[Congressional Record Volume 159, Number 87 (Tuesday, June 18, 2013)]
[Senate]
[Pages S4576-S4580]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SMALL BUSINESS DISASTER REFORM ACT
Ms. LANDRIEU. Madam President, I come to speak on S. 415, the ``Small
Business Disaster Reform Act of 2013.'' As Chair of the Senate
Committee on Small Business and Entrepreneurship, as well as a senator
from a state hard hit by disasters, I am proud that yesterday our
committee reported out S. 415 favorably on a bipartisan basis. In
particular, Section 2 of S. 415 modifies the SBA requirement that
borrowers must use their personal home as collateral for business
disaster loans less than $200,000. This is a very important provision
for businesses impacted by natural and manmade disasters. For that
reason, I want to provide additional information on the need to enact
this provision.
In terms of the legislative history of Section 2, a similar provision
passed the House of Representatives twice in 2009: on October 29, 2009
by a vote of 389-32 as Section 801 of H.R. 3854 and again by voice vote
on November 6, 2009 as Section 2 of H.R. 3743. The same provision that
is in S. 415 passed the Senate 62-32 on December 28, 2012 as Section
501 of H.R. 1, the Hurricane Sandy Supplemental. However, it was not
included in H.R. 152, the House-passed ``Disaster Relief Appropriations
Act'' that subsequently was enacted into law. Despite the setback
earlier this year, I remind my colleagues that this provision has a
history of bipartisan Congressional support and has previously passed
both chambers of Congress.
This Congress, we also have significant bipartisan support. S. 415
has six cosponsors: Senators Thad Cochran, Roger Wicker, Heidi
Heitkamp, Kirsten Gillibrand, Mark Pryor, and Ben Cardin. The House
companion to S. 415, H.R. 1974, was introduced by Representative
Patrick Murphy last month and has 11 cosponsors: Reps. Mick Mulvaney,
Judy Chu, Mike Coffman, Ted Deutch, Peter King, Alan Nunnelee, Donald
M. Payne, Jr., Cedric Richmond, Tom Cole, Trey Radel, and Frederica
Wilson.
While I understand the need to secure the loans and minimize risk to
the taxpayers; SBA has at its disposal multiple ways to secure these
loans. If business owners have literally lost everything, requiring a
$400,000 home as collateral for a $150,000 loan is maddening especially
when other repayment options are available. One can understand that
requirement for loans of $750,000 or $2 million. For the smaller
disaster loans, however, it is a non-starter for many businesses we
have heard from. The bill requires the SBA to seek other business
assets--such as commercial real estate, equipment, or inventory--before
requiring a primary residence be used as collateral.
I want to reiterate that Section 2 is very clear that these business
assets should be of equal or greater value than the amount of the loan.
Also, to ensure that this is a targeted improvement, the bill also
includes additional language that this bill in no way requires SBA to
reduce the amount or quality of collateral it seeks on these types of
loans. I want to especially thank my former Ranking Member Olympia
Snowe for working with me to improve upon previous legislation on this
particular issue. The provision that I am re-introducing, as part of
this disaster legislation, is a direct result of discussions with both
her and other stakeholders late last year. I believe that this bill is
better because of improvements that came out these productive
discussions.
Furthermore, SBA has repeatedly said publicly and in testimony before
my committee that it will not decline a borrower for a lack of
collateral. According to a July 14, 2010 correspondence between SBA and
my office, the agency notes that ``SBA is an aggressive lender and its
credit thresholds are well below traditional bank standards . . . SBA
does not decline loans for insufficient collateral.'' SBA's current
practice of making loans is based upon an individual/business
demonstrating the ability to repay and income. The agency declines
borrowers for an inability to repay the loan. In regards to collateral,
SBA follows traditional lending practices that seek the ``best
available collateral.'' Collateral is required for physical loans over
$14,000 and Economic Injury Disaster Loans, EIDL, loans over $5,000.
SBA takes real estate as collateral when it is available, but as I
stated, the agency will not decline a loan for lack of collateral.
Instead it requires borrowers to pledge what is available. However, in
practice, SBA is requiring borrowers to put up a personal residence
worth $300,000 or $400,000 for a business loan of $200,000 or less when
there are other assets available for SBA.
This provision does not substantively change SBA's current lending
practices and it will not have a significant cost. I believe that this
legislation would not trigger direct spending nor would it have a
significant impact on the subsidy rate for SBA disaster loans.
Currently for every $1 loaned out, it costs approximately 10 cents on
the dollar. Most importantly, this bill will greatly improve the SBA
disaster loan programs for businesses ahead of future disasters. If a
business comes to the SBA for a loan of less than $200,000 to make
immediate repairs or secure working capital, they can be assured that
they will not have to put up their personal home if SBA determines that
the business has other assets to go towards the loan. However, if
businesses seek larger loans than $200,000 or if their business assets
are not suitable collateral, then the current requirements will still
apply. This ensures that very small businesses and businesses seeking
smaller amounts of recovery loans are able to secure these loans
without significant burdens on their personal property. For the
business owners we have spoken to, this provides some badly needed
clarity to one of the Federal government's primary tools for responding
to disasters.
To be clear though, while I do not want to see SBA tie up too much of
a business' collateral, I also believe that if a business is willing
and able to put up business assets towards its disaster loan, SBA
should consider that first before attempting to bring in personal
residences. It is unreasonable for SBA to ask business owners operating
in very different business environments post-disaster to jeopardize not
just their business but also their home. Loans of $200,000 or less are
also the loans most likely to be repaid by the business so personal
homes should be collateral of last resort in instances where a business
can demonstrate the ability to repay the loan and that it has other
assets.
As I have mentioned, there are also safeguards in the provision that
ensures that this provision will not reduce the quality of collateral
required by SBA for these disaster loans nor will it reduce the quality
of the SBA's general collateral requirements. These changes will assist
the SBA in cutting down on waste, fraud and abuse of these legislative
reforms. In order to further assist the SBA, I believe it is important
to clarify what types of business assets we understand they should
review. For example, I understand that SBA's current lending practices
consider the following business assets as suitable collateral:
commercial real estate; machinery and equipment; business inventory;
and furniture and fixtures.
At our markup of S. 415 yesterday, there were concerns raised by some
Minority members of our committee regarding the impact of this
provision. One argument was that SBA has not seized many personal homes
in the last five years. However, the SBA has been more aggressive since
2011 on foreclosures--sending out 113 foreclosure letters since then.
This year alone they have seized 4 homes in Minnesota, Virginia,
Illinois, and Texas. Furthermore, borrowers my office has spoken to are
less concerned about a personal home being seized than they are about
liens tying up personal property and the general roadblock this
requirement
[[Page S4577]]
sets up in applying for SBA disaster assistance. This requirement is
discouraging successful businesses from applying to SBA and causing
current applicants to withdraw their applications. As of May 2013, 35
percent of Sandy business applications were withdrawn, most citing
burdensome lending requirements like this as the main factor.
Also, it is my understanding that another concern that has been cited
was that business equipment depreciates over time so this is a riskier
asset for the Federal government than a personal home. This argument,
however, is false. As it relates to equipment, the SBA factors in
depreciation when considering collateral from potential borrowers. They
value equipment or inventory significantly less than real estate, due
to depreciation. If equipment is not deemed a suitable asset to
collateralize the loan, SBA will not take it. Also, Section 2 still
allows SBA to determine the appropriate business asset if not the home.
It is not specific to equipment. Other assets the SBA could consider
include commercial real estate; machinery and equipment; business
inventory; and furniture and fixtures.
Yet another concern that was raised was that, in utilizing business
assets instead of personal homes, this makes it tougher for SBA to
recover funds in the event of a default. As I previously mentioned, the
SBA factors in depreciation and potential recovery in the event of a
default when considering collateral from potential borrowers. SBA will
not make a loan if it deems the business assets being offered will be
difficult to recover or that it does not have sufficient value to
collateralize the loan. Also, again the bill does not prohibit homes
outright nor require business assets as collateral. It strikes a
delicate balance to instead require the SBA to review if suitable
business assets are available before using a personal home. If business
assets are sufficient, SBA can use them. If business assets are not
sufficient and the borrower is unwilling to put up their home, the SBA
will not make the loan.
Lastly, it was also put forward that that if Congress allows business
assets to be used as collateral instead of homes, this increases the
likelihood of defaults. Again, this argument is false. In an April 1,
2013 letter to my office, the SBA Inspector General confirmed that
there are no findings relative to business assets increasing defaults.
The Inspector General wrote that it has ``. . . conducted numerous
reviews of key aspects of the SBA Disaster Assistance Program; however,
there are no specific findings relative to the `type' of collateral
secured relative to disaster assistance loans.'' Furthermore, the
Inspector General also confirmed that the SBA is still required to
secure the loans and Section 2 does not change that. The Inspector
General wrote that ``. . . Section 2 does not remove SBA's policy for
securing loans with collateral equivalent to 100 percent equity of the
loan. Section 2 also explicitly provides that nothing in the Section
can be construed to require the Administrator to reduce the amount of
collateral required to secure the loan.'' Again, if the business does
not have sufficient business assets or the SBA deems them risky,
Section 2 does not change their ability to not make the loan.
In closing, I would like to note that Section 2 addresses a key issue
that is serving as a roadblock to business owners interested in
applying for smaller SBA disaster loans. After the multiple disasters
that hit the Gulf Coast, my staff has consistently heard from business
owners, discouraged from applying for SBA disaster loans. When we have
inquired further on the main reasons behind this hesitation, the top
concern related to SBA requiring business owners to put up their
personal home as collateral for smaller SBA disaster loans for their
business. So let me provide you with two examples of businesses
impacted by this requirement.
The first example is LiemCo, a Long Island, NY specialty beverage
repair service with 15 employees. Think of ``Starbucks"-type espresso
machines in restaurants and coffee shops--LiemCo fixes them. The
company is family-owned and the son of the owners, Dominic Chieco runs
it. His parents are still partial owners and he pays them a quarterly
draw which serves as their retirement income. Ownership is being
gradually transferred to Dominic.
Prior to Hurricane Sandy, they did everything right. Dominic moved
his vehicles to higher ground; loaded key inventory in the trucks--
inventory with high value or long delivery times; raised items to 6
feet above the floor; purchased extra gas; and withdrew $5,000 in cash
in case electricity went out at the banks. According to their local
Small Business Development Center, SBDC, they are well run and these
preparations show that.
Despite that, Hurricane Sandy flooded his building about 4 to 5 feet.
The water went down after a couple of days but power was out for 3
weeks. The day after it came back on, a Nor'easter snow storm knocked
out power for another week and a half. This caused physical property
damages of more than $250,000. Dominic kept employees on payroll--full
time--throughout recovery. He could not give them the customary
Christmas bonus but once they re-opened after Christmas, he gave 1
employee their bonus each week.
Dominic's biggest concern was the collateral requirement from SBA.
His building is valued at $1.2 million and only carried a $150,000
mortgage. The parents are still partial owners, so notwithstanding the
value of the building, SBA still wanted a lien against the parents'
home for the guarantee for a $200,000 loan. This bothered them
tremendously as it was their retirement security. Much of this would
have been eliminated if the collateral position on the parents' home
had not been required when sufficient collateral existed with the
business.
Another business impacted by this burdensome requirement is Water
Street Bistro in Madisonville, LA. Water Street Bistro is a small
family-owned restaurant overlooking the sail boats on the Tchefuncte
River just across the street. Tony Monroe and his wife Constance have
owned their business for 9 years and have about 9 employees. Monroe
started his culinary career at Cafe Sbisa in New Orleans and then went
to Colorado before returning to the place he was born and raised.
Fortunately, after Hurricane Katrina, the Monroe's escaped damage to
their restaurant and did not need to apply for SBA assistance. However,
this was not the case following Hurricane Isaac. Hurricane Isaac
brought 6 to 10 inches of water into their restaurant which caused them
to close their business for 3 weeks. The Monroe's had to start all over
and buy all new food and replace equipment, such as refrigerators,
which cost around $30,000. In addition to the physical damage to their
property, the Monroe's could not pay their staff during this time.
Mr. and Mrs. Monroe's biggest concern in applying to the SBA was the
collateral requirement. SBA required them to pledge their family home
for a loan of around $40,000 to $45,000. Once they found out the
requirement for pledging primary residence was firm, the Monroe's
decided not to pursue the loan. The Monroe's are in their 60's and
could not imagine using their home--valued around $200,000 to
$250,000--as collateral. They ended up doing all of the repairs, for
the restaurant, on their own because they could not afford to pay for
these services.
I thank the Chair and I ask unanimous consent that a copy of the
April 1, 2013, letter from the SBA Inspector General and other letters
of support for S. 415 be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
U.S. Small Business Administration, Office of Inspector
General,
Washington, DC, April 1, 2013.
Hon. Mary L. Landrieu,
Chair, Committee on Small Business and Entrepreneurship, U.S.
Senate, Washington, DC.
Dear Chair Landrieu: Thank you for your March 20, 2013
letter regarding S. 415, the Small Business Disaster Reform
Act of 2013. The U.S. Small Business Administration, Office
of Inspector General (SBA, OIG) shares the understanding
articulated in your letter relative to the plain reading of
Section 2 of S. 415. In context of the potential concerns
brought to the attention of the Committee on Small Business &
Entrepreneurship, two questions were posed to the OIG.
The OIG offers the following responses for your
consideration:
Does Section 2 of S. 415 remove SBA's ``one-to-one'' policy
for securing loans?
Section 2 of S. 415 states, ``. . . shall not require the
owner of the small business concern to use the primary
residence of the
[[Page S4578]]
owner has other assets with a value equal to or greater than
the amount of the loan that could be used as collateral for
the loan: Provided further, That nothing in the preceding
proviso may be construed to reduce the amount of collateral
required by the Administrator in connection with a loan
described in the preceding proviso or to modify the standards
used to evaluate the quality (rather than the type) of such
collateral' . . .''
According to SBA standard operating procedures (SOP 50 30
7), SBA generally deems collateral is adequate if the equity
is at least 100 percent of the loan amount. As such, a plain
reading of Section 2 does not remove SBA's policy for
securing loans with collateral equivalent to 100 percent
equity for the loan. Section 2 also explicitly provides that
nothing in the Section can be construed to require the
Administrator to reduce the amount of collateral required to
secure the loan.
Does alternative collateral (i.e., to a business owner's
primary personal residence) that is equal to or exceeding the
amount of a potential business disaster loan, as established
in Section 2 of S. 415, increase the likelihood of default?
The Office of Inspector General (OIG) has conducted
numerous reviews of key aspects of the SBA Disaster
Assistance Program; however, there are no specific findings
relative to the ``type'' of collateral secured relative to
disaster assistance loans. OIG's work has found that SBA
officials have not always adhered to established policies and
procedures in managing the program, increasing the risk of
default and subsequently, of loss to the taxpayer. We have
made numerous recommendations for corrective action based on
our work. Regardless of the type of collateral, SBA
officials' adherence to established policy and procedures
during loan origination, servicing, and if necessary
liquidation, decreases the risk of default and loss to the
taxpayer.
The OIG appreciates your continued interest in our work.
Please do not hesitate to contact me if you have any
questions or need additional information.
Sincerely,
Peggy E. Gustafson,
Inspector General.
____
Association of Small Business
Development Centers,
Burke, VA, February 10, 2013.
Hon. Mary Landrieu,
Chair, Committee on Small Business and Entrepreneurship, U.S.
Senate, Russell Senate Building, Washington, DC.
Dear Senator Landrieu: Thank you for giving the Association
of Small Business Development Centers (ASBDC) the opportunity
to comment on your proposed legislative amendments to the
disaster assistance provisions in the Small Business Act (15
USC 631 et seq.).
While Congress has taken a significant step in addressing
the resource issues following Sandy and other disasters there
are still restrictions in the SBDC assistance authority and
the US Small Business Administration's loan making authority
that could complicate future disaster recovery efforts. We
applaud your efforts to deal with those issues.
Under section 21(b)(3) of the Small Business Act (15 USC
648(b)(3)) SBDCs are limited in their ability to provide
services across state lines. This prevents SBDCs dealing with
disaster recovery, like New York and New Jersey, from being
able to draw upon the resources available in our nationwide
network of nearly 1,000 centers with over 4,500 business
advisors. It likewise prevents states with great experience
in disaster recovery assistance like Louisiana and Florida,
from providing assistance to their colleagues.
Your proposed legislation amends that SBDC geographic
service restriction for the purposes of providing disaster
support and assistance. Our Association wholeheartedly
endorses that change. Allowing SBDCs to share resources
across state lines or other boundaries for the purpose of
disaster recovery is a common sense proposal, little
different from utilities sharing linemen. In addition, we
would like to note that this provision has been supported by
the Senate Committee on Small Business and Entrepreneurship
twice in previous Congresses.
In addition, the ASBDC wishes to express its support for
your proposals to amend the collateral requirements in the
disaster loan program for loans under $200,000. SBDCs
routinely assist small business owners with their
applications for disaster loan assistance and have often
faced clients with qualms about some of those requirements.
We share a common goal of putting small business on the
road to recovery after disaster strikes and getting capital
flowing is a key factor in meeting that goal. To that end,
ASBDC supports your efforts to ease collateral requirements
and help improve the flow of disaster funds to small business
applicants. We believe your proposal to limit the use of
personal homes as collateral on smaller loans is consistent
with the need to get capital flowing to affected businesses
and ease the stress on these businesses. We also agree that
this change will not undermine the underwriting standards of
the disaster loan program.
Thank you again for kind attention and continuing support
of small business.
Sincerely,
C. E. ``Tee '' Rowe,
President/CEO, ASBDC.
____
International Economic
Development Council,
Washington, DC, February 13, 2013.
Hon. Mary L. Landrieu,
Chair, Committee on Small Business and Entrepreneurship, U.S.
Senate.
Hon. James E. Risch,
Ranking Member, Committee on Small Business and
Entrepreneurship, U.S. Senate, Washington, DC.
Dear Senator Landrieu and Senator Risch, On behalf of the
International Economic Development Council (IEDC), please
accept our appreciation for this opportunity to provide
comments related to proposed changes to federal disaster
assistance programs offered by the United States Small
Business Administration (SBA). Your continuing support of
these critical programs is worthy of praise and we thank you
for your leadership.
IEDC has a strong history of supporting disaster planning
and recovery. Our organization, with a membership of over
4,000 dedicated professionals, responded to communities in
need following the 2005 hurricane season, the BP Gulf oil
spill and other disaster-related incidents by providing
economic development recovery assistance. We have continued
our work in this area through technical assistance projects
and partnerships with federal agencies and other non-
governmental organizations. Our profession is invested in
helping our country prepare for and respond to disasters,
much the same as you and your colleagues on the Committee on
Small Business and Entrepreneurship. To this end, we support
proposed changes that will allow SBA to more effectively
deliver disaster recovery assistance to local businesses in
need of federal aid.
Rebuilding the local economy must be a top priority
following a disaster, second only to saving lives and homes.
IEDC supports the targeted changing of the current collateral
requirements that state a business owner must place their
home up as collateral in order to secure an SBA disaster
business loan of $200,000 or less. In times of crisis,
affected business owners are understandably reluctant to
place their personal homes up as collateral in order to
obtain a much needed loan to rebuild their business.
Consequently, SBA loans put in place to help businesses
rebuild following a disaster go underutilized. As lawmakers,
you have a responsibility to protect the taxpayer, which is
why we understand the need for posting collateral of equal or
greater value to the amount of the loan. The proposed
targeted change that eliminates the specific requirement of
using a home as collateral to guarantee a loan of $200,000 or
less, and instead allowing business assets to act as
collateral, will promote greater utilization of the loans.
This is an idea we can all get behind; one that will lead to
greater, faster economic recovery.
When disaster strikes, we should do everything in our power
to bring the full resources of the federal government to bear
in the impacted community. This includes, most especially,
bringing in top experts who can immediately begin helping
businesses and local economies recover. The national network
of over 1,100 Small Business Development Centers (SBDC) could
be an excellent resource to stricken communities.
Unfortunately, current rules prevent SBDC's from assisting
their counterparts in other jurisdictions. For example, those
communities in the mid-Atlantic and New England impacted by
Sandy are not able to benefit from the enormous amount of
knowledge and experience in storm recovery held by SBDC's in
Florida and the Gulf region. Certainly, we can all agree that
disasters warrant an extraordinary response and that response
must include qualified expertise from all corners of the
federal government.
Forty to sixty percent of small businesses that close as a
result of a disaster do not reopen. This is an unacceptably
high number. We would not accept that level of loss in homes
and we cannot accept that level of loss in jobs; our
communities cannot sustain such losses and duty dictates we
make certain they don't have to. By enacting common sense
legislation, like that which is under consideration here, and
freeing the flow of capital and expertise, we are taking
concrete steps to give our small businesses and local
economies the greatest chance to recover.
IEDC is your partner in the work of job creation. We thank
you for your leadership in support of small business and
stand ready to offer our assistance in this and future
efforts.
Sincerely,
Paul L. Krutko,
Chairman, International Economic Development Council, and
President and CEO, Ann Arbor SPARK.
____
National Emergency
Management Association,
Washington, DC, March 21, 2013.
Senator Mary Landrieu,
Chairman, Senate Appropriations Subcommittee on Homeland
Security, U.S. Senate, Washington, DC.
Dear Senator Landrieu, On behalf of the National Emergency
Management Association (NEMA), I write you today in support
of the Small Business Disaster Reform Act of 2013. NEMA is
comprised of the emergency management directors from the
states, the
U.S. territories, and the District of Columbia.
[[Page S4579]]
While not a traditional ``first responder'' agency, the US
Small Business Administration (SBA) is a critical partner to
States and localities affected by a wide variety of
disasters. Following a disaster, SBA has the capability to
mobilize staff from the Office of Disaster Assistance to
begin disseminating public information about what services
SBA can provide to supplement many long-term federal recovery
programs. While the Federal Emergency Management Association
(FEMA) is often thought of as the primary agency for disaster
assistance, there are many unique situations where SBA loans
can be utilized in creative ways to assist citizens in need.
NEMA agrees that the SBA needs to be equipped with the
flexibility and authority to adequately assist disaster
victims and we believe this legislation accomplishes such an
objective.
The images of homes and businesses affected by flooding and
wind damage following Hurricane Irene and Tropical Storm Lee
painted a devastating picture in September 2011. In New York
State alone, the SBA approved over $100 million in loans for
citizens affected by the storms. More recently, Hurricane
Sandy reminded us of the critical role SBA has in the
disaster community. Ninety days after Hurricane Sandy struck
the Northeast, the SBA crossed the $1 billion threshold of
approved loans to more than 16,800 homeowners, renters and
businesses. This makes Hurricane Sandy, in terms of SBA
disaster lending, the third largest natural disaster in U.S.
history, behind Hurricanes Katrina/Rita/Wilma ($10.8
billion), and the Northridge Earthquake ($4 billion).
The continued challenge of protecting the nation from a
variety of hazards within the reality of fiscal uncertainty
elevates the importance of cooperation throughout the
emergency management community. Leveraging resources from
across the federal family imperative following a disaster and
the communication and outreach by essential agencies is just
the first step to community recovery. Positive relationships
between federal, state, and local government stakeholders are
the lynchpin to coordinated recovery efforts that support
resilient individuals, prosperous businesses, and thriving
economies.
NEMA believes SBA deserves adequate flexibility.
Legislation such as this helps achieve that end. We remain
available as a resource for you and your staff as this effort
continues. Should you need any additional information or have
questions regarding NEMA's policy positions, please do not
hesitate to contact Matt Cowles, Director of Government
Relations at (202) 624-5459.
Sincerely,
John W. Madden,
President, National Emergency Management Association,
Director, Alaska Division of Homeland Security and Emergency
Management.
____
National Small
Business Association,
Washington, DC, March 22, 2013.
Hon. Mary Landrieu,
U.S. Senate, Hart Senate Office Building, Washington, DC.
Hon. Thad Cochran,
U.S. Senate, Dirksen Senate Office Building, Washington, DC.
Dear Senators Landrieu and Cochran: The National Small
Business Association (NSBA) is pleased to support the
bipartisan Small Business Disaster Reform Act of 2013 (S.
415), which will make it much easier on small businesses
impacted by and recovering from a disaster. By clarifying
that the U.S. Small Business Administration (SBA) shall not
use a small business owner's primary residence as collateral
for disaster business loans less than $200,000 and
authorizing the SBA Administrator to allow out-of-state small
business development centers (SBDCs) to provide much-needed
assistance in Presidentially-declared disaster areas, this
bill will let small businesses do what they do best, create
jobs and energize the economy.
The importance of reforming and enhancing federal programs
to maximize their benefit to small businesses and
entrepreneurs is certainly recognized by the membership of
NSBA, and we greatly appreciate commonsense, bipartisan
reform measures like the Small Business Disaster Reform Act,
especially when they come at no cost to the American
taxpayer.
On behalf of the NSBA and our over 65,000 members across
the country, I would like to thank you and the cosponsors of
this legislation for your tireless efforts to promote
economic development and for your endless support of small
businesses impacted by disasters. We look forward to working
with you and your staffs to help enact this critical piece of
legislation.
Sincerely,
Todd O. McCracken,
President.
____
March 5, 2013.
Hon. Mary Landrieu,
Chair, Committee on Small Business and Entrepreneurship, U.S.
Senate, Russell Senate Office Building, Washington, DC.
Hon. James Risch,
Ranking Member, Committee on Small Business and
Entrepreneurship, U.S. Senate, Russell Senate Office
Building, Washington, DC.
Dear Chair Landrieu and Ranking Member Risch: We write to
you today in strong support of the Small Business Disaster
Reform Act of 2013. Greater New Orleans, Inc. is a regional
economic development alliance serving the 10-parish region of
Southeast Louisiana. The Partnership for New York City is a
nonprofit organization of the city's business leaders. We
represent very different regions of the country, but we are
both strong contributors to the national economy and we have
been seriously impacted by natural disasters that caused huge
economic damage.
The overall economic impact of Hurricane Katrina was
estimated to be $150B--the costliest natural disaster in U.S.
history. Similarly, the disruption and damage inflicted by
Super Storm Sandy--the second costliest natural disaster--is
estimated at over $80 billion and resulted in daily loss of
billions of dollars in economic output, not only locally but
across the country. The impact of these storms has been
particularly serious for small businesses, forcing some to
close shop entirely and many to reduce services. The Federal
government has programs that were intended to insure that
small businesses and local economies can quickly recover from
such disasters, but in our experience these programs are not
working as effectively as they should be and require
legislative amendment. That is why we are very interested in
prompt action on the Small Business Disaster Reform Act.
Here are some examples of what needs to change:
Small business owners are currently required by the Small
Business Administration (SBA) to put up their primary
residence as collateral for SBA disaster loans of less than
$200,000, even though the value of their home often exceeds
the value of the loan. The Small Business Disaster Reform Act
of 2013 would put in place a common sense solution that
requires the SBA to collateralize small loans with available
business assets of equal or greater value before requiring
the business owner to put up his or her personal home. In a
time of crisis, every possible measure should be taken to
avoid business owners having to put their families at further
risk. This reform would reduce pressure on affected business
owners and increase utilization of the SBA disaster loan
program, while still providing necessary protections to the
government in the event of default.
Small Business Development Centers, SBDCs, have also played
a critical role in helping businesses recover following
disasters. However, under current law, SBDCs can only assist
businesses in their prescribed geographic region, even though
often times after major disasters like hurricanes, SBDCs are
affected right along with businesses. Following a
Presidential declaration of a disaster, effected regions need
aid quickly and SBDCs in surrounding regions, including
across state lines, should be able to help neighboring
effected regions. This bill would allow for that.
Small businesses are often disproportionately damaged by
natural disasters due to loss of customer base, thin profit
margins, diminished access to capital and difficulty with
relocation. The reforms proposed would help business owners
take full advantage of available resources and accelerate
their recovery by cutting bureaucratic red tape and providing
businesses with the tools needed to resume normal business as
quickly as possible--putting people back to work.
We appreciate the Committee's work on this critically
important issue and urge the Senate to work together to
deliver these much needed reforms. Thank you in advance for
your work towards strengthening the economy.
Sincerely,
Michael Hecht,
President & CEO, Greater New Orleans, Inc.
Kathryn S. Wylde,
President & CEO, Partnership for New York City.
____
St. Tammany Economic
Development Foundation,
Mandeville, LA, February 19, 2013.
Hon. Mary Landrieu,
Chair, Committee on Small Business and Entrepreneurship, U.S.
Senate, Russell Senate Building, Washington, DC.
Dear Senator Landrieu: The St. Tammany Economic Development
Foundation thanks you for the opportunity to comment on the
proposed amendments to the disaster assistance provisions in
the Small Business Act (15 US 6 31 et seq). As we learned
from Hurricanes Katrina, Rita and most recently Isaac, the
sooner our small businesses are able to recover, the better
it is for the region, the state and the nation.
We fully endorse the proposed amendment to Section 1 of the
bill regarding collateral on business disaster loans. If
approved, no longer would small business owners have to use
their primary personal residence for collateral towards SBA
disaster business loans less than $200,000 if other assets
are available of equal or greater value than the amount of
the loan. In times of crisis, affected business owners are
understandably reluctant to place their personal homes up as
collateral in order to obtain a much needed loan to rebuild
their business. Allowing business assets to act as collateral
will promote greater utilization of the loans; leading to
faster economic recovery.
Under Section 2 of the bill, Small Business Development
Centers (SBDCs) are limited in their ability to provide
services across state
[[Page S4580]]
lines. This prevents SBDCs in affected areas from being able
to draw upon the resources available from their colleagues
nationwide. Louisiana SBDCs have great experience in disaster
recovery assistance and should not be prevented from
providing assistance to their colleagues outside of Louisiana
in the event of disaster. Therefore, we fully support this
provision.
We applaud your efforts to protect small businesses in the
wake of disasters and thank you for continuing to be a strong
advocate on their behalf. After all, small businesses are the
lifeblood of our great nation.
Sincerely,
Brenda Bertus,
Executive Director, St. Tammany Economic Development
Foundation.
____
Charleston Metro
Chamber of Commerce,
North Charleston, SC, March 21, 2013.
Hon. Mary Landrieu,
Chair, Committee on Small Business and Entrepreneurship, U.S.
Senate, Russell Senate Building, Washington, DC.
Dear Senator Landrieu: As President and CEO of the
Charleston Metro Chamber of Commerce, I would like to offer
our support of the Small Business Disaster Reform Act of
2013. As the region's largest private sector organization,
the Chamber represents more than 1,750 businesses and
represents more than 75,000 employees in our region. Small
businesses are the backbone of the American economy and, not
surprisingly, the Charleston Metro Chamber's largest customer
group. More than 80 percent of our members employ 50 or fewer
employees.
Your committee's proposed changes on the collateral
requirements and allowing small business development centers
to work across state lines following disasters are necessary.
Anything that can be done after a major disaster to help
speed-up the rebuilding efforts should be top priority.
I want to commend you on your leadership with this critical
piece of legislation. Please let me know if our team can ever
be of service to you or your committee.
Bryan S. Derreberry,
President and CEO.
____
Mobile Area Chamber of Commerce,
Mobile, AL, March 20, 2013.
Hon. Mary Landrieu,
Chair, Committee on Small Business and Entrepreneurship, U.S.
Senate, Washington, DC.
Hon. James Risch,
Ranking Member, Committee on Small Business and
Entrepreneurship, U.S. Senate, Washington, DC
Dear Senator Landrieu and Senator Risch: The Mobile Area
Chamber of Commerce would like to thank you for this
opportunity to voice our support of the proposed changes to
federal disaster assistance program legislation as it relates
to programs offered by the U.S. Small Business
Administration. We offer our support for two provisions in
the ``Small Business Disaster Reform Act of 2013,'' S-115. We
support section 2 which modifies the collateral requirements
of Business Disaster Loans. We also support section 3 which
authorizes the U.S. Small Business Administration to allow
out-of-state small business development centers to provide
assistance in Presidentially-declared disaster areas.
The Mobile Area Chamber has 2087 member businesses, and
ninety percent of these businesses can be classified as small
businesses. We have worked closely with the U.S. Small
Business Administration office here in Mobile for over five
years. We petitioned heavily to get a U.S. Small Business
Administration office here locally, as this region received
fewer small business loans than any other area of the
country. Since opening the U.S. Small Business Administration
office here in Mobile, small business loans have risen
significantly.
As it relates to disaster assistance, the U.S. Small
Business Administration office here in Mobile was ``on the
ground'' and very helpful to area businesses in the aftermath
of Hurricane Katrina and the December 2012 tornados.
The Mobile Area Chamber of Commerce's mission is to serve
as a progressive advocate for business needs to promote the
Mobile area's economic well-being. Our program structure and
small business agenda reflect that as we offer disaster
planning, survival and recovery workshops. Most all of these
training sessions were done in conjunction with the local
U.S. Small Business Administration office.
Thank you for your hard work and leadership, as we share
the common goal of supporting the small business community.
We appreciate the opportunity to show our support for your
tremendous effort on behalf of small businesses in the Mobile
Bay region.
Sincerely,
Darrell W. Randle,
Vice President,
Small Business Development.
____________________