[Congressional Record Volume 151, Number 125 (Friday, September 30, 2005)]
[Senate]
[Pages S10799-S10802]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. SNOWE (for herself, Mr. Kerry, Mr. Vitter, Ms. Landrieu, 
        Mr. Talent, Mr. Kennedy, Mr. Cornyn, and Mr. Bayh):
  S. 1807. A bill to provide assistance for small businesses damaged by 
Hurricane Katrina or Hurricane Rita, 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, the Small Business Hurricane Relief and 
Reconstruction Act of 2005, 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 reestablish 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.
  I would like to thank my colleagues, Senator Kerry, Senator Vitter, 
Senator Landrieu, Senator Talent, Senator Kennedy, Senator Cornyn, and 
Senator Bayh, for cosponsoring this bill. This bill includes all of the 
provisions that were in prior hurricane relief legislation that I 
introduced with Senator Vitter and Senator Talent but also includes 
several additional provisions and improvements to preexisting 
provisions.
  The provisions of this bill were contained in an amendment that I 
proposed, amendment No. 1717, to the Commerce, Justice, and Science 
Appropriations Act of 2005, H.R. 2862. I would like to thank my 
colleagues, Senator Kerry, Senator Vitter, Senator Landrieu, and 
Senator Talent, for cosponsoring 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.
  Senator Vitter, Senator Talent, and I also introduced the provisions 
of S.A. 1717 as a stand-alone bill, S. 1724, on September 19, 2005. We 
took this step in order to begin the process of enacting these 
provisions into law more quickly than might occur through the Commerce, 
Justice, and Science Appropriations Act, which must still complete its 
Senate-House conference.
  Today we are introducing an expanded package of provisions 
to increase the assistance provided to victims of the hurricane, who 
require immediate assistance. Because the Federal Disaster Loan program 
administered by the Small Business Administration issues disaster loans 
to businesses, homeowners, and renters, this

[[Page S10800]]

legislation would have a significant impact on many facets of the 
efforts to rebuild the areas damaged by Hurricane Katrina.

  Because of the importance of this rebuilding challenge, I chaired a 
hearing in the Committee on Small Business and Entrepreneurship on 
September 22, 2005 to address the impact that Hurricane Katrina and 
Hurricane Rita have had on small businesses. At that hearing, the 
Committee heard testimony from the Administrator of the Small Business 
Administration, Hector Barreto, who explained the unprecedented scope 
of the SBA's response to these disasters. In addition, the director of 
the SBA's Disaster Assistance Program, Herb Mitchell, testified about 
the SBA's actions thus far, and its plans for the continuing recovery.
  The committee also heard testimony from seven representatives of 
small businesses, and of small business development centers, in the 
gulf coast region. These witnesses, who traveled from Louisiana, 
Mississippi, and Alabama for the hearing, described to the committee 
the devastation that has occurred to their businesses and communities 
and various steps they believe would assist in the rebuilding process.
  Many of their recommendations were contained in the legislation I had 
introduced last week, S. 1724, and the legislation I am introducing 
today includes other provisions stemming from the committee's hearing 
and their testimony.
  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 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 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 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.
  For instance, the bill increases the share of small businesses in 
Federal prime contracts and subcontracts for rebuilding the damaged 
areas through meaningful goals, set-asides, subcontracting plans, 
outreach programs, and HUBZone preferences.
  The legislation also allows recipients of disaster loans to increase 
the size of their loan if the additional amounts would be spent on 
mitigation efforts, such as sea walls, storm shutters, or better 
drainage system to prepare for future disasters. This provision was 
suggested by the administration in its proposal to rebuild the gulf 
coast region.
  The bill also allows the Small Business Administration to offer 
economic injury disaster loans to small businesses throughout the 
country if the businesses suffered direct adverse economic impacts from 
the two hurricanes. The SBA offered these loans nationwide after the 
terrorist attacks of September 11, 2001.
  In addition, the bill protects future borrowers in the SBA's business 
loan programs from having to pay higher fees to compensate the Federal 
Government for any defaults that may occur because the businesses of 
some current borrower who had loans before the hurricane were destroyed 
in the hurricanes. SBA business loan programs utilize fees to pay for 
all or part of the programs' costs, and those businesses that default 
because of the hurricanes would not be included in the calculation of 
future program costs in the SBA's business loan programs.
  The bill addresses concerns about fraud and lack of competition by 
abolishing the excessive increase in the ``micro-purchase'' threshold 
to $250,000. This increase, slipped into the second hurricane 
Supplemental Appropriations Act in September 2005, allowed Federal 
officials to ignore small businesses in awarding contracts up to 
$250,000. Micro-purchases are generally strictly limited to $2,500 and 
to $15,000 in case of nuclear attack or military contingency. These 
purchases allow for convenient credit card transactions by the Federal 
Government, but are vulnerable to fraud and favoritism.

  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 l2-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 both within and 
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 $27 
billion, and the 504 lending program from a program level of $7.5 
billion to $12.5 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 $86 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 the September 11 attacks 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 the September 11 attacks, and for the 
special disaster loans made after those attacks.
  Additionally, many small businesses in the disaster areas will 
require relief from making payments and interest on 504 loans they had 
before Katrina hit. Therefore, this amendment includes a provision that 
authorizes the SBA to cover the payments and interest on existing loans 
until the small business can resume payments.
  Similar to the Supplementary Terrorist Activity Relief, STAR, loans 
enacted by Congress after September 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 lowers fees also provides 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 nondisaster victims. The protections 
include requiring lenders to inform borrowers that they are receiving 
Katrina relief loans, requiring lenders to document to

[[Page S10801]]

the SBA how the borrower was adversely affected by Hurricane Katrina, 
and for the SBA's inspector general to collect the explanations and 
report to the Senate Committee on Small Business and Entrepreneurship 
and House Committee on Small Business every 6 months, verifying loans 
are being used for the intended purposes. Finally, the bill would 
require the Government Accountability Office to review the 
implementation of the program, after its completion, and report its 
findings to Congress. These added protections will ensure that only 
applicants who really need these loans to recover from the horrific 
effects of Hurricane Katrina and Hurricane Rita will receive the loans.
  Furthermore, the legislation authorizes $450 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 
quickly, and this measure is based on a successful program that helped 
victims of the hurricanes in Florida in past years.
  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 contracting dollars to economically distressed areas. 
Extending the HUBZone designation to the gulf coast would bring needed 
businesses development tools to affected areas.
  In addition Mr. President, my bill would increase the maximum size of 
SBA surety bonds for small businesses from $2 million to $5 million, 
and authorizes the SBA to increase the size of these bonds further to 
$10 million. 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 Center, 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 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 our Nation's 
small businesses to do what they do best--create jobs.
  Mr. President, 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.
  Thank you, Mr. President.
  Mr. KERRY. Mr. President, today I join with Senator Snowe, the chair 
of our committee, and our colleagues, Senators Landrieu and Vitter, to 
introduce a bill to help small businesses that have been damaged, 
physically and economically, by one or both of the hurricanes that have 
destroyed the gulf region over the past four or five weeks.
  Our colleagues should feel very comfortable voting for this bill. The 
need is undeniable, based not only on what we see on television every 
day and read in the papers but also based on the testimony of small 
businesses and governors at hearings held in the Senate, in our 
committee last week, and this week before the Finance Committee. 
Further, 96 Senators voted for very similar legislation 2 weeks ago.
  This bill is very similar to the amendment (S.A. 1695) that Senator 
Landrieu and I offered to the fiscal year 2006 appropriations bill for 
the Departments of Commerce, Justice, and Science, and that passed the 
Senate by a vote of 96 to 0 on September 15 as part of the compromise 
amendment (S.A. 1717) that I put forth with Senators Snowe, Landrieu, 
and Vitter. We offered those amendments to the appropriations bill 
because relief for small businesses had not been provided for in the 
two emergency supplementals. Two bills, worth some $63 billion, and 
nothing designated for small businesses.
  It is through the Small Business Administration that disaster loan 
assistance is available, not just for businesses but for homeowners and 
renters, and it is through the Small Business Administration that the 
Federal Government provides the full complement of assistance to the 
small businesses in our Nation. The SBA is indispensable to the 
recovery of the gulf region after Hurricane Katrina. If the 
administration is not going to provide small business relief in the 
emergency spending bills it sends to Congress, this is absolutely 
appropriate.
  We have got to get into law, and to fund, relief for small businesses 
before Senators go home for a week break in October. These folks have 
waited too long. We have got to get people back to work.
  Since Hurricane Katrina hit, the gulf has had the extreme misfortune 
of being hit by Hurricane Rita. And this bill reflects the damage 
caused by going a bit further to take care of those small businesses, 
too. It also incorporates provisions requested by the administration. 
For example, at the request of the administration, the bill authorizes 
the Small Business Administration to make economic injury disaster 
loans nationwide to any small business directly and adversely impacted 
by Hurricane Katrina or Hurricane Rita. The bill limits eligibility of 
economic injury disaster loans to those small businesses suffering 
economic losses because of the spikes in gasoline and natural gas and 
heating oil related to Hurricanes Katrina and Rita. That is consistent 
with all other provisions in this bill. We also increased the amount of 
funding for grants to the States from $400 million to $450 million, to 
reflect the increased damage and delays in recovery caused by Hurricane 
Rita. We also repeal some contracting provisions enacted as part of

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the second supplemental that were anti-small business and would have 
resulted in millions of contracting dollars lost for small businesses 
that should be getting Federal contracts to rebuild the area. The small 
businesses don't just need loans; they need work to get revenue flowing 
again and to hire again, creating local jobs.
  Mr. President, I extend great thanks to my colleagues, Senators 
Snowe, Landrieu, and Vitter for their work on this bill. I think we 
have demonstrated to a weary public that we can work together, and I 
hope that our colleagues in the Senate and in the House and the 
President will join us and vote to make this law and to fund it.
                                 ______