[Congressional Record Volume 140, Number 94 (Tuesday, July 19, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: July 19, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                 DEVELOPMENT COMPANY PROGRAM INCREASES

  Mr. LaFALCE. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 4322) to amend the Small Business Act to increase the 
authorization for the Development Company Program, and for other 
purposes, as amended.
  The Clerk read as follows:

                               H.R. 4322

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. DEVELOPMENT COMPANY LOANS.

       Section 20(i)(2) of the Small Business Act (15 U.S.C. 631 
     note) is amended--
       (1) by striking ``$8,458,000,000'' and inserting 
     ``$8,758,000,000; and
       (2) by striking ``$1,200,000,000'' and inserting 
     ``$1,500,000,000''.

     SEC. 2. DISASTER LOAN PERSONNEL.

       Section 5(b)(8) of the Small Business Act (15 U.S.C. 
     634(b)(8)) is amended by striking the semicolon and inserting 
     the following: ``: Provided, That the Administrator may 
     extend the six-month limitation for an additional six months 
     if the Administrator determines the extension is necessary to 
     continue efficient disaster loan making activities;''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from New 
York [Mr. LaFalce] will be recognized for 20 minutes, and the 
gentlewoman from Kansas [Mrs. Meyers] will be recognized for 20 
minutes.
  The Chair recognizes the gentleman from New York [Mr. LaFalce].
  Mr. LaFALCE. Mr. Speaker, I yield myself such time as I may consume.
  (Mr. LaFALCE asked and was given permission to revise and extend his 
remarks.)
  Mr. LaFALCE. Mr. Speaker, this bill would do two things: first, it 
would increase the authorization for the amount of financing which may 
be guaranteed under the development company financing programs by $300 
million in the current fiscal year; and second, it would extend to 1 
year the length of time which a Small Business Administration employee 
may be assigned at one disaster loanmaking site.
  The certified development company or CDC program provides long-term 
loans to small concerns, with the proceeds being used for plant and 
equipment. These financings are made on a partnership basis: a private 
lender, without any SBA guarantee, provides 50 percent of the cost of 
the project; an SBA guarantee of the CDC debenture, which is sold to 
private investors, provides 40 percent of the cost of the project; and 
the small business borrower provides the other 10 percent of the 
project's cost.
  The authorization in current law is limited $1.2 billion in 
guarantees of these financings, of which $1.032 billion has been funded 
by the 1994 Appropriations Act. This is not the cost of the bill--these 
are guarantees and under the Credit Reform Act, as is true of all loan 
and loan guarantee programs, the ultimate cost of the program must be 
provided in advance. In the case of this program, the cost of providing 
the required subsidy budget or loss reserve is 0.51 percent or about 
one-half of 1 percent. Thus the subsidy cost of a $300 million increase 
in these guarantees is about $1.5 million.

  As of the end of June 1994, SBA had obligated guarantees in the total 
amount of $948 million and anticipates it will reach the appropriated 
level of $1.032 billion before the end of this month.
  No new appropriation will be required to increase the program level 
to the fully authorized amount--there is additional money in another 
program which is not anticipated to be used. These funds can be shifted 
to the Development Company Program.
  Turning to the other topic, the SBA provides disaster loan assistance 
to victims of natural disasters such as the flooding in the 
Southeastern United States and the January 1994, earthquake in 
Northridge, CA. These SBA loans are processed primarily by temporary 
employees who are hired and then released at the end of the job, or 
moved to other disaster locations.
  In order to minimize costs, SBA hires local employees to the extent 
possible. But SBA also has a trained cadre who are sent to each 
disaster and also must supplement locally hired staff with individuals 
hired elsewhere. Both the cadre and the nonlocal hires receive 
reimbursement for their lodging and food. Current law limits this 
reimbursement to a maximum of 6 months on a single disaster.

  Usually this 6-month limitation is adequate, but in a few situations, 
including the earthquake and Hurricane Hugo, it is not.
  In the California situation, for example, loan processing will 
continue for another 6 months. Thus unless the per diem reimbursement 
time is extended, some current employees will be moved, including the 
attendant expenses, to another disaster site, and temporary employees 
hired and moved to California. Thus it would be advantageous for a 
budget standpoint to extend the limit to 1 year if SBA deems it 
necessary.
  Mr. Speaker, this bill received unanimous support in committee and 
deserves the unanimous support of the House.
  Before closing, however, I want to thank my ranking minority member, 
Mrs. Meyers of Kansas, and the other members on both sides of the aisle 
whose support and assistance have made prompt consideration of this 
bill possible.

                              {time}  1250

  Mr. Speaker, I reserve the balance of my time.
  Mrs. MEYERS of Kansas. Mr. Speaker, I yield myself such time as I may 
consume.
  (Mrs. MEYERS of Kansas asked and was given permission to revise and 
extend her remarks.)
  Mrs. MEYERS of Kansas. Mr. Speaker, I rise in strong support of H.R. 
4322. Section 504 Certified Development Company loans provide long-
term, fixed-rate loans to expanding small businesses. This ``bricks and 
mortar'' loan program allows small businesses to obtain financing for 
new construction, expansion, renovation, or equipment purchases.
  Unlike most Government financing programs, the 504 program has a job 
creation requirement. Over the life of the Certified Development 
Company Program, 341,000 jobs have been created or retained. With a 
total of 19,546 small businesses assisted, that amounts to 
approximately 17 new jobs per business expanded through 504 program 
financing.
  The success of the 504 program is evident, not only from the jobs 
created and businesses expanded, but from the extremely low loss rate 
of the program--just one-half of 1 percent. Through the Certified 
Development Company structure, which pairs SBA assistance with private 
financing to complete each project, small businesses have been able to 
access scarce long-term loans for capital improvements, benefiting the 
entire community.
  Mr. Speaker, H.R. 4322 makes two simple changes in very important SBA 
programs. First, it increases the authorization level for the 504 loan 
program by $300 million for the current fiscal year. No new 
appropriations are required, as the SBA plans to reprogram existing 
funds to meet the demand for 504 program financing.
  Second, the bill grants the SBA Administrator the ability to detail a 
disaster employee to a particular location for up to 1 year. Under 
current law, a disaster employee can be detailed to one location for 
just 6 months. After 6 months, that employee must be moved to another 
disaster. Recent disasters in such areas in California have required 
extensive work to process loan applications and provide assistance. 
H.R. 4322 allows the Administrator the discretion to keep disaster 
employees at the same site for up to 1 year. This is a commonsense 
change that will save taxpayer dollars, as employees will not have to 
be rotated arbitrarily every 6 months.
  Mr. Speaker, H.R. 4322 makes two necessary changes in SBA programs. 
The measure was passed unanimously in the Small Business Committee, and 
I urge my colleagues to support its adoption.
  Mr. Speaker, I have no requests for time, and I yield back the 
balance of my time.
  Mr. LaFALCE. Mr. Speaker, I have no requests for time, and I yield 
back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from New York [Mr. LaFalce] that the House suspend the rules 
and pass the bill, H.R. 4322, as amended.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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