[Congressional Record Volume 153, Number 3 (Monday, January 8, 2007)]
[Senate]
[Pages S234-S236]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS--JANUARY 4, 2007

      By Mr. KERRY (for himself, Ms. Snowe, Ms. Landrieu, and Mr. 
        Vitter):
  S. 163. A bill to improve the disaster loan program of the Small 
Business Administration, and for other purposes; to the Committee on 
Small Business and Entrepreneurship.
  Ms. LANDRIEU. Mr. President, as we all know, there was a tremendous 
amount of criticism of the Federal Government's response to Hurricanes 
Katrina and Rita last year. Things are better now and the region is 
slowly recovering. But, having just finished the 2006 hurricane season, 
and with the 2007 season a few months away, we must be sure that if we 
have another disaster, the Federal Government's response will be better 
this time around. Disaster response agencies have to be better 
organized, more efficient, and more responsive in order to avoid the 
problems, the delays, mismanagement, and the seeming incompetence that 
occurred in 2005.
  Today, I am proud to be an original cosponsor of legislation to 
improve the disaster response of one agency that had a great deal of 
problems last year, the Small Business Administration, SBA. This bill, 
the ``Small Business Disaster Response and Loan Improvements Act'' 
makes major improvements to the SBA's disaster response and provides 
them with essential tools to ensure that they are more efficient and 
better prepared for future disasters--big and small. I should also note 
that this bill is a result of intensive bipartisan work over the past 
couple of months and was introduced shortly before the 109th Congress 
adjourned as S. 4097. Unfortunately, there was no action on that bill 
so it must be reintroduced in the new Congress. I strongly believe 
though we can secure passage during this Congress as the bill is 
reflective of the priorities from Senators Kerry and Snowe, 
respectively, Chair and Ranking Member of the Senate Small Business 
Committee, as well as Senators Landrieu and Vitter. For my part, I have 
heard loud and clear from our impacted businesses that SBA reforms 
should be implemented as soon as possible. That is why in September, I 
sent a letter to the new SBA Administrator Steve Preston, expressing 
concerns on the lack of progress on SBA disaster reforms, which were 
included in S. 3778, the FY07 SBA Reauthorization bill reported out of 
the Senate Small Business Committee. In this letter, I requested his 
cooperation, along with our committee to pass this important 
legislation before Congress adjourns at the end of the year. The 
introduction of this bill today, shows the progress that the committee 
made since September on this issue. I hope that this spirit of 
bipartisanship continues into the 110th Congress and that I can 
continue to work with my colleagues on the Senate Small Business 
Committee to reform SBA.

  This legislation offers new tools to enhance SBA's disaster 
assistance programs. In every disaster, the SBA Disaster Loan program 
is a lifeline for businesses and homeowners who want to rebuild their 
lives after a catastrophe. When Hurricane Katrina hit, our businesses 
and homeowners had to wait months for loan approvals. I do not know how 
many businesses we lost because help did not come in time. Because of 
the scale of this disaster, what these businesses needed was immediate, 
short-term assistance to hold them over until SBA was ready to process 
the tens of thousands of loan applications it received.
  That is why this legislation provides the SBA Administrator with the 
ability to set up an expedited disaster assistance business loan 
program to make short-term, low-interest loans to keep them afloat. 
These loans will allow businesses to make payroll, begin making 
repairs, and address other immediate needs while they are awaiting 
insurance payouts or regular SBA disaster loans. However, I realize 
that every disaster is different and could range from a disaster on the 
scale of Hurricane Katrina or 9-11, to an ice storm or drought. This 
legislation

[[Page S235]]

gives the SBA additional options and flexibility in the kinds of relief 
they can offer a community. When a tornado destroys 20 businesses in a 
small town in the Midwest, SBA can get the regular disaster program up 
and running fairly quickly. You may not need short-term loans in this 
instance. But if you know that SBA's resources would be overwhelmed by 
a storm--just as they were initially with Hurricane Katrina--these 
expedited business loans would be very helpful.
  This legislation also would direct SBA to study ways to expedite 
disaster loans for those businesses in a disaster area that have a 
good, solid track record with the SBA or can provide vital recovery 
efforts. We had many businesses in the Gulf Coast that had paid off 
previous SBA loans, were major sources of employment in their 
communities, but had to wait months for decisions on their SBA disaster 
loan applications. I do not want to get rid of the SBA's current 
practice of reviewing applications on a first-come first-served basis, 
but there should be some mechanism in place for major disasters to get 
expedited loans out the door to specific businesses that has a positive 
record with SBA or those that could serve a vital role in the recovery 
efforts. Expedited loans would jump-start impacted economies, get vital 
capital out to businesses, and retain essential jobs following future 
disasters.
  This bill also makes an important modification to the collateral 
requirements for disaster loans. The SBA cannot disburse more than 
$10,000 for an approved loan without showing collateral. This is to 
limit the loss to the SBA in the event that a loan defaults. However, 
this disbursement amount has not been increased since 1998 and these 
days, $10,000 is not enough to get a business up and running. That is 
why this bill increases this collateral requirement to $14,000 and 
gives the Administrator the ability to increase that amount, in the 
event of another large-scale disaster. I believe this is a reasonable 
and fiscally responsible increase, and at the same time gives the 
Administrator flexibility for future disasters which will inevitably 
occur.
  As you may know, I pushed to get language in the last Hurricane 
Supplemental Appropriations bill in June 2006 to require SBA to develop 
a disaster plan and report to Congress on its contents by July 15, 
2006. SBA provided this status report in July and I am pleased that, 
since then, SBA has been working on a comprehensive disaster response 
plan. That said, I believe that with the 2007 Atlantic hurricane season 
fast approaching, and other disasters possible before then, the SBA 
should be looking at additional ways to improve upon this plan. This 
legislation requires SBA to report to Congress, by March 15, 2007 on 
the current status of its response plan and to provide us with a 
snapshot of where they were with Hurricane Katrina and where they are 
now. The report also requests SBA feedback on suggested improvements. 
These improvements include better incorporating State disaster 
assistance efforts into SBA's response, as well as better coordination 
with Federal response agencies like FEMA.
  The Small Business Disaster Response and Loan Improvements Act will 
provide essential tools to make the SBA more proactive, flexible, and 
most important, more efficient during future disasters. Again, I look 
forward to working with both Senator Snowe and Senator Kerry during 
this new session of Congress to ensure that the SBA has everything it 
needs to meet these goals.
  I ask unanimous consent that a copy of my September 27, 2006 letter 
to SBA be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                                  U.S. Senate,

                               Washington, DC, September 27, 2006.
     Hon. Steven C. Preston,
     Administrator, U.S. Small Business Administration, 
         Washington, D.C.
       Dear Administrator Preston: Let me take this opportunity to 
     again congratulate you on your confirmation as Administrator 
     of the U.S. Small Business Administration (SBA). Your 
     management experience and passion to serve will prove 
     extremely helpful to you in this challenging position.
       I write you today because as a member of the Senate 
     Committee on Small Business and Entrepreneurship, as well as 
     senator from a state hit hard by both Hurricanes Katrina, and 
     Rita. I believe it is my duty to ensure that we implement 
     substantive changes to SBA's Disaster Assistance Program 
     during this session of Congress.
       The SBA's response to Katrina and Rita was too slow and 
     lacking in urgency--threatening the very survival of our 
     affected businesses. A year has passed since Hurricanes 
     Katrina and Rita, yet while Congress is currently acting on 
     extensive reforms for the Federal Emergency Management Agency 
     (FEMA), there has been only incremental changes to SBA's 
     Disaster Assistance Program. That is why I am pleased to 
     learn that you have recently created the Accelerated Disaster 
     Response Initiative to identify and help implement process 
     improvements to enable the SBA to respond more quickly in 
     assisting small businesses and homeowners in need of 
     assistance after a disaster. I applaud these efforts and your 
     leadership on this issue. But much more must be done to 
     address the systemic problems that led to delays and inaction 
     post-Katrina and Rita.
       For our part, the Senate is also attempting to address the 
     multiple problems that hampered SBA's ability to assist 
     impacted Gulf Coast small businesses and homeowners. Under 
     the leadership of the Chair and Ranking Member of the Senate 
     Committee on Small Business and Entrepreneurship, Senators 
     Snowe and Kerry, the committee voted unanimously to approve 
     S. 3778, the ``Small Business Reauthorization and 
     Improvements Act of 2006'' and sent it to the full Senate for 
     consideration. A copy of the bill is attached for your 
     convenience. This bipartisan legislation reauthorizes SBA 
     programs, and also of great importance to me and my 
     constituents, makes essential reforms to SBA's Disaster 
     Assistance Program. However, since S. 3778 was introduced on 
     August 2, 2006, almost nine weeks ago, it has been blocked 
     from consideration and the Committee is still waiting for 
     budget information so that it may file its report on the 
     bill. It is my understanding that the administration and SBA 
     has several concerns about this bill in its current form.
       I am very concerned at this apparent deadlock, a deadlock 
     which threatens our bipartisan efforts to implement 
     comprehensive SBA Disaster Assistance reforms before the end 
     of the year. In particular, I believe that there must be SBA 
     reforms in the following areas:
       Short-Term Assistance: Following Katrina and Rita small 
     businesses waited, on average, four to six months for 
     approvals and disbursements on SBA Disaster Loans, In order 
     to ensure the long-term survival of small businesses impacted 
     by a catastrophic disaster, SBA needs to be in the business 
     of short-term recovery--by providing either emergency bridge 
     loans or grants.
       Disaster Loan Process for Homeowners: While SBA's mission 
     is to ``aid, counsel, assist and protect, insofar as is 
     possible, the interests of small business concerns'' it also 
     has the added responsibility of helping affected homeowners 
     rebuild their housing post-disaster. Katrina and Rita 
     resulted in record numbers of SBA Disaster Loan applications 
     from homeowners, which strained SBA's existing resources and 
     personnel. If the SBA must bear this responsibility, the 
     agency should improve the process as well as possibly seek 
     greater coordination and cooperation with the U.S. Department 
     of Housing and Urban Development on disaster housing 
     assistance.
       Expedited Disaster Loans to Businesses: The SBA currently 
     has no mechanism in place to expedite Disaster Loans to 
     impacted businesses that are either a major source of 
     employment or that can demonstrate a vital contribution to 
     recovery efforts in the area, such as businesses who 
     construct housing, provide building materials, or conduct 
     debris removal. The SBA needs the ability to fast-track loans 
     to these businesses, in order to jumpstart local economies 
     and recovery efforts.
       Economic Injury Disaster Loans: Although Katrina and Rita 
     directly affected businesses along the Gulf Coast, additional 
     businesses in the region, as well as the rest of the country, 
     were economically impacted by the storms. The SBA must have 
     the ability to provide nationwide, or perhaps regional, 
     economic injury disaster loans to businesses which can 
     demonstrate economic distress or disruption from a future 
     major disaster.
       Loss Verification and Loan Processing: Following the Gulf 
     Coast hurricanes, the SBA struggled for months to hire enough 
     staff to inspect losses and process loan applications. 
     Although SBA now has trained reserves to handle such surges 
     in demand, the SBA also needs the permanent authority to 
     enter into agreements with qualified private lenders and 
     credit unions to process Disaster Loans and provide loss 
     verification services.
       Administrator Preston, I was impressed by your expressed 
     willingness to be a bridge between Congress and the White 
     House. For the SBA to truly bring its disaster capabilities 
     to the next level, I believe that it must work in concert 
     with the Congress. Together, we must remove layers of 
     bureaucracy and red tape, which, following Katrina and Rita, 
     both overwhelmed and frustrated dedicated SBA employees and 
     those affected by the hurricanes. We must also give the SBA 
     new tools to ensure that problems that occurred post-Katrina 
     and Rita never happen again.
       Last month we marked the one-year anniversary of Hurricane 
     Katrina, and now mark the one-year anniversary of Hurricane 
     Rita. It is essential that we take action now to make 
     substantive reforms to the SBA Disaster Assistance Program. 
     We owe nothing less to our small businesses. I ask that you 
     continue working with my office on this important issue and 
     respond to our approach in

[[Page S236]]

     writing no later than October 31, 2006. This will help us 
     develop a proposal which can address the concerns of the SBA 
     as well as provide a better and more responsive SBA Disaster 
     Assistance Program for our Small businesses.
       Thank you in advance for your assistance with this request.
           Sincerely,
                                                 Mary L. Landrieu,
     United States Senator.

                          ____________________