[Congressional Record Volume 152, Number 38 (Thursday, March 30, 2006)]
[Senate]
[Pages S2604-S2606]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. LANDRIEU (for herself and Mr. Kerry):
  S. 2482. A bill to authorize funding for State-administered bridge 
loan programs, to increase the access of small businesses to export 
assistance center services in areas in which the President declared a 
major disaster as a result of Hurricane Katrina of 2005, Hurricane Rita 
of 2005, or Hurricane Wilma of 2005, to authorize additional disaster 
loans, to require reporting regarding the administration of the 
disaster loan programs, and for other purposes; to the Committee on 
Small Business and Entrepreneurship.
  Ms. LANDRIEU. Mr. President, I come to the floor with my ranking 
member and leader on this issue, Senator John Kerry of Massachusetts, 
to speak for a few moments about a bill the two of us are going to 
introduce today, the Gulf Coast Open for Business Act of 2006, by 
Senators Landrieu, Kerry and others. Let me first commend my colleague 
and thank him for joining me here today. He will be giving more details 
about the act, which he has worked with my staff and others to craft, 
so let me add some personal perspective.
  I stand here again, on behalf of the people of Louisiana, and the 
whole gulf coast, who have just been devastated by the two most 
powerful storms to ever hit the United States in recorded history, and 
as you yourself know, because you were down in the gulf and have been a 
frequent champion for our cause. It is still hard, though, to describe 
to our colleagues the current situation there. Not only were these two 
hurricanes quite powerful, at some point category 4 and 5, which are 
killer storms, but just as devastating was the flooding that ensued by 
the collapse of the Federal levee system--a collapse because of 
inadequate engineering. Both the hurricanes and the flooding have 
literally devastated a major metropolitan area which sits in the heart 
of America's only energy coast, the gulf coast, and has been 
devastating to large and small businesses alike. We are here today to 
talk about our small businesses and their struggle for survival. They 
are indeed the backbone of our economic recovery.
  We have first focused on levees, appropriately, and gulf coast 
restoration efforts, without which no recovery will be possible. We 
have also tried to struggle keeping children in school, keeping 
families sheltered, literally from the elements in temporary housing, 
when we think 7 months on after Katrina and Rita, recovery is going to 
start with our small businesses.
  As I mentioned, yesterday marked the seven month anniversary of 
Hurricane Katrina. Katrina was the most destructive hurricane ever to 
hit the United States. The next month, in September, Hurricane Rita hit 
the Louisiana and Texas coast. It was the second most powerful 
hurricane ever to hit the United States, wreaking havoc on the 
southwestern part of my state and the east Texas coast. This one-two 
punch devastated Louisiana lives, communities and jobs, stretching from 
Cameron Parish in the west to Plaquemines Parish in the east.
  We are now rebuilding our State and the wide variety of communities 
that were devastated by Rita and Katrina, areas representing a diverse 
mix of population, income and cultures. We hope to restore the region's 
uniqueness and its greatness. To do that, we need to rebuild our local 
economies for now and far into the future.
  Before last year's storms, Louisiana had 86,000 small businesses, 
employing over 850,000 people. Their annual payroll was $21.9 billion.
  My State estimates that there were 71,000 businesses in the Katrina 
and Rita disaster zones. A total of 18,752 of these businesses 
catastrophically destroyed. However, on a wider scale, according to the 
U.S. Chamber of Commerce, over 125,000 small and medium-sized 
businesses in the gulf region were disrupted by Katrina and Rita. As of 
this month, local chambers of commerce report that as many as two-
thirds of their members had not resumed business operations. We will 
never succeed without these small businesses. They will be the key to 
the revitalization. I am here with my colleague to say that the regular 
approach, the standard operation, the mousetrap that we created to 
handle past disasters is simply not sufficient.
  Some of the people who work for the Small Business Administration and 
FEMA are terrific. You could not find better human beings on the face 
of the Earth. But it is not the individual human beings who are lacking 
here; it is the system that is insufficient and inadequate to the task.
  Senator Kerry and I come to the floor today to speak about this bill 
that will create new models, create enhanced help from the Federal 
Government so that the businesses in Louisiana can at least be met 
halfway in their struggle to get their roofs back on, their inventories 
back in supply, and new markets opened up, since the markets around 
them have collapsed. The communities they served and hold to are in 
some cases destroyed, in others dispersed across the country. If we 
don't help them now, building a strong gulf coast will be all the more 
difficult without our small businesses.
  After talking to the business leaders and small businesses in my 
State, there are three things that they need right now: technical 
assistance, contracting assistance, and assistance with SBA disaster 
loans. For example, many of our small businesses need help navigating 
the SBA assistance programs or, with much of their customer base in 
other States, others are now looking overseas for new markets. Our bill 
includes a provision to waive the $100,000 cap on portability grants to 
SBDCs and allows SBDCs to receive these grants for disaster relief. Our 
bill also contains funds for the SBA to create a gulf coast 
international finance specialist, based in the gulf, who would provide 
essential technical assistance for small businesses looking for export 
financing.
  It is vital to the economic recovery in Louisiana that our small 
businesses are given the opportunity to take part in the reconstruction 
of their State. Our businesses want to help rebuild their communities, 
but continue to have trouble getting Federal recovery contracts and 
keep getting mixed signals from FEMA.
  With these facts in mind, our bill sets a small business prime 
contracting goal of 30 percent for Federal emergency contracts to 
rebuild the affected areas. This is to ensure that small businesses, 
particularly those located in the disaster area and that employ 
individuals in the affected areas, should receive a fair share of 
Federal contracting dollars. Our bill also makes the disaster areas 
eligible for HUBZones status to promote business growth.
  Our businesses are struggling to deal with the SBA bureaucracy. Too 
often, when they get action on their loan application, it is a letter 
of rejection rather than a check.
  The SBA has repeatedly touted how it has staffed up and increased its 
loan

[[Page S2605]]

processing productivity in recent months. They even cite record loan 
approvals in the gulf. But recent numbers show it is still taking the 
SBA 104 days to process and close on a business application. That is 
time many struggling businesses that are holding on by their 
fingernails in a challenging environment simply do not have.
  Many times, when businesses are approved for an SBA loan, they find 
the terms and conditions to be unduly burdensome. Some are put in the 
position of having to make payments while they take care of expenses 
they have incurred for the months they spent waiting for the loan.
  Our bill provides substantive relief to small businesses in the 
disaster areas by allowing them to defer repayment of disaster loans 
for 1 year from the time they received the loan. This will give them 
time to resume operations and build back a customer base as displaced 
residents gradually return home. Our bill also increases the SBA's 
disaster mitigation loan amounts so that borrowers can more effectively 
invest in products such as sea walls or storm shutters, that mitigate 
against damage from future disasters.
  It is important to not only address our current needs from past 
hurricanes but to also look ahead to the next hurricane season--which 
is only 63 days away. I am concerned that the SBA has not incorporated 
`lessons learned' from recent storms. I am concerned that they remain 
unprepared for what may be another active hurricane season--if not in 
my State then perhaps in other coastal States in 2007.
  One provision included in our bill is a requirement that the SBA 
submit to Congress a detailed proactive disaster response plan by June 
1, 2006, the start of the 2006 Atlantic hurricane season. I want to 
make sure the SBA is ready to respond should that become necessary.
  As we reflect on the 7-month anniversary of the worst natural 
disaster to hit our Nation, now is the time for action--not words or 
empty promises. Today, right here in the Senate, is a time for fresh 
ideas and fiscally responsible plans to help our small businesses 
rebuild.
  I urge my colleagues to support this important legislation.
  With that, I turn the floor over to Senator Kerry who will go into 
additional detail about the Gulf Coast Open for Business Act. I thank 
him for his leadership, not only for this week but since the week of 
the storm. Our chairwoman, Senator Snowe along with Senator Kerry, have 
focused a great deal of their own efforts from outside of our region to 
help our small businesses. I commend them for their continued efforts 
and, along with my fellow Senator from Louisiana, Mr. Vitter, look 
forward to working with them in the coming months to give our small 
businesses the help they need so that they may rebuild and prosper once 
again.
  The PRESIDING OFFICER. The Senator from Massachusetts is recognized.
  Mr. KERRY. Mr. President, first of all, I thank the Senator from 
Louisiana. She has been terrific to work with on this issue, but, more 
important, she is absolutely tenacious with respect to the recovery 
issues in her State. I think she has offered tremendous leadership in 
the Senate on a constant basis. On almost every bill that comes 
through, she has fought to find a way to assist with the recovery. It 
has been a pleasure to work with her. I know she has to go to another 
meeting. I am pleased to join with her in introducing this legislation 
today.
  Senator Landrieu has tried to spread the word that New Orleans has 
plenty to offer, that people should not be scared away by negative 
press reports but instead be looking for opportunities to help rebuild 
one of our greatest cities.
  According to the U.S. Chamber of Commerce, more than 125,000 small 
and medium sized businesses were disrupted or destroyed by the 
hurricanes. It's been seven months since the Gulf was hit by the 
hurricanes, and it is time to take a look at the long-term needs of 
businesses in the region if we are going to truly foster an economic 
recovery.
  It is well known, the SBA's disaster loan program has done an abysmal 
job of getting out capital to businesses and homeowners over the past 
seven months, still with almost 80,000 applications to be processed out 
of 400,000 applications submitted. To help clear out the backlog, this 
bill enlists the agency's private-sector lending partners to help 
process loans. They are experienced SBA lenders, and in exchange for 
their expertise, SBA would pay them a fee to process loans. This is 
much faster than building a separate infrastructure of lenders, losing 
time to train them, when the experience and infrastructure already 
exists. Along with the American Bankers Associations, we urged the SBA 
back in November to enlist the agency's private-sector lending partners 
to help process loans. SBA refused, saying they had a better idea. That 
idea failed. With this bill, SBA can increase processing, get small 
businesses their loans faster, and local lenders can participate in the 
recovery of their communities.
  We also identified a need for export assistance. There is an 
interesting phenomenon occurring right now as a result of Katrina. 
Companies from around the globe, having witnessed the tragedy of New 
Orleans, are trying to reach out to businesses along the Gulf Coast. 
For companies that had already established relationships overseas, this 
has meant big bucks. Many smaller businesses, however, don't have those 
relationships and are struggling to take advantage of these new 
international opportunities. The U.S. Export Assistance Centers, or 
USEACs, are ready and willing to help, and they are a tremendous 
resource for businesses looking to branch into foreign markets. But the 
problem is that the Small Business administration doesn't have an 
employee in the New Orleans USEAC to help direct businesses to the 
financing programs that they need. Senator Landrieu and I recognize 
that this is because the SBA's international trade resources are 
stretched too thinly, so we are authorizing extra funds for the SBA to 
use in hiring an employee for the New Orleans USEAC.
  Shortly after Hurricane Katrina hit, Small Business Development 
Centers across the country decided to devote all the funds in the 
portability grant program, which is designed to help communities 
recover after suffering significant job losses, to helping the Gulf 
Coast SBDCs. Not only did the SBDC community sacrifice money to help 
their colleagues in the Gulf, they tried to volunteer employees and 
other resources. Unfortunately, the good intentions of the SBDC network 
were stopped by legal technicalities. Limitations on the amount of 
money a State could get for a portability grant and restrictions on 
SBDC employees working outside of their State hampered recovery 
efforts. Senator Landrieu and I were disturbed to hear of these 
problems, and with our legislation today we will correct these problems 
so that bureaucracy isn't preventing the Gulf Coast recovery.
  This bill also focuses on contracting opportunities for small 
businesses. The full participation of this Nation's small businesses, 
particularly those in and around the affected region, in the rebuilding 
effort is essential to the long-term success of the region's economy. 
New Orleans, in particular, was a city built on a foundation of small 
business and they will be the driving force behind its rebuilding.
  Unfortunately, not enough is being done to ensure this participation. 
Just last week, I sent a letter to FEMA about their failure to award 
approximately $1.5 billion in relief, recovery, and rebuilding 
contracts to small businesses. They told Senator Landrieu and me, and 
the other members of the Small Business Committee in November that they 
would award those contracts by February 1. We were disappointed that it 
would be another four months to get those funds to small businesses 
that desperately needed the work, but we were even more appalled when 
the deadline came and went, with no action from FEMA.
  Thus, this legislation has a number of provisions to help small 
businesses in the disaster areas compete for Federal contracts in the 
short term and in any future disaster recovery effort.
  This bill would make the declared disaster areas an Historically 
Underutilized Business Zone (HUBZone). This would give a preference to 
small businesses in the disaster zone when they bid on Federal 
contracts.
  To help jumpstart the local economies affected by Hurricanes Katrina 
and Rita and Wilma, the bill requires the Federal Government to award 
30 percent of prime contracts and 40 percent of subcontract dollars 
spent on

[[Page S2606]]

disaster relief, recovery or reconstruction in the four affected States 
to be awarded to small businesses. Small businesses performing work in 
the area are more likely to turn over Federal dollars in the local 
economy, reinvigorating the local economy. The provision also includes 
a requirement of a weekly small business utilization report from the 
Gulf Coast region.
  The bill includes a change to the Stafford Act, requiring that 10 
percent of immediate disaster recovery contracts, such as debris 
removal, distribution of supplies, and reconstruction are awarded to 
firms located in or near an area designated as a federal disaster area 
by the President. This will put more local people back to work and help 
a region's economic recovery after a disaster.
  This legislation will increase access for small businesses seeking 
contracting opportunities but limited by their ability to get bonded. 
Expanding access to bonding will increase small business participation, 
but will also protect the Federal Government from significant cost 
overruns and lack of performance in a contract.
  Mr. President, 43 percent of businesses that close following a 
disaster never reopen, and an additional 29 percent of businesses close 
down permanently within two years of a natural disaster. It's been 
seven months, but we still have a chance to make a difference and 
mitigate bankruptcies and foster the startup and growth of new small 
businesses to rebuild the Gulf region. I hope that my colleagues and 
the administration will give this bill consideration and not repeat the 
past months of obstruction that have hurt local small businesses and 
homeowners. It is inexcusable that the bipartisan bill we put forward 
with Senators Snowe and Vitter in September has been stalled.
  I thank my colleague Senator Landrieu for her leadership and look 
forward to traveling with her soon to Louisiana to visit with 
businesses and families that still need our help.
                                 ______