report under subsection (b);
(7)the amount of
funding spent over the month for administrative costs, and the percent by which
such spending has increased or decreased since the previous report under
subsection (b);
(8)the amount of
funding available for salaries and expenses combined, and the percent by which
such funding has increased or decreased, noting the source of any additional
funding; and
(9)an estimate of
how long the available funding for salaries and expenses will last, based on
the spending rate.
15.Disaster loans
after major disastersSection
7(b) of the Small Business Act (15
U.S.C. 636(b)) is amended by inserting immediately after paragraph (5), as
added by this Act, the following:
(6)Authority for
lenders to process disaster loansThe Administrator may enter
into an agreement with a qualified lender, as determined by the Administrator,
to process loans under this section, under which the Administrator shall pay
the lender a fee for each loan processed.
(7)Authority for
the administrator to contract with lenders for loan loss verification
servicesThe Administrator may enter into an agreement with a
qualified lender or loss verification professional, as determined by the
Administrator, to verify losses for loans under this section, under which the
Administrator shall pay the lender or verification professional a fee for each
loan for which such lender or verification professional verifies
losses.
.
16.Waiver of geographic
restrictions on SBDC counselorsSection 21(b) of the Small Business Act (15
U.S.C. 648(b)) is amended by adding at the end the following:
(4)Waiver of geographic restrictions
on SBDC counselors
(A)The Administrator shall authorize any small
business development center, regardless of location, to provide advice,
information, and assistance, as described in subsection (c), to a small
business concern located in an area in which the President declared a major
disaster (as defined in section 102 of the Robert T. Stafford Disaster Relief
and Emergency Assistance Act (42 U.S.C. 5122)), during the period of such
declaration.
(B)A small business development center that
provides counselors to an area described in subparagraph (A) shall, to the
maximum extent practicable, ensure continuity of services in the State it
currently serves.
(C)Access to disaster recovery
facilitiesFor purposes of
providing recovery assistance under this paragraph, the Administrator shall
permit small business development center personnel to use any site or facility
designated by the Administration for use for such
purpose.
.