[Congressional Record Volume 143, Number 28 (Thursday, March 6, 1997)]
[Extensions of Remarks]
[Pages E408-E409]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    EXTENDING THE DELTA LOAN PROGRAM

                                 ______
                                 

                         HON. MICHAEL P. FORBES

                              of new york

                    in the house of representatives

                        Thursday, March 6, 1997

  Mr. FORBES. Mr. Speaker, I rise today to bring to the attention of my 
colleagues a bill that I introduced to improve the Defense Loan and 
Technical Assistance Program, known in short as the DELTA Program. I am 
honored to be joined by Congresswoman Carolyn McCarthy in this effort.
  As a former regional administrator of the Small Business 
Administration, I had the opportunity to see firsthand the correlation 
between a thriving defense industry and a successful small business 
community. In the early 1990's, Congress mandated a reduction in 
overall defense spending. As a result of those cuts, many defense 
businesses and contractors across the country were forced to terminate 
thousands of employees, eliminate services, and close down factories. 
Some parts of the country were hit harder than others. On Long Island 
we saw the departure of our largest employer, Northrup/Grumman and 
30,000 jobs lost. In fact, Long Island's economy is still experiencing 
a recession and we have yet to recover those lost job opportunities.
  That is why as a member of the Appropriations Committee, I worked 
hard to make the DELTA Program a reality.
  Currently, $30 million is authorized and appropriated for the DELTA 
Program with the specific purpose of helping defense dependent small 
businesses to diversify within the commercial market, while at the same 
time retain and create jobs. Since becoming operational in 1995, the 
DELTA Program has been a success. As of February 1, 1997, 94 DELTA 
loans have been made nationwide. I am proud to say that eight of those 
loans were made by the Long Island SBA office, which makes Long Island 
the leader in the Northeast region. Initial figures show that the DELTA 
Program has created more than 400 jobs and more than 700 jobs have been 
retained. While these are impressive numbers, it is important to note 
that they are not representative of the success of the program. The 
results of a SBA survey on the program have not been reported yet. I am 
confident that the survey results, coupled with SBA's initial figures 
on job creation and retention, will reveal that the DELTA Program has 
led to the creation and salvation of thousands of jobs.
  No question about it--the DELTA Program is a success. And that is why 
I introduced legislation to make it more accessible to small 
businesses. My bill calls for three changes to the existing DELTA 
Program that will ensure that the $30 million appropriated will not go 
unused.
  First, my bill extends the life of the DELTA Program 1 year to 1999. 
If unchanged, the DELTA Program will sunset at the close of fiscal year 
1998. If we allow this to happen, all

[[Page E409]]

unused DELTA funds will revert back to the General Treasury. This is a 
real concern because to date of the $30 million originally set aside 
for the DELTA Program, only a little more than $3 million has been 
utilized. This means that close to $27 million is sitting unused at the 
SBA. I would hate to see that money transferred back to the General 
Treasury, especially when there are so many small businesses and jobs 
that hang in the balance.

  Second, my bill makes the DELTA Program more accessible to small 
firms. As the law is written now, in order for a small business to 
qualify for a DELTA loan a substantial amount, 25 percent to be exact, 
of its prior year's revenue must be derived from defense-related 
contracts. However, only a small sector of the defense-dependent small 
firms can meet this onerous requirement. To fully grasp the impact that 
the defense spending cuts of the early 1990's had on small companies, 
it is necessary to look beyond a firm's previous year's revenues. It is 
too narrow of a measure. Most of the small businesses that relied on 
defense-related contracts are still reeling from the effects of the 
defense reductions. Ask any business person and they will tell you that 
it is impossible to project the impact that a policy change has on 
small businesses based on just 1 year's operating records.
  That is why my legislation expands the eligibility requirement for 
the DELTA Program. My legislation states that in order to qualify for a 
DELTA loan a firm must demonstrate that during any one of its 7 
preceding operating years, at least 25 percent of its sales were 
derived from defense-related contracts. This provides a more 
comprehensive and realistic standard of measure.
  Third, my bill increases the loan guaranty rate from 75 to 90 
percent. A higher guaranty rate is more attractive to lenders and will 
enable them to make more DELTA loans.
  The last thing I want to see happen is the DELTA Program, a program 
that Congress has already committed $30 million to go to waste because 
Congress was not willing to make it work. My bill does not appropriate 
any new funds for the DELTA Program; it only fine tunes the existing 
program to make it more available to small businesses. I cannot stand 
by and let $30 million that was appropriated by Congress to help small 
businesses go unused. If Congress does not amend the existing DELTA 
loan program that will happen.

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