[Congressional Record Volume 145, Number 32 (Tuesday, March 2, 1999)]
[Senate]
[Pages S2059-S2069]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 SMALL BUSINESS YEAR 2000 READINESS ACT

  The PRESIDENT pro tempore. The clerk will report the pending 
business.
  The legislative clerk read as follows:

       A bill (S. 314) to provide the loan guarantee program to 
     address the year 2000 computer problems of small business 
     concerns, and for other purposes.

  The Senate proceeded to consider the bill.
  Mr. BOND. Mr. President, I thank you very much. I will begin, 
although my colleague and my cosponsor on this measure is on his way 
over. Let me begin the discussion of this measure.
  I thank my colleagues, Senators Bennett and Dodd, particularly for 
the work of the Special Committee on the Year 2000 Technology Problem 
communicating to both the government agencies and the private sector 
about the seriousness of the year 2000 computer problem. I look forward 
to their presentations to the Senate today on the potential economic 
and national security concerns that this problem raises. I also thank 
Senators Bennett and Dodd, and particularly my ranking member, Senator 
Kerry, the ranking member of the Small Business Committee, for their 
cooperation and valuable assistance in the drafting of this important 
piece of legislation.
  As my colleagues on the Committee on Small Business and the Special 
Committee on the Year 2000 Technology Problem know very well, the year 
2000 computer problems may potentially cause great economic hardships 
and disruptions to numerous Americans and to numerous sectors of our 
economy. I am very pleased that the Senate has decided to make this 
problem one of its top priorities and has scheduled discussions on this 
topic early in the legislative session this year. It is commendable 
that the Senate is taking action on this problem quickly, and that we 
are taking action before the calamity happens, instead of after it 
occurs, which could otherwise be the case.
  It is imperative that we move quickly on this measure. And I hope 
that we can work with our colleagues in the House to pass it and send 
it to the President, because by definition, since this is 1999, the 
year 2000 problem grows closer every day with the coming of the end of 
this calendar year.
  The bill before us is an important step toward ensuring the 
continuing viability of many small businesses after

[[Page S2060]]

December 31, 1999. The bill will establish a loan guarantee program to 
be administered by the Small Business Administration that will provide 
small businesses with capital to correct their Year 2000 computer 
problems and provide relief from economic injuries sustained as a 
result of Y2K computer problems. Last year I introduced a similar bill 
that the Committee on Small Business adopted by an 18-0 vote and that 
the full Senate approved by unanimous consent. Unfortunately, the House 
of Representatives did not act on the legislation prior to adjournment. 
I reintroduced the bill this year because the consequences of Congress 
not taking action to assist small businesses with their Y2K problems 
are too severe to ignore. My colleagues on the Committee on Small 
Business unanimously approved this legislation once again and I 
sincerely hope that we can pass this bill, and as I said earlier, that 
the House of Representatives will act on this legislation promptly.
  The problem that awaits this country, and indeed the entire world, at 
the end of this year is that many computers and processors in automated 
systems will fail because such systems will not recognize the Year 
2000. Small businesses that are dependent upon computer technology, 
either indirectly or directly, could face failures that could 
jeopardize their economic futures. In fact, a small business is at risk 
if it uses any computers in its business, if it has customized 
software, if it is conducting e-commerce, if it accepts credit card 
payments, if it uses a service bureau for its payroll, if it depends on 
a data bank for information, if it has automated equipment for 
communicating with its sales or service force or if it has automated 
manufacturing equipment.
  Last June, the Committee on Small Business, which I chair, held 
hearings on the effect the Y2K problem will have on small businesses. 
The outlook is not good--in fact it is poor at best, particularly for 
the smallest business. The Committee received testimony that the 
entities most at risk from Y2K failures are small and medium-sized 
companies, not larger companies. Two major reasons for this anomaly is 
that many small companies have not begun to realize how much of a 
problem Y2K failures could be for them, and many may not have the 
access to capital to cure such problems before they cause disastrous 
results.
  A study on Small Business and the Y2K Problem sponsored by Wells 
Fargo Bank and the NFIB found that an estimated 4.75 million small 
employers are potentially subject subject to the Y2K problem. The 
committee has also received alarming statistics on the number of small 
businesses that could potentially face business failure or prolonged 
inactivity due to the Year 2000 computer problem. The Gartner Group, an 
international information technology consulting firm, has estimated 
that between 50% and 60% of small companies worldwide would experience 
at least one mission critical failure as a result of Y2K computer 
problems. The committee has also received information indicating that 
approximately 750,000 small businesses may either shut down due to the 
Y2K problem or be severely crippled if they do not take action to cure 
their Y2K problems.
  Such failures and business inactivity affect not only the employees 
and owners of small businesses, but also their creditors, suppliers and 
customers. Lenders will face significant losses if their small business 
borrowers either go out of business or have a sustained period in which 
they cannot operate. Most importantly, however, is the fact that up to 
7.5 million families may face the loss of paychecks for a sustained 
period of time if small businesses do not remedy their Y2K problems. 
Given these facts, it is easy to forecast that there will be severe 
economic consequences if small businesses do not become Y2K compliant 
in time and there are only 10 months to go. Indeed the countdown is on.
  A good example of how small businesses are dramatically affected by 
the Y2K problem is the experience of Lloyd Davis, the owner of Golden 
Plains Agricultural Technologies, Inc., a farm equipment manufacturer 
in Colby, Kansas. Like many small business owners, Mr. Davis' business 
depends on trailing an international information technology consulting 
firm, has estimated that between 50% and 60% of small companies 
worldwide would experience at least one mission critical failure as a 
result of Y2K computer problems. The Committee has also received 
information indicating that approximately 750,000 small businesses may 
either shut down due to the Y2K problem or be severely crippled if they 
do not take action to cure their Y2K problems.

  Such failures and business inactivity affect not only the employees 
and owners of small businesses but also their creditors, suppliers and 
customers. Lenders will face significant losses if their small business 
borrowers either go out of business or have a sustained period in which 
they cannot operate. Most importantly, however, is the fact that up to 
7.5 million families may face the loss of paychecks for a sustained 
period of time if small businesses do not remedy their Y2K problems. 
Given these facts, it is easy to forecast that there will be severe 
economic consequences if small businesses do not become Y2K compliant 
in time and there are only 10 months to go. Indeed the countdown is on.
  A good example of how small businesses are dramatically affected by 
the Y2K problem is the experience of Lloyd Davis, the owner of Golden 
Fields Agricultural Technologies, Inc., a farm equipment manufacturer 
in Colby, Kansas. Like many small business owners, Mr. Davis' business 
depends on trailing technology purchased over the years, including 386 
computers running custom software. Mr. Davis uses his equipment to run 
his entire business, including handling the company's payroll, 
inventory control, and maintenance of large databases on his customers 
and their specific needs. In addition, Golden Fields has a web site and 
sells the farm equipment it manufactures over the internet.
  Unlike many small business owners, however, Mr. Davis is aware of the 
Y2K problem and tested his equipment to see if it could handle the Year 
2000. His tests confirmed his fear--the equipment and software could 
not process the year 2000 date and would not work properly after 
December 31, 1999. That is when Mr. Davis' problems began. Golden 
Fields had to purchase an upgraded software package. That cost $16,000. 
Of course, the upgraded software would not run on 386 computers, so 
Golden Fields had to upgrade to new hardware. Golden Fields had a 
computer on each of its 11 employees' desks, so that each employee 
could access the program that essentially ran the company and assist 
filling the internet orders the company received. Replacing all the 
hardware would have cost Golden Fields $55,000. Therefore Golden Fields 
needed to expend $71,000 just to put itself in the same position it was 
in before the Y2K problem.
  Like many small business owners facing a large expenditure, Mr. Davis 
went to his bank to obtain a loan to pay for the necessary upgrades. 
Because Golden Fields was not already Y2K compliant, his bank refused 
him a loan because it had rated his company's existing loans as ``high-
risk.'' Golden Fields was clearly caught in a Catch-22 situation. 
Nevertheless, Mr. Davis scrambled to save his company. He decided to 
lease the new hardware instead of purchasing it, but he will pay a 
price that ultimately will be more expensive than conventional 
financing. Moreover, instead of replacing 11 computers, Golden Fields 
only replaced six at a cost of approximately $23,000. Golden Fields 
will be less efficient as a result. The experience of Mr. Davis and 
Golden Fields has been and will continue to be repeated across the 
country as small businesses realize the impact the Y2K problem will 
have on their business.
  A recent survey conducted by Arthur Andersen's Enterprise Group on 
behalf of National Small Business United indicates that, like Golden 
Fields, many small businesses will incur significant costs to become 
Y2K compliant and are very concerned about it. The survey found that to 
become Y2K compliant, 29% of small businesses will purchase additional 
hardware, 24% will replace existing hardware and 17% will need to 
convert their entire computer system. When then asked their most 
difficult challenge relating to their information technology, more than 
54% of the businesses surveyed cited ``affording the cost.'' Congress 
must ensure that these businesses do not have the same trouble 
obtaining financing for their Y2K

[[Page S2061]]

corrections as Mr. Davis and Golden Fields Agricultural Technologies. 
Moreover, Congress must deal with the concerns that have recently been 
raised that there may be a ``credit crunch'' this year with businesses, 
especially small businesses, unable to obtain financing for any 
purposes if they are not Y2K compliant.

  In addition to the costs involved, there is abundant evidence that 
small businesses are, to date, generally unprepared for, and in certain 
circumstances, unaware of the Y2K problem. The NFIB's most recent 
survey indicates that 40 percent of small businesses don't plan on 
taking action or do not believe the problem is serious enough to worry 
about. In addition, the Gartner Group has estimated that only 5 percent 
of small companies worldwide had repaired their Y2K computer problems 
as of the third quarter of 1998.
  The Small Business Year 2000 Readiness Act that the Senate is 
considering today will serve the dual purpose of providing small 
businesses with the means to continue operating successfully after 
January 1, 2000, and making lenders and small firms more aware of the 
dangers that lie ahead. The act requires the Small Business 
Administration to establish a limited-term loan program whereby SBA 
guarantees the principal amount of a loan made by a private lender to 
assist small businesses in correcting Year 2000 computer problems. The 
problem will also provide working capital loans to small businesses 
that incur substantial economic injury suffered as a direct result of 
its own Y2K computer problems or some other entity's Y2K computer 
problems.
  Each lender that participates in the SBA's 7(a) business loan program 
is eligible to participate in the Y2K loan program. This includes more 
than 6,000 lenders located across the country. To ensure that the SBA 
can roll out the loan program promptly, the act permits a lender to 
process Y2K loans pursuant to any of the procedures that the SBA has 
already authorized for that lender. Moreover, to assist small business 
that may have difficulty sustaining sufficient cash flows while 
developing Y2K solutions, the loan program will permit flexible 
financing terms so small businesses are able to service the new debt 
with available cash flow. For example, under certain circumstances, a 
borrower may defer principal payments for up to a year. Once the Y2K 
problem is behind us, the act provides that the loan program will 
sunset.
  To assure that the loan program is made available to those small 
businesses that need it and to increase awareness of the Y2K problem, 
the legislation requires that SBA market this program aggressively to 
all eligible lenders. Awareness of this loan program's availability is 
of paramount importance. Financial institutions are currently required 
by federal banking regulators to contact their customers to ensure that 
they are Y2K compliant. The existence of a loan program designed to 
finance Y2K corrections will give financial institutions a specific 
solution to offer small companies that may not be eligible for 
additional private capital and will focus the attention of financial 
institutions and, in turn, their small business customers to the Y2K 
problem. To increase awareness of this program, I have already 
contacted the governor of each State to make them aware of the 
potential availability of the program. Moreover, so that we can state 
that we directed our best efforts to mitigating the Year 2000 problem, 
I am seeking to find other ways that the Federal government can assist 
State efforts to help small businesses become Y2K compliant.
  The Small Business Year 2000 Readiness Act is a necessary step to 
ensure that the economic health of this country is not marred by a 
substantial number of small business failures following January 1, 
2000, and that small businesses continue to be the fastest growing 
segment of our economy in the Year 2000 and beyond.
  Mr. President, I thank the Chair, and I yield to my good friend and 
distinguished colleague from Massachusetts, the ranking member of the 
Small Business Committee.
  The PRESIDING OFFICER (Mr. Crapo). The Senator from Massachusetts is 
recognized.
  Mr. KERRY. I thank the Chair. I thank my colleague, the chairman of 
the committee. I thank him for his work on this act and for his 
leadership within the committee so that we can proceed as he has 
described.
  Most of the media attention with respect to the Y2K problem has been 
on big businesses, the challenges they face and the costs they are 
going to bear in order to fix the problem. But as my colleague has 
mentioned, small businesses face the same effects of Y2K as big 
businesses. However, they often have little or no resources available 
to devote to detecting the extent of the problem or to developing a 
workable and cost-effective solution. That is why we on the Small 
Business Committee are proceeding with this particular response which I 
think is most important.
  It is in our economic best interest to make sure that all of our 
small businesses, some 20 million if we include the self-employed--are 
up and running soundly and effectively, creating jobs and providing 
services, on and after January 1 of the year 2000.
  There are a lot of questions about what the full impact of the Y2K 
problem is going to be. Is it going to bring a whole series of 
nationwide glitches? Could it, in fact, induce a worldwide recession?
  One hears differing opinions on the extent of that. I was recently at 
the World Economic Forum in Davos, Switzerland, and there was a 
considerable amount of focus there from sizable numbers of companies on 
this issue. I think it is fair to say that here in the United States we 
have had a greater response than has taken place in Europe or in many 
other countries. But it is interesting to note that the Social Security 
Administration, I understand, spent about 6 years and some 600 people, 
and spent upwards of $1 billion, in order to be ready and capable of 
dealing with the Y2K problem. Other Departments have spent significant 
amounts of money as well and have had very large teams of people 
working in order to guarantee that they are going to be safe. Compared 
to that, you have very large entities in Europe and elsewhere that are 
only just beginning.
  So, if you look at the numbers of people and the amount of money and 
the amount of years people have been spending in order to try to put 
together solutions--obviously those experiences can be helpful to many 
other entities around the world as we cope with this problem. But the 
bottom line is, we know our economy is interdependent. We know that 
most of our technology, interdependent as it is, is date-dependent, and 
much of it is incapable of distinguishing between the years 2000 and 
1900.
  We have 10 short months now to become completely Y2K compliant, and 
national studies have found that the majority of small businesses in 
the United States are not ready and they are not even preparing. 
Specifically, the 1998 ``Survey of Small and Mid-Sized Business'' by 
Arthur Andersen Enterprise Group and National Small Business United 
found that only 62 percent of all small- and mid-sized businesses have 
even begun addressing Y2K issues. The good news is that a greater 
percentage of small- and mid-sized businesses are preparing for Y2K 
than last summer. The bad news is that they have only just begun that 
process and a significant group is taking a ``wait and see'' approach.
  On a local level, Y2K consultants and commercial lenders in 
Massachusetts, from Bank Boston to the Bay State Savings Bank, tell us 
of reactions to the Y2K dilemma that vary from complete and total 
ignorance, or complete and total denial, to paralysis or simply to 
apathy.
  I will give you an example. Bob Miller, the president of Cambridge 
Resource Group in Braintree, MA, shared with us what he has observed. 
Though his company specializes in the Y2K compliance of systems with 
embedded processors for Fortune 1000 companies and large State 
projects, he knows how real the technology problem is and how expensive 
a consultant can be. He has tried to help small companies through free 
seminars, but literally no one shows up. One time, in Maine, only 2 out 
of 400 companies responded. ``Small businesses just don't get it. Many 
think it is a big company problem, but it is not. It will bite them,'' 
says Mr. Miller. He advises companies to start now, and to build a 
contingency plan first, because it is so late in the game.

[[Page S2062]]

  The owner of Coventry Spares, Ltd., a vintage motorcycle parts 
company, would not disagree with that. John Healy was one of those 
small business owners who thought it was somebody else's problem. It 
couldn't happen to him. Luckily for John Healy and his business, he got 
a scare and so he decided to test his computer system by creating a 
purchase order for motorcycle pistons with a receivable date of early 
January 2000. So what happened when he put the order into his system? 
He punched a key and he waited for his software to calculate how many 
days it would take to receive the order. He got back a series of 
question marks.
  Then he turned to the company's software that publishes its ``Vintage 
Bikes'' magazine and he tested it with a 2000 date. His indispensable 
machine told him the date was not valid.
  Mr. Healy's computer problems are, ironically, compounded by his own 
Yankee ingenuity. As his business evolved, he combined and customized a 
mishmash of computer systems. It saved money, it worked well, handling 
everything from the payroll to inventory management, but making these 
software programs of the various computers Y2K-compliant is all but 
impossible. As Mr. Healy said:

       ``[These programs] handle 85 percent of the business that 
     makes me money. If I didn't fix this by the year 2000, I 
     couldn't do anything. I'd be a dead duck in the water.''

  When all is said and done, Mr. Healy estimates he is going to pay 
more than $20,000 to become Y2K-compliant, and that includes the cost 
of new hardware, operating system and database software and conversion.
  So, how do we reach those small business owners who have been slow to 
act, or who, to date, have no plans at all to act? How do we help them 
facilitate assessment and remediation of their businesses? We believe 
the way we do that is by making the solution affordable.
  According to the same Andersen and NSBU study that I quoted a moment 
ago, 54 percent of all respondents said ``affording the cost [was the] 
most difficult challenge in dealing with information technology.''
  That sentiment was echoed by David Eddy, who is a Y2K consultant who 
owns Software Sales Group in Boston, and who testified before the Small 
Business Committee when we were putting this legislation together last 
June. Mr. Eddy recently wrote:

       ``Basically, all of our customers are having trouble paying 
     for Y2K. . ..The cost varies from client to client, but no 
     business has ``extra'' money around, so they are 
     struggling.''

  So, Mr. President, cost is a very legitimate, albeit risky, reason to 
delay addressing the Y2K problem--saving until you are a little ahead 
or waiting until the last possible moment to take on new debt to 
finance changes. Those are strategies that many companies are forced to 
adopt, but those are strategies that can still leave you behind the 
eight ball as of January 1, year 2000.
  If you own your own facility, you have to ask yourself, Is the 
security system going to need an upgrade? What will the replacement 
cost be? Will simple things work? Will the sprinklers in your plant 
work? What happens if there is a fire? If you own a dry cleaning store 
and you hire a consultant to assess the equipment in your franchise, 
will remediation eat up all of your profit and set you back?
  These are the basic questions of any small business person in this 
country. Some business owners literally cannot afford to hear the 
answers to those questions. It may come down to a choice between debt 
or dissolution, or rolling the dice, which is what a lot of small 
companies are deciding to do. They say to themselves: I can't really 
afford to do it, I am not sure what the implications are, I am small 
enough that I assume I can put the pieces together at the last moment--
so they are going to roll the dice and see what happens.
  There is another problem with waiting. Just as regulators have forced 
lenders to bring their systems into compliance, the lenders themselves 
are now requesting the same compliance of existing borrowers and loan 
applicants. In Massachusetts, for instance, the Danvers Savings Bank, 
one of the State's top SBA lenders, has stated publicly that it will 
not make loans to businesses unless they are in control of their Y2K 
problems. The bank fears that if a small company isn't prepared for Y2K 
problems, it could adversely affect its business, which could then, 
obviously, adversely affect the loan that the bank has made and the 
small business ability to repay the loan, which adversely affects the 
bottom line for the bank.
  The Year 2000 Readiness Act gives eligible business owners a viable 
option. And that is why we ask our colleagues to join in supporting 
this legislation today.

  This legislation will make it easy for lenders, and timely for 
borrowers, and it is similar to the small business loan bill that I 
introduced last year in Congress. It expands the 7(a) loan program, one 
of the most popular and successful guaranteed lending programs of the 
Small Business Administration.
  Currently, this program gives small businesses credit, including 
working capital, to grow their companies. If the Year 2000 Readiness 
Act is enacted, those loans can be used until the end of the year 2000 
to address Y2K problems ranging from the upgrade or replacement of 
date-dependent equipment and software to relief from economic injury 
caused by Y2K disruptions, such as power outages or temporary gaps in 
deliveries of supplies and inventory.
  The terms of 7(a) loans are very familiar to those, obviously, within 
the small business community, and they have taken advantage of them. 
The fact is, these loans are very easy to apply for and to process. 
They are structured to be approved or denied, in most cases, in less 
than 48 hours. So for those who fear paperwork or fear the old 
reputation of some Government agencies, we believe this is a place 
where they can find a quick answer and quick help to their problems. We 
expect the average Y2K loan to be less than $100,000.
  In addition, Mr. President, to give lenders an incentive to make 7(a) 
loans to small businesses for Y2K problems, the act raises the 
Government guaranties of the existing program by 10 percent, from 80 
percent to 90 percent for loans of $100,000 or less, and from 75 to 85 
percent for loans of more than $100,000. Under special circumstances, 
the act also raises the dollar cap of loan guarantees from $750,000 to 
$1 million for Y2K loans.
  Eligible lenders can use the SBA Express Pilot Program to process Y2K 
loans. Under this pilot, lenders can use their own paperwork and make 
same-day approval, so there can be a streamlined process without a 
whole lot of duplication for small businesses, which we know is one of 
the things that most drives small business people crazy. The tradeoff 
for the ease and loan approval autonomy is a greater share of the loan 
risk. Unlike the general 7(a) loans, SBA Express Pilot loans are 
guaranteed at 50 percent.
  We know that many small-business owners also have shoestring budgets, 
and that they are going to be hard-pressed to pay for another monthly 
expense. With this in mind, we have designed the Small Business Year 
2000 Readiness Act to encourage lenders to work with small businesses 
addressing Y2K-related problems by arranging for affordable financing 
terms. For example, when quality of credit comes into question, lenders 
are directed to resolve reasonable doubts about the applicant's ability 
to repay the debt in favor of the borrower. And, when warranted, 
borrowers can get a moratorium for up to 1 year on principal payments 
on Y2K 7(a) loans, beginning when the loans are originated.
  Mr. President, one final comment. As important as this Y2K loan 
program is, in my judgment, it has to be available in addition to, not 
in lieu of, the existing 7(a) program. It is a vital capital source for 
small businesses. We provided 42,000 loans in 1998, and they totaled $9 
billion. That is not an insignificant sum. What we do not want to have 
happen is to diminish the economic up side of that kind of lending. 
With defaults down--and they are--and recoveries up and the 
Government's true cost under the subsidy rate at 1.39 percent, we 
should not create burdens that would slow or reverse the positive trend 
that we have been able to create.
  To protect the existing 7(a) program, we have to make certain that it 
is adequately funded for fiscal years 1999 and 2000. And because the 
Y2K loan program is going to be part of the 7(a) business lending 
program, funds that have already been appropriated for the 7(a) program 
can be used for the Y2K loan program.

[[Page S2063]]

  Already this year, demand for that lending is running very high. 
Typically, the demand for 7(a) loans increases by as much as 10 percent 
in the spring and in the summer. So we are entering the high season of 
cyclical lending within the SBA itself. If that holds true for the 
current fiscal year, the program may use nearly all of its funds to 
meet the regular loan demand. There may be even greater demand for Y2K 
lending as people become more aware of the problem with increased 
publicity and discussion of it in a national dialogue.

  Under these circumstances, we need to be diligent about monitoring 
the 7(a) loan program to make certain there is adequate funding. I 
appreciate that Chairman Bond, who also serves on the Appropriations 
Committee, shares this concern and has agreed to work with me to secure 
the necessary funds targeted specifically for the Y2K loan program, and 
I thank Chairman Bond for his commitment.
  I also thank Senators Bennett and Dodd and the Small Business 
Administration for working with our committee on this important 
initiative. We have tackled some tough policy issues, and the give-and-
take, I believe, has made this legislation more helpful for businesses 
that face the Y2K problems.
  I am very hopeful that all of our colleagues will join with us in 
voting yes today and that our friends on the House side will act as 
quickly as possible to pass S. 314. It is, obviously, a good program 
that will have a profound impact on the year 2000 and on the long-term 
economic prospects of our Nation.
  Mr. President, I reserve the remainder of our time.
  Mr. BOND addressed the Chair.
  The PRESIDING OFFICER. Senator Bond.
  Mr. BOND. Mr. President, I thank the ranking member, once again. His 
work on this measure, as so many others, and the work of his staff has 
been essential to assuring a product that meets the needs of small 
business and also deals with legitimate concerns which were raised 
initially by the SBA and others, and we are grateful to him for that 
effort. I thank him for his strong leadership and the very compelling 
case he makes.
  Obviously, all the members of the Small Business Committee believe 
very strongly that small business needs some help, and we would love to 
have more people talking about the Y2K problem, but I should advise my 
colleagues, and those who are watching, that there is, as we speak, a 
hearing going on in the Y2K Committee where Senator Dodd and Senator 
Bennett are exploring some of the other issues.
  This is really ``Y2K Day'' in the Senate because, as I stated in the 
opening, when we finish the vote on this measure--which I hope will be 
overwhelming in favor of it--there will be a confidential hearing 
regarding the Y2K issue in room S-407, and at 2:15 p.m., we will begin 
consideration of a resolution to fund this special committee dealing 
with the Y2K issues.
  I noticed on one of the morning television shows that we are getting 
some good coverage and discussion in the media about the Y2K problem, 
and today certainly the Senate has explored in many, many different 
aspects how we can help smooth the transition to January 1, 2000, and 
beyond, when computers, if they are not fixed, might think that it is 
1900 all over again.
  Mr. President, we invite Members who want to come down to speak on 
this issue to do so. We hope they will have some time. We have 20 
minutes more. And after, I may use some time on another matter, but I 
want to find out if there are other Members who wish to address the Y2K 
problem first.
  I yield the floor.
  Ms. LANDRIEU. Mr. President, today I rise in support of S. 314, the 
Small Business Year 2000 Readiness Act. I also want to thank Chairman 
Bond and Senator Kerry for their leadership on this issue. Without this 
legislation a large percentage of the 97,000 small businesses in 
Louisiana and nearly 5 million small business nationwide would not have 
access to needed credit necessary to repair Year 2000 computer 
problems.
  According to recent studies and information provided to the Senate 
Small Business Committee, as estimated 750,000 small businesses are at 
risk of being temporarily shut down or incurring significant financial 
loss. Another four million businesses could be affected in other ways. 
In fact, any small business is at risk if it uses any computers in its 
business or related computer applications. For example, any e-commerce 
business or other businesses that use credit card payments, the use of 
a service bureau for its payroll, or automated manufacturing equipment 
could be affected. It is difficult to predict how serious the 
implications could be. But it is clear that if the Congress does not 
act, millions of small businesses, so important to our national 
economy, and millions of families dependent on these enterprises will 
suffer greatly.
  A recent survey conducted on behalf of National Federation of 
Independent Business, NFIB, by Arthur Andersen indicated that many 
small businesses will incur significant costs to become Y2K compliant 
and are very concerned. The survey found that to become Y2K compliant, 
29 percent of small to medium sized businesses will purchase additional 
hardware, 24 percent will replace existing hardware and 17 percent will 
need to convert their entire computer system. Then, when asked their 
most difficult challenge relating to their information technology, more 
than 54 percent of the businesses surveyed cited ``affording the 
cost.''
  However, according to the NFIB, while these studies indicated many 
are worried, 40 percent of small businesses don't plan on taking action 
or do not believe the problem is serious enough to worry about. 
Fortunately, the Small Business Year 2000 Readiness Act, tries to 
address this problem as well as other credit issues, facing small 
businesses. First and foremost, it allows the Small Business 
Administration the authority to expand its guaranteed loan program to 
provide these businesses with the means to continue operating 
successfully after January 1, 2000. Moreover, it will provide technical 
assistance in order to help educate lenders and small firms about the 
dangers that lie ahead. And, finally, this measure allows small 
businesses to use Y2K loan proceeds to offset economic injury sustained 
after the year 2000, due to associated computer glitch problems.
  Mr. President, with less than a year to go, and many small businesses 
not prepared for the unforeseeable consequences, Congress must respond 
expeditiously with the passage of this legislation. Without adequate 
capital and computer related costs that could result in millions of 
dollars of damages, the economic consequences could be severe. This 
legislation is a very positive step to help mitigate the potential loss 
of thousands of small businesses and the associated impact on our 
States' and national economies.
  I ask that my colleagues join me in support of this critical 
legislation and know that the Congress will be able to send a positive 
message with the enactment of this legislation in the very near future.
  Thank you, I yield the floor.
  Mr. KERRY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. Mr. President, I yield 3 minutes to the Senator from 
Vermont.
  The PRESIDING OFFICER. The Senator from Vermont is recognized for 3 
minutes.
  Mr. LEAHY. Mr. President, there have been a number of hearings on 
Y2K. One was held yesterday in the Judiciary Committee. And in that 
meeting I offered a very simple and direct principle: Our goal should 
be to encourage Y2K compliance. No matter how much we talk about 
liabilities or who is to blame, or anything else, the bottom line is 
for people who want to go from December 31 to January 1, at the end of 
this year, we should look for compliance. That is what we are doing by 
passing this, the Small Business Year 2000 Readiness Act, S. 314. It 
offers help to small businesses working to remedy their computer 
systems before the millennium bug hits.
  I want to commend Senators Bond and Kerry for their bipartisan 
leadership in the Small Business Committee on this bill. It is going to 
support small businesses around the country in the Y2K remedial 
efforts. I am proud to be a cosponsor of this legislation.
  We know that small businesses are the backbone of our economy, 
whether it is the corner market in a small city, or the family farm, or 
a smalltown doctor. In my home State of Vermont, 98

[[Page S2064]]

percent of the businesses are small businesses. They have limited 
resources. That is why it is important to provide these small 
businesses with the resources to correct their Y2K problems --but to do 
it now.
  Last month, for example, I hosted a Y2K conference in Vermont to help 
small businesses prepare for the year 2000. Hundreds of small business 
owners from across Vermont attended this conference. They took time out 
of their work so they could learn how to minimize or eliminate Y2K 
computer problems. Those who could not join us at the site joined us by 
interactive television around the State.
  Vermonters are working hard to identify their vulnerabilities. They 
should be encouraged and assisted in these efforts. That is the right 
approach. The right approach is not to seek blame but to fix as many of 
the problems ahead of time as we can. Ultimately, the best business 
policy--actually, the best defense against Y2K-based lawsuits--is to be 
Y2K compliant.
  The prospect of Y2K problems requires remedial efforts and increased 
compliance, not to look back on January 1 and find out who was at fault 
but to look forward on March 2 and say what can we do to fix it.
  Unfortunately, not all small businesses are doing enough to address 
the year 2000 issue because of a lack of resources in many cases. They 
face Y2K problems both directly and indirectly through their suppliers, 
customers and financial institutions. As recently as last October the 
NFIB testified: ``A fifth of them do not understand that there is a Y2K 
problem. . . . They are not aware of it. A fifth of them are currently 
taking action. A fifth have not taken action but plan to take action, 
and two-fifths are aware of the problem but do not plan to take any 
action prior to the year 2000.'' Indeed, the Small Business 
Administration recently warned that 330,000 small businesses are at 
risk of closing down as a result of Y2K problems, and another 370,000 
could be temporarily or permanently hobbled.
  Federal and State government agencies have entire departments working 
on this problem. Utilities, financial institutions, telecommunications 
companies, and other large companies have information technology 
divisions working to make corrections to keep their systems running. 
They have armies of workers--but small businesses do not.
  Small businesses are the backbone of our economy, from the city 
corner market to the family farm to the small-town doctor. In my home 
State of Vermont, 98 percent of the businesses are small businesses 
with limited resources. That is why it is so important to provide small 
businesses with the resources to correct their Y2K problems now.
  Last month, I hosted a Y2K conference in Vermont to help small 
businesses prepare for 2000. Hundreds of small business owners from 
across Vermont attended the conference to learn how to minimize or 
eliminate their Y2K computer problems. Vermonters are working hard to 
identify their Y2K vulnerabilities and prepare action plans to resolve 
them. They should be encouraged and assisted in these important 
efforts.
  This is the right approach. We have to fix as many of these problems 
ahead of time as we can. Ultimately, the best business policy and the 
best defense against Y2K-based lawsuits is to be Y2K compliant.
  I am studying the Report from our Special Committee on the Year 2000 
Technology Problem and thank Chairman Bennett and Vice Chairman Dodd 
for the work of that Committee. I note that they are just beginning 
their assessment of litigation. As they indicate in the Report released 
today: ``The Committee plans to hold hearings and work closely with the 
Judiciary and Commerce Committees to make legislative proposals in this 
area.''
  I understand that the Special Committee is planning hearings on Y2K 
litigation soon. As best anyone has been able to indicate to me, only 
52 Y2K-related lawsuits have been commenced to date. Of those, several 
have already been concluded with 12 having been settled and 8 
dismissed.
  At our Judiciary Committee hearing earlier this week we heard from a 
small businessman from Michigan who was one of the first Y2K plaintiffs 
in the country. He had to sue to obtain relief from a company that sold 
him a computer and cash register system that would not accept credit 
cards that expired after January 1, 2000 and crashed.
  We also heard from an attorney who prevailed on behalf of thousands 
of doctors in an early Y2K class action against a company that provided 
medical office software that was not Y2K compliant.
  Recent legislative proposals by Senator Hatch and by Senator McCain 
raise many questions that need to be answered before they move forward. 
I look to the hearings before the Special Committee and to additional 
hearings before the Judiciary Committee to gather the factual 
information that we need in order to make good judgments about these 
matters. We heard Monday of a number of serious concerns from the 
Department of Justice with these recent proposals. Those concerns are 
real and need to be addressed.
  If we do not proceed carefully, broad liability limitation 
legislation could reward the irresponsible at the expense of the 
innocent. That would not be fair or responsible. Removing 
accountability from the law removes one of the principal incentives to 
find solutions before problems develop.
  Why would congressional consideration or passage of special immunity 
legislation make anyone more likely to expend the resources needed to 
fix its computer systems to be ready for the millennium? Is it not at 
least as likely to have just the opposite effect? Why should 
individuals, businesses and governments act comprehensively now if the 
law is changed to allow you to wait, see what problems develop and then 
use the 90-day ``cooling off'' period after receiving detailed written 
notice of the problem to think about coming into compliance? Why not 
wait and see what solutions are developed by others and draw from them 
later in the three-month grace period, after the harm is done and only 
if someone complains?
  I would rather continue the incentives our civil justice systems 
allows to encourage compliance and remediation efforts now, in advance 
of the harm. I would rather reward responsible business owners who are 
already making the investments necessary to have their computer systems 
fixed for Y2K.
  I sense that some may be seeking to use fear of the Y2K millennium 
bug to revive failed liability limitation legislation of the past. 
These controversial proposals may be good politics in some circles, but 
they are not true solutions to the Y2K problem. Instead, we should be 
looking to the future and creating incentives in this country and 
around the world for accelerating our efforts to resolve potential Y2K 
problems before they cause harm.
  I also share the concerns of the Special Committee that ``disclosure 
of Y2K compliance is poor.'' We just do not have reliable assessments 
of the problem or of how compliance efforts are going. In particular, I 
remain especially concerned with the Special Committee's report that: 
``Despite an SEC rule requiring Y2K disclosure of public corporations, 
companies are reluctant to report poor compliance.'' I have heard 
estimates that hundreds if not thousands of public companies are not in 
compliance with SEC disclosure rules designed to protect investors and 
the general public.
  I hope that the Special Committee will follow through on its 
announced ``plans to address certain key sectors in 1999 where there 
has been extreme reluctance to disclose Y2K compliance.'' We should not 
be rewarding companies that have not fulfilled their disclosure 
responsibilities by providing them any liability limitation 
protections.
  On the contrary, after all the talk earlier this year about the 
importance of the rule of law, we ought to do more to enforce these 
fundamental disclosure requirements. As the Special Committee reports: 
``Without meaningful disclosure, it is impossible for firms to properly 
assess their own risks and develop necessary contingency plans.
  Disclosure is also important in the context of congressional 
oversight. The Special Committee will continue to promote this 
important goal in 1999.'' The Senate should do nothing to undercut this 
effort toward greater disclosure in accordance with law.

[[Page S2065]]

  Sweeping liability protection has the potential to do great harm. 
Such legislation may restrict the rights of consumers, small 
businesses, family farmers, State and local governments and the Federal 
Government from seeking redress for the harm caused by Y2K computer 
failures. It seeks to restructure the laws of the 50 states through 
federal preemption. Moreover, it runs the risk of discouraging 
businesses from taking responsible steps to cure their Y2K problems now 
before it is too late.
  By focusing attention on liability limiting proposals instead of on 
the disclosures and remedial steps that need to be taken now, Congress 
is being distracted from what should be our principal focus--
encouraging Y2K compliance and the prompt remedial efforts that are 
necessary now, in 1999.
  The international aspect of this problem is also looming as one of 
the most important. As Americans work hard to bring our systems into 
compliance, we encounter a world in which other countries are not as 
far along in their efforts and foreign suppliers to U.S. companies pose 
significant risks for all of us. This observation is supported by the 
Report of the Special Committee, as well. We must, therefore, consider 
whether creating a liability limitation model will serve our interests 
internationally.
  The Administration is working hard to bring the Federal Government 
into compliance. President Clinton decided to have the Social Security 
Administration's computers overhauled first and then tested and 
retooled and retested, again. The President was able to announce on 
December 28 that social security checks will be printed without any 
glitches in January 2000. That is progress.
  During the last Congress, I joined with a number of other interested 
Senators to introduce and pass into law the consensus bill known as 
``The Year 2000 Information and Readiness Disclosure Act.'' We worked 
on a bipartisan basis with Senator Bennett, Senator Dodd, the 
Administration, industry representatives and others to reach agreement 
on a bill to facilitate information sharing to encourage Y2K 
compliance. The new law, enacted less than five months ago, is working 
to encourage companies to share Y2K solutions and test results. It 
promotes company-to-company information sharing while not limiting 
rights of consumers.
  The North American Electric Reliability Council got a great response 
from its efforts to obtain detailed Y2K information from various 
industries. We also know that large telephone companies are sharing 
technical information over websites designed to assist each other in 
solving year 2000 problems. Under a provision I included, that law also 
established a National Y2K Information Clearinghouse and Website at the 
General Services Administration. That website is a great place for 
small businesses to go to get started in their Y2K efforts.
  If, after careful study, there are other reasonable efforts that 
Congress can make to encourage more computer preparedness for the 
millennium, then we should work together to consider them and work 
together to implement them.
  Legislative proposals to limit Y2K liability now pending before the 
Commerce and Judiciary Committees were printed in last Wednesday's 
Congressional Record. Given the significant impact these bills might 
have on State contract and tort law and the legal rights of all 
Americans, I trust that the Senate will allow all interested Committees 
to consider them carefully before rushing to pass liability limitation 
provisions that have not been justified or thoroughly examined.
  The prospect of Y2K problems requires remedial efforts and increased 
compliance, which is what the ``Small Business Year 2000 Readiness 
Act,'' S.314, will promote. It is not an excuse for cutting off the 
rights of those who will be harmed by the inaction of others, turning 
our States' civil justice administration upside down, or immunizing 
those who recklessly disregard the coming problem to the detriment of 
their customers and American consumers.
  Ms. SNOWE. Mr. President, I rise today in support of the Small 
Business Year 2000 Readiness Act, of which I am an original cosponsor.
  I would like to begin by thanking Senator Bond, who serves as 
Chairman of the Senate Small Business Committee, for his leadership on 
this important issue. As a member of the Small Business Committee and a 
Senator from a state where virtually all the businesses are small 
businesses, I strongly believe that assisting small businesses prepare 
for the Year 2000 must be a top priority.
  So many aspects of our lives are influenced by computers. I believe 
the Y2K computer glitch is an issue of such importance that it demands 
decisive action on our part, because any delay at this point will make 
this problem exponentially more difficult to solve.
  The bill before us today authorizes loan guarantees for small 
businesses to help with Y2K compliance. Loan guarantees will permit 
small businesses to assess their computers' Y2K compatibility, identify 
changes to assure compatibility, and finance purchase or repair of 
computer equipment and software to ensure that is compatible with Y2K. 
The loans will also allow small businesses to hire third party 
consultants to support their efforts.
  Maine has an historical record of self-reliance and small business 
enterprise, and I am extremely supportive of the role the federal 
government can play in promoting small business growth and development. 
Small businesses are increasingly essential to America's prosperity, 
and they should and will play a vital role in any effort to revitalize 
our communities if we help them enter the 21st Century in a strong 
position.
  As we all know, this problem stems from a simple glitch--how the more 
than 200 million computers in the United States store the date within 
their internal clocks.
  Some computers and software may not run or start if the internal 
clock fails to recognize ``00'' as a proper year. The computer can 
continue waiting for you to enter what it thinks is a correct date and 
prevent you from accessing your records until you have done so. Without 
access to your records, you will be unable to track your inventory, 
sales, or even your bank accounts.
  I began to wonder what the effects would be on small business when 
the Commerce Committee held a hearing on the issue last year. And after 
questioning officials, specifically Deputy Secretary of Commerce Robert 
Mallett, it became evident that many small businesses simply didn't 
have the kind of time and resources that many larger business may have 
at their disposal to fix this potentially serious problem.
  At the Maine forums I sponsored last year as a member of both the 
Commerce and Small Business Committees, I worked to educate small 
businesses on the Y2K threat, and it was a learning experience for me 
as well.
  The impact of Y2K on the small business community could be 
devastating. According to a National Federation of Independent Business 
and Wells Fargo Bank study, 82 percent of small businesses are at risk.
  Fortunately, it doesn't have to be that way. With the benefit of 
foresight and proper planning, we can diffuse this ticking time bomb 
and ensure that the business of the nation continues on without a 
hitch--or a glitch.
  From a technical standpoint, the necessary corrections are not 
difficult to make. However, determining that there's a problem, finding 
people qualified to fix the problem, and crafting a solution to fit the 
individual needs of different computers and programs poses significant 
challenges.
  We must put ourselves in the position that a small business or 
entrepreneur is in. Consider that this problem effects more than just 
your business. By checking your system you are only halfway to solving 
the problem. You must also take time to ensure your supplier, 
distributer, banker, and accountant are also ``cured'' of the Year 2000 
problem.
  For example, if you manufacture a product on deadline, you'll want to 
make sure your computers will be able to keep track of your delivery 
schedule, inventory, and accounts receivable and payable. If your 
system fails to do this, the consequences could be debilitating for a 
business.
  But think about this: suppose your suppliers aren't compatible, and 
their system crashes. You may not receive the raw materials you need to 
get your product to market on time--devastating if you're in a ``just 
in time'' delivery schedule with your supplier. And

[[Page S2066]]

what happens when your shipper's computers go down for the count?
  That is why it is so important that we take steps to fix the problem 
now. The year 2000 is almost upon us, and each day that goes by trades 
away valuable time.
  For the vast majority of businesses, there are five simple steps 
toward compliance. First, awareness of the problem. Second, assessing 
which systems could be affected and prioritizing their conversion or 
replacement. Third, renovating or replacing computer systems. Fourth, 
validating or testing the computer systems. And fifth, implementing the 
systems.
  The bill before us today will help small business address these 
steps, and I urge my colleagues to join in an overwhelming show of 
support for our nation's small businesses by voting for this important 
legislation.
  Mr. President, I yield the floor.
  Mr. LEVIN. Mr. President, as a member of the Senate Small Business 
Committee and cosponsor of this legislation, I am pleased the Senate is 
acting expeditiously on S. 314, the Small Business Year 2000 Readiness 
Act. Making affordable government guaranteed loans available to small 
businesses to correct the computer problem associated with the Year 
2000, or Y2K, is a critical part of that the federal government can do 
to ensure that all businesses can become Y2K compliant by the turn of 
the century.
  As everyone knows by now, experts are concerned that on January 1, 
2000, many computers will recognize a double zero not as the year 2000 
but as the year 1900. This technical glitch could cause the computers 
to stop running altogether or start generating erroneous data. It is a 
serious problem that should be taken seriously by businesses, large and 
small.
  Unfortunately, surveys show that many small businesses are not taking 
the action they should be taking to fix the problem and as a result 
could face costly consequences on January 1, 2000. According to recent 
research, nearly 25 percent of all businesses, of which 80 percent are 
small companies, have not begun to prepare for the serious system 
issues that are predicted to occur on January 1, 2000.
  One of the reasons for this lack of preparedness by small businesses 
could be the lack of access to funds to pay for the needed repairs. 
That is why the Senate Small Business Committee reported by a unanimous 
vote this legislation to establish a special loan program for small 
businesses to pay for Y2K repairs. Our hope is to move this legislation 
expeditiously through the 106th Congress so that the special loan 
program established by this bill will be available in time to do Y2K 
repairs. The full extent of the year 2000 problem is unknown, but we 
can reduce the possibility of problems by taking action now.
  System failures can be costly and that's why it's better to avoid 
them rather than fix them after failure. As we count down the remaining 
months of this century, let's give small businesses who have been the 
backbone of our great economic prosperity access to the funds they need 
to correct the Y2K computer bug. For many of our small businesses, S. 
314 could help keep them from suffering severe financial distress or 
failure.
  S. 314 requires the Small Business Administration to establish a 
limited-term government guaranteed loan program to guarantee loans made 
by private lenders to small businesses to correct their own Y2K 
problems or provide relief from economic injuries sustained as a result 
of its own or another entity's Y2K computer problems. It offers these 
loans at more favorable terms than other government guaranteed loans 
available to small businesses and it allows small businesses to defer 
interest for the first year. The bill report language also includes a 
provision I suggested allowing the favorable terms of this lending 
program to be applied to loans already granted to small businesses that 
were used primarily for Y2K repairs but under less favorable terms than 
offered under this program. Since this loan program already passed the 
Senate last year as a component of a larger bill, some small businesses 
may have already made the decision to take out small business loans to 
pay for Y2K repairs based on the reasonable expectation that this 
program would be enacted into law.
  Ms. COLLINS. Mr. President, I rise in support of S. 314, the Small 
Business Year 2000 Readiness Act. The bill establishes a guaranteed 
loan program for small businesses in order to remediate existing 
computer systems or to purchase new Year 2000 compliant equipment. The 
loan program would be modeled after the Small Business Administration's 
popular 7(a) loan program, which has provided thousands of small 
businesses funding to grow their operations.
  Many small businesses are having difficulty determining how they will 
be affected by the millennium bug and what they should do about it. 
Many of them face not only technological but also severe financial 
challenges in becoming Y2K-compliant. This legislation will help 
provide peace of mind to the small business community throughout the 
nation, which we must help prepare now for the coming crisis.
  The Small Business Year 2000 Readiness Act would encourage business 
to focus on Year 2000 computer problems before they are upon us. A 
successful program being operated in my State underscores the benefits 
to such forethought.
  Through the efforts of the Maine Manufacturing Extension Partnership 
(MEP), a program funded through the National Institutes of Science and 
Technology, small businesses have been successful in addressing their 
Y2K problems. With the use of an assessment tool, the Maine MEP is able 
to provide small business owners road maps for addressing critical Y2K 
issues concerning accounting systems, computerized production 
equipment, environmental management systems, and supplier 
vulnerabilities.
  Once the Maine MEP completes an assessment of technical Y2K problems, 
it instructs the small business owner on how to apply for a loan from 
the Small Business Administration. As it turns out, this step is 
crucial. Small business owners have commented that, while they need 
help in determining their Y2K exposure, it is just as important to have 
a place to turn for funding so that they can take action to correct 
possible problems. Because businesses often do not budget for Y2K 
problems, it is vital to give businesses some assurance that they will 
be able to borrow the funds necessary to remediate their systems. The 
Small Business Year 2000 Readiness Act does exactly that.
  My home State of Maine has over 35,000 small businesses, which were 
responsible for all of the net new jobs created in our State from 1992 
through 1996. With their diversity and innovation, small businesses are 
the backbone of our economy and the engine fueling job growth.
  Mr. President, by their very definition entrepreneurs are risk 
managers. In the years that I have been working with small businesses, 
I am aware of countless experiences where the entrepreneurial spirit 
has propelled business owners to overcome major obstacles to succeed. 
With the financial assistance that this new SBA loan program will 
offer, it is my expectation that small businesses will indeed succeed 
in squashing their Y2K bug.
  Mr. MOYNIHAN. Mr. President, I am delighted to see that the Senate 
passed S. 314, the Small Business Year 2000 Readiness Act, today. I 
introduced this bill with Senators Christopher S. Bond, John F. Kerry, 
Robert F. Bennett, Christopher J. Dodd, and Olympia Snowe on January 
27, 1999. S. 314 establishes a loan guarantee program to help small 
businesses prepare for the year 2000. Because our economy is 
interdependent, we must make sure that our small businesses are still 
up and running and providing services on January 1, 2000. This bill 
will help ensure that that is the case.
  I began warning about the Y2K problem 3 years ago. Since that time, 
people have begun to listen and progress has been made on the Y2K 
front. The federal government and large corporations are expected to 
have their computers functioning on January 1, 2000. Good news indeed. 
But small businesses continue to lag behind in fixing the millennium 
problem. I am confident that the Readiness Act will help small 
businesses remediate their computer systems and I urge the House to 
consider it forthwith. There is no time to waste.
  Mr. JEFFORDS. Mr. President, most small businesses in Vermont rely on

[[Page S2067]]

electronic systems to operate. Many of these businesses are looking to 
the Year 2000 with apprehension or outright despair. Small businesses 
rely on microprocessors for manufacturing equipment, telecommunications 
for product delivery, and the mainstay of data storage--computer chips. 
These businessmen and women are concerned about the financial effects 
of the Year 2000 Computer Bug will have on their efforts to remedy the 
problem, as well as those after-effects caused by system failures. This 
is why I firmly believe that the quick enactment of Senator Bond's 
bill, S. 314, the Small Business Year 2000 Readiness Act should be a 
top priority for Congress.
  The legislation will go a long way toward providing vitally needed 
loans for the nation's small businesses. This bill serves three 
purposes: first, it will authorize the U.S. Small Business 
Administration (SBA) to expand its guaranteed loan program so eligible 
small businesses have the means to continue operating successfully 
after January 1, 2000. Second, the bill will allow small businesses to 
use Y2K loan proceeds to offset economic injury sustained after the 
year 2000 as a result of Y2K problems. Third, the legislation will 
highlight those potential vulnerabilities small businesses face from 
Y2K so small businessmen and women understand the risks involved.
  Unfortunately, while many small businesses are well aware of the Y2K 
Millennium Bug, recent surveys indicate that a significant proportion 
of them do not plan on taking action because they do not believe it is 
a serious enough threat. This bill will raise awareness of Y2K risks so 
small businesses who may face problems will choose to upgrade their 
hardware and software computer systems. As costs of doing so could be 
prohibitive for small businesses the legislation will meet the 
financial needs of small businesses by ensuring access to guaranteed 
SBA loans.
  The operation of this legislation will remain the same as the current 
SBA loan program, where the agency guarantees the principal amount of a 
loan made by a private lender to assist new small businesses seeking to 
correct Y2K computer problems. Those lenders currently participating in 
the SBA's 7(a) business loan program will also be able to participate 
in the Y2K loan program by accessing additional guaranteed loan funds.
  Mr. President, I commend the efforts of Chairman Bond on this 
legislation and I hope for its quick enactment. While this legislation 
will not eradicate the potential effects Y2K may have on electronic 
systems, it will at least ensure that resources are available to those 
small businesses who try to protect themselves from the threat, or 
recuperate following a Y2K-related difficulty.
  Mr. KERREY. Mr. President, I rise to make a few remarks concerning S. 
314. I am pleased that the Senate took a step forward today to help 
small businesses prepare for the Year 2000 Problem. I am very concerned 
about Y2K's potential affect on small businesses and rural communities, 
particularly in my home state of Nebraska where technology is 
increasingly playing a vital role in all aspects of commerce. In 
addition to the many small businesses that use technology in everyday 
transactions, Nebraska is home to a growing high-technology industry 
that could be derailed if we fail to take additional steps to solve the 
Year 2000 problem.
  High-technology companies account for a significant portion of 
Nebraska's economic output. According to the United States Bureau of 
Labor Statistics, forty-four of every one-thousand private sector 
workers in Nebraska are employed by high-tech firms at an average 
salary of $37,000. Astonishingly, that's nearly $15,000 more than the 
average private sector wage.
  This rapidly growing sector of Nebraska's economy is a testament to 
the ingenuity and work ethic that characterize the citizens of our 
state. From the data processing industry in Omaha to the 
telecommunications and technology interests in Lincoln to electronic 
retail commerce and agribusiness interests in the panhandle, Nebraskans 
are using and developing unique technologies to improve their lives. 
It's clear that the information age has arrived on the plains as nearly 
one-fourth of Nebraska's exports come through high-tech trade.
  Currently, Nebraska ranks 32nd in high-tech employment and 38th in 
high-tech average wage. The hard work of community leaders across the 
state has encouraged new technology companies to put down roots in 
Nebraska. One of my top priorities is fostering the continued 
development of advanced communications networks and providing 
Nebraska's kids with the math, science and technology skills they need 
to become productive members of this industry. Telemedicine, distance 
learning and other telecommunications services offer exciting new 
possibilities for our businesses, schools and labor force. I mention 
these successes, to underscore how important technology has become not 
only to Nebraska's economy but to the nation's economy.
  S. 314 provides a new resource to guarantee that the nation's small 
businesses, high-tech and otherwise, will have somewhere to turn to for 
financial help in solving this difficult problem. I hope the House will 
follow the Senate's lead and quickly take up this important bill.
  Mr. ASHCROFT. Mr. President, I want to take an opportunity to 
congratulate the senior Senator from my home State for introducing and 
reporting the Small Business Year 2000 Readiness Act. This is an 
important bill that I am happy to co-sponsor and support. The bill 
represents an important step in Congress' ongoing efforts to limit the 
scope and impact of the Year 2000 problem before it is too late. Last 
year, we passed the Year 2000 Information and Readiness Disclosure Act, 
which was an important first step in removing any legal barriers that 
could prevent individuals and companies from doing everything possible 
to eliminate Year 2000 problems before they happen. I was particularly 
gratified that I was able to work with Senators Hatch and Leahy to 
include the provisions of my temporary antitrust immunity bill, S. 
2384, in last year's act. However, as I said at the time, the 
Disclosure Act must be understood as only the first step in our efforts 
to deal with this problem. Senator Bond's bill, along with the 
liability bills working their way through the Commerce and Judiciary 
Committees, on which I sit, are the next logical steps in this ongoing 
effort.
  Countless computer engineers and experts are busy right now trying to 
solve or minimize the Year 2000 and related date failure problems. Part 
of what makes this problem so difficult to address is that there is no 
one Year 2000 problem. There are countless distinct date failure 
problems, and no one silver bullet will solve them all. The absence of 
any readily-available one-size-fits-all solution poses particularly 
serious challenges for small business.
  The Small Business Year 2000 Readiness Act addresses this problem by 
providing loan guarantees to small businesses to remedy their year 2000 
problems. The act provides the necessary resources so that small 
businesses can nip this problem in the bud, so that the Year 2000 
problem does not become the Year 2000 disaster.
  The act is narrowly targeted at enabling small business to remedy 
Year 2000 issues before they lead to costly damages and even more 
costly litigation. Like the antitrust exemption I authored in the last 
Congress, this provision automatically sunsets once the window of 
opportunity for avoiding Year 2000 problems closes.
  Finally, let me say, that like Year 2000 Information and Readiness 
Disclosure Act we enacted last year, this law does not offer a complete 
solution to the Year 2000 problem. There are many aspects to this 
problem--both domestic and international--and there may be limits to 
what government can do to solve this problem. These loan guarantees are 
one constructive step Congress can take. Another constructive step is 
to remove government-imposed obstacles that limit the ability of the 
private sector to solve this problem. For example, Congress needs to 
address the liability rules that govern litigation over potential Year 
2000 problems. That process is ongoing in both the Commerce and 
Judiciary Committees, and I look forward to working with my colleagues 
on both committees to reach an acceptable approach that can be enacted 
quickly.
  The remaining issues are difficult, but we cannot shrink from 
tackling the tough issues. Many have talked about the unprecedented 
prosperity generated by our new, high-tech economy.

[[Page S2068]]

I want to make sure that the next century is driven by these high-tech 
engines of growth and is stamped made in America. But we will not make 
the next century an American Century by dodging the tough issues and 
hoping the Year 2000 problem will just go away. We need to keep working 
toward a solution.
  Resources to address the Year 2000 problem, particularly time, are 
finite. They must be focused as fully as possible on remediation, 
rather than on unproductive litigation. This issue is all about time, 
and we have precious little left before the Year 2000 problem is upon 
us. I hope we can continue to work together on legislation like this to 
free up talented individuals to address this serious threat.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. BOND addressed the Chair.
  The PRESIDING OFFICER. The Senator from Missouri.
  Mr. BOND. I ask unanimous consent that the Senator from Kentucky, 
Senator Bunning, be added as a cosponsor to the bill.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BOND. Mr. President, if there are no colleagues who wish to speak 
on the Y2K bill, I ask unanimous consent that time continue to be 
charged against me on S. 314 but that I may be permitted to speak up to 
5 minutes as in morning business to introduce a piece of legislation.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The remarks of Mr. Bond pertaining to the introduction of S. 495 are 
located in today's Record under ``Statements on Introduced Bills and 
Joint Resolutions.'')
  The PRESIDING OFFICER. Under the previous order, the hour of 10:30 
a.m. having arrived, the Senate will now proceed to vote on passage of 
S. 314.
  Mr. BOND. Mr. President, have the yeas and nays been ordered?
  The PRESIDING OFFICER. They have not.
  Mr. BOND. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed for a third reading and was read 
the third time.
  The PRESIDING OFFICER. The question is on passage of the bill.
  The yeas and nays have been ordered. The clerk will call the roll.
  The bill clerk called the roll.
  Mr. NICKLES. I announce that the Senator from Arizona (Mr. McCain) is 
necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 99, nays 0, as follows:
           [Rollcall Vote No. 28 Leg.]

                                YEAS--99

     Abraham
     Akaka
     Allard
     Ashcroft
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Boxer
     Breaux
     Brownback
     Bryan
     Bunning
     Burns
     Byrd
     Campbell
     Chafee
     Cleland
     Cochran
     Collins
     Conrad
     Coverdell
     Craig
     Crapo
     Daschle
     DeWine
     Dodd
     Domenici
     Dorgan
     Durbin
     Edwards
     Enzi
     Feingold
     Feinstein
     Fitzgerald
     Frist
     Gorton
     Graham
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Helms
     Hollings
     Hutchinson
     Hutchison
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Kyl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Lott
     Lugar
     Mack
     McConnell
     Mikulski
     Moynihan
     Murkowski
     Murray
     Nickles
     Reed
     Reid
     Robb
     Roberts
     Rockefeller
     Roth
     Santorum
     Sarbanes
     Schumer
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Torricelli
     Voinovich
     Warner
     Wellstone
     Wyden

                             NOT VOTING--1

       
     McCain
      
  The bill (S. 314) was passed, as follows:

                                 S. 314

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Small Business Year 2000 
     Readiness Act''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) the failure of many computer programs to recognize the 
     Year 2000 may have extreme negative financial consequences in 
     the Year 2000, and in subsequent years for both large and 
     small businesses;
       (2) small businesses are well behind larger businesses in 
     implementing corrective changes to their automated systems;
       (3) many small businesses do not have access to capital to 
     fix mission critical automated systems, which could result in 
     severe financial distress or failure for small businesses; 
     and
       (4) the failure of a large number of small businesses due 
     to the Year 2000 computer problem would have a highly 
     detrimental effect on the economy in the Year 2000 and in 
     subsequent years.

     SEC. 3. YEAR 2000 COMPUTER PROBLEM LOAN GUARANTEE PROGRAM.

       (a) Program Established.--Section 7(a) of the Small 
     Business Act (15 U.S.C. 636(a)) is amended by adding at the 
     end the following:
       ``(27) Year 2000 computer problem program.--
       ``(A) Definitions.--In this paragraph--
       ``(i) the term `eligible lender' means any lender 
     designated by the Administration as eligible to participate 
     in the general business loan program under this subsection; 
     and
       ``(ii) the term `Year 2000 computer problem' means, with 
     respect to information technology, and embedded systems, any 
     problem that adversely effects the processing (including 
     calculating, comparing, sequencing, displaying, or storing), 
     transmitting, or receiving of date-dependent data--

       ``(I) from, into, or between--

       ``(aa) the 20th or 21st centuries; or
       ``(bb) the years 1999 and 2000; or

       ``(II) with regard to leap year calculations.

       ``(B) Establishment of program.--The Administration shall--
       ``(i) establish a loan guarantee program, under which the 
     Administration may, during the period beginning on the date 
     of enactment of this paragraph and ending on December 31, 
     2000, guarantee loans made by eligible lenders to small 
     business concerns in accordance with this paragraph; and
       ``(ii) notify each eligible lender of the establishment of 
     the program under this paragraph, and otherwise take such 
     actions as may be necessary to aggressively market the 
     program under this paragraph.
       ``(C) Use of funds.--A small business concern that receives 
     a loan guaranteed under this paragraph shall only use the 
     proceeds of the loan to--
       ``(i) address the Year 2000 computer problems of that small 
     business concern, including the repair and acquisition of 
     information technology systems, the purchase and repair of 
     software, the purchase of consulting and other third party 
     services, and related expenses; and
       ``(ii) provide relief for a substantial economic injury 
     incurred by the small business concern as a direct result of 
     the Year 2000 computer problems of the small business concern 
     or of any other entity (including any service provider or 
     supplier of the small business concern), if such 
     economic injury has not been compensated for by insurance 
     or otherwise.
       ``(D) Loan amounts.--
       ``(i) In general.--Notwithstanding paragraph (3)(A) and 
     subject to clause (ii) of this subparagraph, a loan may be 
     made to a borrower under this paragraph even if the total 
     amount outstanding and committed (by participation or 
     otherwise) to the borrower from the business loan and 
     investment fund, the business guaranty loan financing 
     account, and the business direct loan financing account would 
     thereby exceed $750,000.
       ``(ii) Exception.--A loan may not be made to a borrower 
     under this paragraph if the total amount outstanding and 
     committed (by participation or otherwise) to the borrower 
     from the business loan and investment fund, the business 
     guaranty loan financing account, and the business direct loan 
     financing account would thereby exceed $1,000,000.
       ``(E) Administration participation.--Notwithstanding 
     paragraph (2)(A), in an agreement to participate in a loan 
     under this paragraph, participation by the Administration 
     shall not exceed--
       ``(i) 85 percent of the balance of the financing 
     outstanding at the time of disbursement of the loan, if the 
     balance exceeds $100,000;
       ``(ii) 90 percent of the balance of the financing 
     outstanding at the time of disbursement of the loan, if the 
     balance is less than or equal to $100,000; and
       ``(iii) notwithstanding clauses (i) and (ii), in any case 
     in which the subject loan is processed in accordance with the 
     requirements applicable to the SBAExpress Pilot Program, 50 
     percent of the balance outstanding at the time of 
     disbursement of the loan.
       ``(F) Periodic reviews.--The Inspector General of the 
     Administration shall periodically review a representative 
     sample of loans guaranteed under this paragraph to mitigate 
     the risk of fraud and ensure the safety and soundness of the 
     loan program.
       ``(G) Annual report.--The Administration shall annually 
     submit to the Committees on Small Business of the House of 
     Representatives and the Senate a report on the results of the 
     program carried out under this paragraph during the preceding 
     12-month period, which shall include information relating 
     to--

[[Page S2069]]

       ``(i) the total number of loans guaranteed under this 
     paragraph;
       ``(ii) with respect to each loan guaranteed under this 
     paragraph--

       ``(I) the amount of the loan;
       ``(II) the geographic location of the borrower; and
       ``(III) whether the loan was made to repair or replace 
     information technology and other automated systems or to 
     remedy an economic injury; and

       ``(iii) the total number of eligible lenders participating 
     in the program.''.
       (b) Guidelines.--
       (1) In general.--Not later than 30 days after the date of 
     enactment of this Act, the Administrator of the Small 
     Business Administration shall issue guidelines to carry out 
     the program under section 7(a)(27) of the Small Business Act, 
     as added by this section.
       (2) Requirements.--Except to the extent that it would be 
     inconsistent with this section or section 7(a)(27) of the 
     Small Business Act, as added by this section, the guidelines 
     issued under this subsection shall, with respect to the loan 
     program established under section 7(a)(27) of the Small 
     Business Act, as added by this section--
       (A) provide maximum flexibility in the establishment of 
     terms and conditions of loans originated under the loan 
     program so that such loans may be structured in a manner that 
     enhances the ability of the applicant to repay the debt;
       (B) if appropriate to facilitate repayment, establish a 
     moratorium on principal payments under the loan program for 
     up to 1 year beginning on the date of the origination of the 
     loan;
       (C) provide that any reasonable doubts regarding a loan 
     applicant's ability to service the debt be resolved in favor 
     of the loan applicant; and
       (D) authorize an eligible lender (as defined in section 
     7(a)(27)(A) of the Small Business Act, as added by this 
     section) to process a loan under the loan program in 
     accordance with the requirements applicable to loans 
     originated under another loan program established pursuant to 
     section 7(a) of the Small Business Act (including the general 
     business loan program, the Preferred Lender Program, the 
     Certified Lender Program, the Low Documentation Loan Program, 
     and the SBAExpress Pilot Program), if--
       (i) the eligible lender is eligible to participate in such 
     other loan program; and
       (ii) the terms of the loan, including the principal amount 
     of the loan, are consistent with the requirements applicable 
     to loans originated under such other loan program.
       (c) Repeal.--Effective on December 31, 2000, this section 
     and the amendments made by this section are repealed.

  Mr. BENNETT. Mr. President, I move to reconsider the vote.
  I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The Senator from Vermont is recognized.
  Mr. LEAHY. I ask unanimous consent for 7 minutes as in morning 
business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________