[Congressional Record Volume 152, Number 46 (Tuesday, April 25, 2006)]
[Senate]
[Pages S3508-S3513]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KERRY:
  S. 2646. A bill to create a 3-year pilot program that makes small, 
nonprofit child care businesses eligible for loans under title V of the 
Small Business Investment Act of 1958; to the Committee on Small 
Business and Entrepreneurship.
  Mr. KERRY. Mr. President, as Congress comes back in session for a 
five-week work period, it is high time we put partisan bickering aside 
and take up real issues that will improve the lives of America's hard-
working families. Today, I rise to address one such problem--the 
growing shortage of quality child care for our country's future 
generations. Over the past 50 years, the United States has witnessed a 
43 percent increase in the number of dual-

[[Page S3512]]

earner and single-parent families. Furthermore, the Census Bureau 
estimates that more than six million children are left home alone on a 
regular basis. Nationwide, more households than ever are struggling to 
make ends meet, while providing safe, nurturing environments for their 
children to grow up in. For many, child care is not a choice, but a 
necessity in this endeavor. That is why we owe it to our Nation's 
families to increase the availability of quality child care--because 
strong, healthy families build a stronger America.
  As the Ranking Member on the Senate Committee on Small Business and 
Entrepreneurship, I firmly believe that we can work with the Small 
Business Administration (SBA) to cultivate and expand existing child 
care facilities. In light of this, I rise today to introduce the Child 
Care Lending Pilot Act of 2006, which establishes a three-year pilot 
program enabling small, non-profit child care businesses to be eligible 
for the SBA's 504 loans.
  With affordable fixed low interest rates and long terms, 504 loans 
play a vital role in spurring economic development and the rebuilding 
of communities. Current law permits for-profit child care small 
businesses to finance building repairs and expand existing facilities 
through these 504 loans. However, their non-profit counterparts are 
unable to access the same financing through the SBA. Given that the 
majority of child care centers in many States across the country 
operate as non-profits, this system is shutting out the lion's share of 
facilities from obtaining necessary funds to provide quality care for 
the families they serve. The Child Care Lending Pilot Act of 2006 
reverses this trend. By allowing non-profit child care businesses to 
apply for 504 lending, the legislation enables these entities to put 
down only 10 to 20 percent of the loan with a term of up to 20 years. 
With low, predictable monthly payments, these non-profit centers can 
then invest in the families they provide services to, by updating and 
improving their buildings and materials without breaking the bank or 
raising fees.
  Since the industry is not high-earning overall, a majority of child 
care centers do not have an abundance of easily accessible capital. 
Proposals that call for centers to simply charge less or cut back on 
employees are not the way to make child care more affordable for 
families and do not serve in the children's best interests. An adequate 
staff is crucial in ensuring that children receive proper supervision 
and support to foster their development and learning. Furthermore, if 
centers are asked to decrease operating costs in order to lower costs 
absorbed by families, the safety and quality of the child care provided 
would most likely be in jeopardy.
  In recent years, the Children's Defense Fund estimated that in all 
but one State, the average annual cost of child care in urban area 
child care centers is more than the average annual cost of public 
college tuition. Additionally, they projected that child care can 
easily cost between $4,000 to $10,000 per year in cities and States 
across the Nation. Clearly, these high costs pose virtually 
insurmountable hurdles for low-income families in need of quality care 
for their children. Although many States have implemented grant and 
loan programs to help these child care small businesses, more must be 
done--not only to improve the quality of care, but also the overall 
supply of child care facilities for the Nation's neediest families.
  I urge my colleagues to support this important legislation and allow 
non-profit child care providers to access SBA 504 financing for their 
facilities and the children they serve. Funded entirely through fees, 
this legislation requires no appropriation. Additionally, it is 
consistent with the three-year SBA reauthorization cycle. This 
legislation is the product of work on this issue in both the 107th and 
108th Congresses. Similar legislation was introduced in 2002, S. 2891, 
however the four year provision made this program inconsistent with the 
cycle of SBA reauthorization. To remedy this, I reintroduced the 
measure in 2003 as S. 822, making the act a three-year pilot program 
consistent with the cycle of reauthorization. This pilot program was 
also part of the larger Senate Small Business reauthorization 
legislation in the last Congress, S. 1375. Unfortunately, this 
innovative proposal to expand child care, which had bipartisan support, 
was cut out of the final authorization package when a scaled-back 
version of the reauthorization legislation, without most Democratic 
initiatives, was added to the FY2005 omnibus appropriations bill.
  Although there is no quick-fix solution for the Nation's child care 
shortage and lack of quality facilities, this bill marks an important 
step in the right direction by allowing non-profit child care centers 
to receive SBA loans. I hope that my colleagues on both sides of the 
aisle will recognize the vital role that early education plays in the 
development of fine minds and productive citizens, and realize that in 
this great Nation, child care should be available to all families in 
all income brackets. The Child Care Lending Pilot Act of 2006 is a 
sound investment in our Nation's future--our children.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2646

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

     SECTION 1. SHORT TITLE; DEFINITIONS.

       (a) Short Title.--This Act may be cited as the ``Child Care 
     Lending Pilot Act of 2006''.
       (b) Definitions.--In this Act--
       (1) the terms ``Administration'' and ``Administrator'' mean 
     the Small Business Administration and the Administrator 
     thereof, respectively; and
       (2) the term ``small business concern'' has the meaning 
     given the term in section 3 of the Small Business Act (15 
     U.S.C. 632).

     SEC. 2. CHILD CARE LENDING PILOT PROGRAM.

       Section 502 of the Small Business Investment Act of 1958 
     (15 U.S.C. 696) is amended--
       (1) in the matter preceding paragraph (1)--
       (A) by striking ``The Administration'' and inserting the 
     following:
       ``(a) Authorization.--The Administration'';
       (B) by striking ``and such loans'' and inserting ``. Such 
     loans'';
       (C) by striking ``: Provided, however, That the foregoing 
     powers shall be subject to the following restrictions and 
     limitations:'' and inserting a period; and
       (D) by adding at the end the following:
       ``(b) Restrictions and Limitations.--The authority under 
     subsection (a) shall be subject to the following restrictions 
     and limitations:''; and
       (2) in paragraph (1)--
       (A) by inserting after ``Use of proceeds.--'' the 
     following:
       ``(A) In general.--;'' and
       (B) by adding at the end the following:
       ``(B) Loans to small, nonprofit child care businesses.--
       ``(i) In general.--Notwithstanding subsection (a)(1), the 
     proceeds of any loan described in subsection (a) may be used 
     by the certified development company to assist a small, 
     nonprofit child care business, if--

       ``(I) the loan is used for a sound business purpose that 
     has been approved by the Administration;
       ``(II) each such business meets all of the same eligibility 
     requirements applicable to for-profit businesses under this 
     title, except for status as a for-profit business;
       ``(III) 1 or more individuals has personally guaranteed the 
     loan;
       ``(IV) each such business has clear and singular title to 
     the collateral for the loan; and
       ``(V) each such business has sufficient cash flow from its 
     operations to meet its obligations on the loan and its normal 
     and reasonable operating expenses.

       ``(ii) Limitation on volume.--Not more than 7 percent of 
     the total number of loans guaranteed in any fiscal year under 
     this title may be awarded under this subparagraph.
       ``(iii) Defined term.--For purposes of this subparagraph, 
     the term `small, nonprofit child care business' means an 
     establishment that--

       ``(I) is organized in accordance with section 501(c)(3) of 
     the Internal Revenue Code of 1986;
       ``(II) is primarily engaged in providing child care for 
     infants, toddlers, pre-school, or pre-kindergarten children 
     (or any combination thereof), and may provide care for older 
     children when they are not in school, and may offer pre-
     kindergarten educational programs;
       ``(III) including its affiliates, has tangible net worth 
     that does not exceed $7,000,000, and has average net income 
     (excluding any carryover losses) for the 2 completed fiscal 
     years preceding the application that does not exceed 
     $2,500,000; and
       ``(IV) is licensed as a child care provider by the State, 
     the insular area, or the District of Columbia in which it is 
     located.

       ``(iv) Sunset provision.--This subparagraph shall remain in 
     effect until September 30, 2009, and shall apply to all loans 
     authorized under this subparagraph that are applied for, 
     approved, or disbursed during the period beginning on the 
     date of enactment of this subparagraph and ending on 
     September 30, 2009.''.

[[Page S3513]]

     SEC. 3. REPORTS.

       (a) Small Business Administration.--
       (1) In general.--Not later than 6 months after the date of 
     enactment of this Act, and every 6 months thereafter until 
     September 30, 2009, the Administrator shall submit a report 
     on the implementation of the program under section 
     502(b)(1)(B) of the Small Business Investment Act of 1958, as 
     added by this Act, to--
       (A) the Committee on Small Business and Entrepreneurship of 
     the Senate; and
       (B) the Committee on Small Business of the House of 
     Representatives.
       (2) Contents.--Each report under paragraph (1) shall 
     contain--
       (A) the date on which the program is implemented;
       (B) the date on which the rules are issued under section 4; 
     and
       (C) the number and dollar amount of loans under the program 
     applied for, approved, and disbursed during the previous 6 
     months--
       (i) with respect to nonprofit child care businesses; and
       (ii) with respect to for-profit child care businesses.
       (b) Government Accountability Office.--
       (1) In general.--Not later than March 31, 2009, the 
     Comptroller General of the United States shall submit a 
     report on the child care small business loans authorized by 
     section 502(b)(1)(B) of the Small Business Investment Act of 
     1958, as added by this Act, to--
       (A) the Committee on Small Business and Entrepreneurship of 
     the Senate; and
       (B) the Committee on Small Business of the House of 
     Representatives.
       (2) Contents.--The report under paragraph (1) shall contain 
     information gathered during the first 2 years of the loan 
     program, including--
       (A) an evaluation of the timeliness of the implementation 
     of the loan program;
       (B) a description of the effectiveness and ease with which 
     certified development companies, lenders, and small business 
     concerns have participated in the loan program;
       (C) a description and assessment of how the loan program 
     was marketed;
       (D) by location (State, insular area, and the District of 
     Columbia) and in total, the number of child care small 
     businesses, categorized by status as a for-profit or 
     nonprofit business, that--
       (i) applied for a loan under the program (and whether it 
     was a new or expanding child care provider);
       (ii) were approved for a loan under the program; and
       (iii) received a loan disbursement under the program (and 
     whether they are a new or expanding child care provider); and
       (E) with respect to businesses described under subparagraph 
     (D)(iii)--
       (i) the number of such businesses in each State, insular 
     area, and the District of Columbia, as of the year of 
     enactment of this Act;
       (ii) the total amount loaned to such businesses under the 
     program;
       (iii) the total number of loans to such businesses under 
     the program;
       (iv) the average loan amount and term;
       (v) the currency rate, delinquencies, defaults, and losses 
     of the loans;
       (vi) the number and percent of children served who receive 
     subsidized assistance; and
       (vii) the number and percent of children served who are low 
     income.
       (3) Access to information.--
       (A) In general.--The Administration shall collect and 
     maintain such information as may be necessary to carry out 
     this subsection from certified development centers and child 
     care providers, and such centers and providers shall comply 
     with a request for information from the Administration for 
     that purpose.
       (B) Provision of information to government accountability 
     office.--The Administration shall provide information 
     collected under this paragraph to the Comptroller General of 
     the United States for purposes of the report required by this 
     subsection.

     SEC. 4. RULEMAKING AUTHORITY.

       Not later than 120 days after the date of enactment of this 
     Act, the Administrator shall issue final rules to carry out 
     the loan program authorized by section 502(b)(1)(B) of the 
     Small Business Investment Act of 1958, as added by this Act.
                                 ______