[Congressional Record Volume 145, Number 46 (Tuesday, March 23, 1999)]
[House]
[Pages H1488-H1490]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 SMALL BUSINESS YEAR 2000 READINESS ACT

  Mr. TALENT. Mr. Speaker, I move to suspend the rules and pass the 
Senate bill (S. 314) to provide for a loan guarantee program to address 
the Year 2000 computer problems of small business concerns, and for 
other purposes.
  The Clerk read 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--
       ``(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

[[Page H1489]]

     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.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Missouri (Mr. Talent) and the gentlewoman from New York (Ms. Velazquez) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Missouri (Mr. Talent).
  Mr. TALENT. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the Year 2000 computer problem, commonly known as Y2K, 
has the potential to disrupt many of this Nation's small to medium-
sized businesses at the turn of the century. The Y2K problem exists 
because many computers and embedded chips cannot process dates beyond 
December 31, 1999.
  Although computer programmers have known about this problem since at 
least the late 1960s, many small business owners have not taken any 
action toward correcting any possible Y2K problems they may have. In 
fact, according to a recent study by the NFIB, a small business 
association, only one in four small business owners consider Y2K a 
serious problem.
  Today we are considering a very important piece of legislation that 
will help small businesses achieve Y2K compliance. The Small Business 
Year 2000 Readiness Act, S. 314, requires the Small Business 
Administration to establish a limited-term loan program to assist small 
businesses in correcting Y2K computer problems. Any of the more than 
6,000 lenders nationwide that are eligible to participate in SBA's 7(a) 
business loan program are eligible to participate in the Y2K loan 
program.
  Under current law, the SBA may not guarantee more than $750,000 to 
any single borrower. This legislation establishes a limited exception 
to current law so that the SBA may exceed that amount by up to $250,000 
for loans under the Y2K loan program.
  Small businesses may use the proceeds of a loan for two purposes. 
First, a small business may use the loan to correct Y2K problems 
affecting its own information technology systems and other automated 
systems. For example, a small business is permitted to purchase or 
repair hardware or software or pay for consultants to repair its 
information technology systems.
  Second, a small business may use the loan proceeds to provide relief 
from economic injury suffered as a direct result of its own Year 2000 
problems or some other entity's Y2K problems.
  The belief of many small businesses that the Y2K problem does not 
affect them because they do not own a large mainframe or PC is 
unrealistic. Many of these businesses rely on a wide range of suppliers 
and customers who use automated and computerized systems for 
production, inventory, shipping and billing purposes. If one of these 
links in a small business' supply and demand chain is broken due to a 
computer system that is not Y2K complaint, it could lead to irreparable 
damage to a business that lacks a large capital pool.
  Other Y2K-related problems that could affect small businesses include 
interest calculation errors, bank account balance errors, and 
disruption of service on production lines. Additionally, in our 
continuously expanding marketplace, small business owners who have 
contact with overseas corporations need to discover whether or not 
their foreign trading partners are Y2K compliant.
  There is one positive aspect of the Y2K problem, Mr. Speaker. We know 
what it is and we know when it will strike. Unlike other disasters that 
strike unexpectedly, American small businesses can prepare for this 
potential problem and, in fact, help to blunt its impact. The loan 
program established by the Small Business Year 2000 Readiness Act will 
be instrumental in preparing our Nation's small businesses for the turn 
of the century.
  In closing, I would like to read a letter I recently received from 
one of my constituents which I believe clearly illustrates the problems 
small businesses may face in the Year 2000.
  ``Dear Congressman Talent: I own and operate a small payroll service 
bureau in your district providing payroll services for over 100 client 
companies and approximately 6,000 people. Our gross income in many 
cases is just 50 cents per check in this extremely competitive 
environment. It is my estimate that it will cost us about $27,000 to 
$35,000 to obtain the needed payroll software and computer hardware to 
become Y2K compliant.
  ``Obviously payroll checks issued for January of the Year 1900 are 
not likely to be cashable at many banks. None of my clients will stay 
with us without some assurance of valid checks come January 1, 2000, so 
not complying would mean the death of my company. It is going to take a 
significant portion of our revenues for several years to pay for the 
compliance we absolutely must have. This may mean going without an 
income for me, possibly pay cuts for my employees, and paying high loan 
interest rates for years.
  ``We are currently struggling to figure out a way to finance the 
upgrades needed to become compliant, instead of working on getting the 
equipment and software and becoming compliant. It will take us about 3 
months to convert all records, even after installing equipment and 
software.
  ``I would ask that you and the House of Representatives move as 
quickly as possible to approve a matching bill to S. 314 already 
passed. Once any legislation passes, and the money finally comes down 
to my small business, I still face months of work to finish what you 
are starting.
  ``Thank you very much for your consideration of the immense pressures 
this issue has added to many small businesses already dealing with a 
host of other problems,'' and it is signed with a constituent's name.
  That, I think, illustrates the reason why we have this bill before 
the House. I thank my friend, the ranking member of the committee, the 
gentlewoman from New York (Ms. Velazquez) for her help.
  Mr. Speaker, I reserve the balance of my time.
  Ms. VELAZQUEZ. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in support of S. 314, the Small Business Year 
2000 Readiness Act. Providing small businesses with access to the 
capital they need to prepare themselves for the Year 2000 is important 
for the safety and soundness of our economy.
  The Year 2000 problem is one of the most critical issues facing 
America's small businesses. It is not even January 1, 2000, and already 
some businesses are experiencing difficulties. Unless action is taken 
soon, the closer to this date we get, the more problems our Nation's 
businesses can expect.
  Although no one knows for certain what impact Y2K will have, most 
experts believe that computer-related problems will be wide-ranging, 
from miscalculation in insurance and loan rates to brownouts caused by 
malfunctioning power plants. In fact, some equipment may stop working 
altogether. The economic impact could be disastrous not only for the 
United States but also for the global economy.
  The overall cost to the American economy could be as high as $119 
billion in lost output between now and 2001. In addition to this 
figure, the economic growth rate could slow, inflation could rise and 
productivity could drop. For small businesses, which may not have 
adequate resources to deal with this problem, the effects could be 
devastating. Estimates indicate that up to 7 percent of U.S. businesses 
will fail due to the lack of Y2K readiness. Clearly, something must be 
done to minimize the effects of the Year 2000 problem.
  Despite all of this information and the dire forecast for the 
economy, a recent study conducted by the National Federation of 
Independent Businesses and Wells Fargo Bank found that fewer than 23 
percent of small business owners consider Y2K a serious problem. 
Additionally, the report stated that only 41 percent addressed or 
planned to address this issue. There are many reasons for this, ranging 
from lack of understanding to inadequate resources.

[[Page H1490]]

  Today's legislation tackles one problem faced by small businesses 
preparing for the Y2K: access to capital. S. 314, the Small Business 
Year 2000 Readiness Act, would remedy this by providing greater 
flexibility through the 7(a) program to help businesses deal with their 
readiness. This legislation will also increase the number and amount of 
loans available to small businesses. Repayment of loans will be 
structured to help businesses with their cash flow and in their 
planning for the coming year.
  Mr. Speaker, we should all take the threat that the Year 2000 problem 
poses to our small business community very seriously. We must continue 
to work together to make businesses aware of the need to prepare for 
Y2K, and we must continue finding ways to help small businesses become 
ready.
  S. 314 is a step in that direction. I urge my colleagues to support 
this legislation.
  Mr. Speaker, I reserve the balance of my time.
  Mr. TALENT. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, in closing, I would like to thank our distinguished 
ranking member, the gentlewoman from New York (Ms. Velazquez), for her 
work on this legislation.
  Mr. Speaker, this is the sixth piece of legislation that the 
Committee on Small Business has brought before this House in these 
first months of the 106th Congress. We have moved all these measures on 
a bipartisan basis and in fact, so far, Mr. Speaker, we have been able 
to move our legislative agenda on a bicameral basis.
  I would like to thank all the members of the committee for making the 
past few months a success for the committee. I also want to thank the 
committee staff on both sides of the aisle that worked so effectively 
to help our committee accomplish its goals.
  I do not normally thank staff in these kinds of debates, Mr. Speaker, 
but I think it is appropriate given the fine work so far. On the 
Democratic staff, I would like to thank George Randels, Catherine Cruz-
Wojtasik, Michael Klier and Michael Day. On the Republican staff, I 
would like to thank Charles Rowe, Meredith Matty, Dwayne Andrews, 
Stephanie O'Donnell, Larry McCredy, Paul Denham and Harry Katrichis.
  This is a very important piece of legislation, Mr. Speaker, to help 
our small business community in dealing with what could be a very 
significant problem. I urge the House to support it.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise to speak on behalf of 
this bill, which encourages our small businesses to address the Y2K 
computer problem. I support S. 314 as a necessary support tool for 
small businesses dealing with Y2K.
  This bill requires the Small Business Administration (SBA) to 
establish a new loan program that would give small businesses, who 
often do not have a great deal of money for capital investment, the 
opportunity to address the Y2K conversion in a responsible manner.
  The Administration has gone through great pains to work through the 
Y2K bug, and to make sure that the United States survives the 
transition to next year with minimal discomfort. Among the programs 
that the Administration has created are several instituted by the SBA 
and the National Institute of Standards and Technology (NIST), which 
are aimed exclusively at getting small business on the track to Y2K 
Compliance.
  These programs are vital in my district, and in areas throughout the 
country, where small businesses are responsible for providing many of 
the most important services to the community. In many urban 
neighborhoods, for instance, the largest grocery stores are the mom-
and-pop shops on the corner--which would be called ``convenience 
stores'' in the suburbs. These small shops are, for many whom do not 
have cars or whom rely on public transportation, their only source for 
food and other necessary goods--and we simply cannot afford to have 
them shut down for any amount of time.
  Most of the growth in our economy can be attributed to the 
revitalization of our small and medium-sized businesses, and we ought 
to ensure that no phenomenon, whether an act of God or the 
miscalculation of a computer designed decades ago, will curb that 
growth. I believe that this, simple bill, has the potential to do a 
great deal of good, and I, like my colleagues in the Senate, urge its 
passage.
  Mr. TALENT. Mr. Speaker, I yield back the balance of my time.
  Ms. VELAZQUEZ. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Missouri (Mr. Talent) that the House suspend the rules 
and pass the Senate bill, S. 314.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the Senate bill was passed.
  A motion to reconsider was laid on the table.

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