[Congressional Record Volume 151, Number 117 (Monday, September 19, 2005)]
[Senate]
[Pages S10194-S10196]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. SNOWE (for herself, Mr. Vitter, and Mr. Talent):
  S. 1724. A bill to provide assistance for small businesses damaged by 
Hurricane Katrina, and for other purposes; to the Committee on Small 
Business and Entrepreneurship.
  Ms. SNOWE. Mr. President, I rise today to bring to the attention of 
the Senate a bill which provides a comprehensive package for immediate 
emergency resources to help the victims of Hurricane Katrina rebuild 
their lives and their businesses.
  As we are well aware, the entire Gulf Coast of the United States has 
been ravaged by the disaster of Hurricane Katrina. No natural disaster 
in this country in recent memory has carried with it the devastation 
and horror we have witnessed in the recent weeks. Many lives have been 
lost and damages are projected in the hundreds of billions of dollars. 
The President and Congress have already provided over $61 billion in 
emergency funds.
  While we work to re-establish communities and provide some stability 
to the affected areas, we must consider the enormous economic impact 
this catastrophe has had on the region and on our entire Nation. This 
impact is particularly pronounced for the vital small business sector. 
With over 800,000 firms damaged in the Hurricane-affected region, 
employment in the Louisiana, Mississippi and Alabama area may be 
reduced by over a million jobs! Moreover, our economy which has 
recently recovered from recession, thanks largely to our small 
businesses which have created three-quarters of all new jobs, could be 
dampened by as much as a full percentage point.
  As Chair of the Committee on Small Business and Entrepreneurship, I 
am committed to do everything in my power to provide immediate and 
necessary support to rebuild this region and to help sustain our 
economy. I want to ensure that every American affected by this 
Hurricane has the resources to begin rebuilding their lives, their 
businesses and their dreams.
  The provisions of this bill were contained in an amendment that I 
proposed, Amendment #1717, to the Commerce, Justice, and Science 
Appropriations Act of 2005, H.R. 2862. I would like to thank my 
colleagues, Senator Vitter, Senator Talent, Senator Kerry, and Senator 
Landrieu, for co-sponsoring that amendment. The amendment was approved 
in the Senate by a rollcall vote of 96 to 0 on September 15, 2006, and 
subsequently passed the Senate in the Commerce, Justice, and Science 
Appropriations Act on that same day.
  Because the Federal Disaster Loan program administered by the Small 
Business Administration issues Disaster Loans to businesses, 
homeowners, and renters, this legislation would have a significant 
impact on many facets of the efforts to rebuild the areas damaged by 
Hurricane Katrina.
  I will also be holding a hearing in the Small Business Committee on 
September 22, 2005 to address the impact that Hurricane Katrina has had 
on small businesses.
  The Small Business Administration is and must be at the forefront of 
this massive relief effort, playing a significant role in assisting 
impacted communities. This bill will strengthen the SBA's resources and 
will enable them to pave the pathway to recovery. I have faith that 
American small businesses will persevere through these difficult times 
and help lead the region's recovery. It is essential that we work 
together here in Congress, and put forth the best possible proposal to 
stimulate our economy and foster job growth.

  I have spoken with SBA's Administrator Barreto concerning the various 
ways to respond to this disaster and assist with the recovery. He 
informed me that FEMA has referred over 500,000 cases for loan 
assistance to the SBA, and that the SBA is receiving up to

[[Page S10195]]

20,000 calls per day. This is a tremendous volume and a vital challenge 
that the SBA must satisfy. To date, the SBA has sent out almost 500,000 
applications for loans to individuals and businesses, and has received 
810 loan applications as of Monday morning, which demonstrates that 
much assistance is yet to be provided by the SBA. Therefore, it is 
critical that we act now!
  I firmly believe this legislation is the best possible package to aid 
families, businesses and communities through these challenging times. 
Small businesses must have a fighting chance to survive the economic 
disaster caused by Hurricane Katrina.
  I have included many provisions in my bill that would assist 
hurricane victims applying for SBA disaster loans. My legislation 
increases the maximum size of an SBA Disaster Loan from $1.5 million 
per loan to $10 million per loan and makes it possible for non-profit 
institutions damaged by Hurricane Katrina to be eligible for Disaster 
Loans.
  I have also provided the SBA with the authority to grant victims of 
Hurricane Katrina up to 12 months to begin repaying their SBA disaster 
loans which would assist both small and large businesses, homeowners, 
and renters. This 12 month period could be extended to 24 months at the 
discretion of the SBA Administrator if he determines that Katrina 
victims would need additional time to begin repaying their loans. This 
would allow also homeowners and businesses additional time to get their 
lives and businesses restored before being required to begin repaying 
loans.
  This legislation also proposes lowering fees for the 7(a) program to 
make borrowing more affordable for small businesses outside the 
disaster areas, many of which have been impacted by the disaster, and 
are struggling to cover higher costs in health care and energy, and 
rising interest rates.
  Recognizing the increased demand this disaster will place on all 
small business lending programs, the amendment proposes increasing the 
7(a) lending program from a program level of $17 billion to $20 
billion, and the 504 lending program from a program level of $7.5 
billion to $10 billion. Both the 504 and 7(a) lending programs are 
funded entirely through fees, so the increases require no 
appropriation.
  Moreover, this bill increases the program level for SBA Disaster 
Loans--Physical and Economic Injury--by approximately $800 million, 
requiring an appropriation of approximately $117 million. The Committee 
is concerned there will not be enough funding for disaster loans 
available to meet the scope of this disaster, given that the economic 
injury disaster loans alone for 9-11 amounted to about $1 billion, and 
the physical damage for Katrina is considered much more extensive.
  The bill also includes a provision requiring the SBA to treat these 
special provisions as separate from the regular programs, to avoid 
increasing future subsidy rates, and therefore, the costs for borrowers 
who rely on those programs. This same protection was provided for 
emergency 7(a) loans after 9-11 and for the special disaster loans for 
9-11.
  Additionally, many small businesses in the disaster areas will 
require relief from making payments and interest on 7(a) and 504 loans 
they had before Katrina hit. Therefore, this amendment includes a 
provision that directs the SBA to cover the payments and interest on 
existing loans for up to two years, or until the small business can 
resume payments.
  Similar to the Supplementary Terrorist Activity Relief (STAR) loans 
enacted by Congress after 9-11, this bill allows the SBA to provide 
similar loans with lower fees for small businesses located outside the 
disaster zones but are nonetheless indirectly impacted by Hurricane 
Katrina. The lower fees also provide the lenders with an incentive to 
lend to these businesses.
  Importantly, the bill includes protections to mitigate recent reports 
of past misdirection of loans to non-disaster victims. The protections 
include requiring lenders to inform borrowers that they are receiving 
Katrina relief loans, requiring lenders to document to the SBA how the 
borrower was adversely affected by Hurricane Katrina, and for the 
Government Accountability Office to collect the explanations and report 
to the Senate Committee on Small Business and Entrepreneurship and 
House Committee on Small Business every six months, verifying loans are 
being used for the intended purposes. These added protections will 
ensure that only applicants who really need these loans to recover from 
the horrific effects of Hurricane Katrina will receive the loans.
  Furthermore, the legislation authorizes $400 million to the affected 
state governments of Louisiana, Mississippi, Alabama, Texas, and 
Florida to provide emergency bridge loans or grants to small businesses 
in the disaster areas that have been adversely impacted by Hurricane 
Katrina and require immediate access to capital until they can secure 
other loans or financial assistance. The goal is to disburse the funds 
within seven days, and this measure is based on a successful program 
that helped victims of the hurricanes in Florida.
  With the cost of Katrina relief and rebuilding estimated at over $100 
billion, small businesses, particularly those located in the disaster 
area and that employ individuals in the affected areas, should receive 
their fair share of federal contracting and subcontracting dollars. My 
bill also attempts to provide critical assistance to small businesses 
that have been operating in the areas devastated by the Hurricane 
Katrina by expanding access to Federal contract and subcontracts.
  Government projects provide solid business opportunities and prompt, 
steady pay for small businessmen and businesswomen. In addition, 
government procurement would open doors for many local small businesses 
to participate in the long-term reconstruction work in the Gulf Coast 
areas. Prior to the disaster, small construction companies in Alabama, 
Mississippi, and Louisiana brought home nearly $500 million in Federal 
contracts a year. Total small business contracts in the Gulf Coast 
region exceeded $3 billion a year. While many small businesses would 
benefit from other forms of disaster assistance, many of them are ready 
to get back to work and into business as soon as possible.
  To that end, my bill designates the Hurricane Katrina disaster area 
as a HUBZone. A HUBZone designation would enable small businesses 
locating in the disaster area and employing people in that area to 
receive contracting preferences and price evaluation preferences to 
offset greater costs of doing business. The HUBZone program was created 
to direct federal contacting dollars to economically distressed areas. 
Extending the HUBZone designation to the Gulf Coast would bring needed 
businesses development tools to affected areas.
  In addition, my bill would increase the maximum size of surety bonds 
from $2 million to $5 million for Katrina-related contracts. Small 
contractors vying for work need an increase in bonds to handle greater 
projects for Hurricane Katrina relief. Local small businesses in the 
Gulf Coast can use higher bonds to compensate for the damage to their 
assets from the Hurricane.
  My bill would also direct the SBA, its resources partners, and the 
Federal offices of small and disadvantaged business utilization to 
create a contracting outreach program for small businesses located or 
willing to locate in the Katrina disaster area. Finally, my bill would 
establish small business contracting and subcontracting goals for all 
Katrina-related contracts and subcontracts to promote greater jobs 
creation and development, while providing reasonable flexibility to 
Federal agencies in meeting that goal in light of difficult 
circumstances on the ground.
  Finally I would also like to comment on the funding levels provided 
for the SBA in this bill. I have authorized the appropriation of $24.25 
million for grants to increase business counseling in the damaged areas 
for several SBA entrepreneurial development programs including: Small 
Business Development Centers (SBDCs); SCORE; Womens Business Centers 
(WBCs); Veteran's Business Centers, and Microloan Technical Assistance.
  Our Nation's 25 million small businesses prove time and again to 
breathe new life into our economy, by growing at twice the rate of all 
firms. And when a disaster strikes, the spirit, determination and will 
of America's small

[[Page S10196]]

businesses help to create the firm economic foundation, propelling our 
nation's economic growth. Therefore, we in turn must create an 
atmosphere favorable for small businesses and provide this emergency 
package to the SBA. We must allow Nation's small businesses to do what 
they do best--``create jobs.''
  I urge my colleagues to support this bill. Too much is at stake for 
small businesses, and the economy as a whole, to allow this critical 
legislation to languish. Congress must find essential agreement and 
fulfill its obligation to America's small businesses. Clearly, if we 
strive for anything less, we fail to support the backbone of our 
economy, our hope for new innovation, and the entrepreneurs reach for 
the American dream.
                                 ______