[Congressional Record (Bound Edition), Volume 145 (1999), Part 13]
[Senate]
[Pages 17964-17967]
[From the U.S. Government Publishing Office, www.gpo.gov]



       THE MILITARY RESERVISTS SMALL BUSINESS RELIEF ACT OF 1999

  Mr. SESSIONS. Mr. President, on behalf of the majority leader, I ask 
unanimous consent that the Senate proceed to the immediate 
consideration of calendar No. 166, S. 918.
  The PRESIDING OFFICER. The clerk will report the bill by title.

[[Page 17965]]

  The legislative clerk read as follows:

       A bill (S. 918) to authorize the Small Business 
     Administration to provide financial and business development 
     assistance to military reservists' small businesses, and for 
     other purposes.

  There being no objection, the Senate proceeded to consider the bill, 
which had been reported from the Committee on Small Business, with an 
amendment to strike all after the enacting clause and inserting in lieu 
thereof the following:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Military Reservists Small 
     Business Relief Act of 1999''.

     SEC. 2. REPAYMENT DEFERRAL FOR ACTIVE DUTY RESERVISTS.

       Section 7 of the Small Business Act (15 U.S.C. 636) is 
     amended by adding at the end the following:
       ``(n) Repayment Deferred for Active Duty Reservists.--
       ``(1) Definitions.--In this subsection:
       ``(A) Eligible reservist.--The term `eligible reservist' 
     means a member of a reserve component of the Armed Forces 
     ordered to active duty during a period of military conflict.
       ``(B) Essential employee.--The term `essential employee' 
     means an individual who is employed by a small business 
     concern and whose managerial or technical expertise is 
     critical to the successful day-to-day operations of that 
     small business concern.
       ``(C) Period of military conflict.--The term `period of 
     military conflict' means--
       ``(i) a period of war declared by Congress;
       ``(ii) a period of national emergency declared by Congress 
     or by the President; or
       ``(iii) a period of a contingency operation, as defined in 
     section 101(a) of title 10, United States Code.
       ``(D) Qualified borrower.--The term `qualified borrower' 
     means--
       ``(i) an individual who is an eligible reservist and who 
     received a direct loan under subsection (a) or (b) before 
     being ordered to active duty; or
       ``(ii) a small business concern that received a direct loan 
     under subsection (a) or (b) before an eligible reservist, who 
     is an essential employee, was ordered to active duty.
       ``(2) Deferral of direct loans.--
       ``(A) In general.--The Administration shall, upon written 
     request, defer repayment of principal and interest due on a 
     direct loan made under subsection (a) or (b), if such loan 
     was incurred by a qualified borrower.
       ``(B) Period of deferral.--The period of deferral for 
     repayment under this paragraph shall begin on the date on 
     which the eligible reservist is ordered to active duty and 
     shall terminate on the date that is 180 days after the date 
     such eligible reservist is discharged or released from active 
     duty.
       ``(C) Interest rate reduction during deferral.--
     Notwithstanding any other provision of law, during the period 
     of deferral described in subparagraph (B), the Administration 
     may, in its discretion, reduce the interest rate on any loan 
     qualifying for a deferral under this paragraph.
       ``(3) Deferral of loan guarantees and other financings.--
     The Administration shall--
       ``(A) encourage intermediaries participating in the program 
     under subsection (m) to defer repayment of a loan made with 
     proceeds made available under that subsection, if such loan 
     was incurred by a small business concern that is eligible to 
     apply for assistance under subsection (b)(3); and
       ``(B) not later than 30 days after the date of enactment of 
     this subsection, establish guidelines to--
       ``(i) encourage lenders and other intermediaries to defer 
     repayment of, or provide other relief relating to, loan 
     guarantees under subsection (a) and financings under section 
     504 of the Small Business Investment Act of 1958 that were 
     incurred by small business concerns that are eligible to 
     apply for assistance under subsection (b)(3), and loan 
     guarantees provided under subsection (m) if the intermediary 
     provides relief to a small business concern under this 
     paragraph; and
       ``(ii) implement a program to provide for the deferral of 
     repayment or other relief to any intermediary providing 
     relief to a small business borrower under this paragraph.''.

     SEC. 3. DISASTER LOAN ASSISTANCE FOR MILITARY RESERVISTS' 
                   SMALL BUSINESSES.

       Section 7(b) of the Small Business Act (15 U.S.C. 636(b)) 
     is amended by inserting after the undesignated paragraph that 
     begins with ``Provided, That no loan'', the following:
       ``(3)(A) In this paragraph--
       ``(i) the term `essential employee' means an individual who 
     is employed by a small business concern and whose managerial 
     or technical expertise is critical to the successful day-to-
     day operations of that small business concern;
       ``(ii) the term `period of military conflict' has the 
     meaning given the term in subsection (n)(1); and
       ``(iii) the term `substantial economic injury' means an 
     economic harm to a business concern that results in the 
     inability of the business concern--
       ``(I) to meet its obligations as they mature;
       ``(II) to pay its ordinary and necessary operating 
     expenses; or
       ``(III) to market, produce, or provide a product or service 
     ordinarily marketed, produced, or provided by the business 
     concern.
       ``(B) The Administration may make such disaster loans 
     (either directly or in cooperation with banks or other 
     lending institutions through agreements to participate on an 
     immediate or deferred basis) to assist a small business 
     concern that has suffered or that is likely to suffer 
     substantial economic injury as the result of an essential 
     employee of such small business concern being ordered to 
     active military duty during a period of military conflict.
       ``(C) A small business concern described in subparagraph 
     (B) shall be eligible to apply for assistance under this 
     paragraph during the period beginning on the date on which 
     the essential employee is ordered to active duty and ending 
     on the date that is 90 days after the date on which such 
     essential employee is discharged or released from active 
     duty.
       ``(D) Any loan or guarantee extended pursuant to this 
     paragraph shall be made at the same interest rate as economic 
     injury loans under paragraph (2).
       ``(E) No loan may be made under this paragraph, either 
     directly or in cooperation with banks or other lending 
     institutions through agreements to participate on an 
     immediate or deferred basis, if the total amount outstanding 
     and committed to the borrower under this subsection would 
     exceed $1,500,000, unless such applicant constitutes a major 
     source of employment in its surrounding area, as determined 
     by the Administration, in which case the Administration, in 
     its discretion, may waive the $1,500,000 limitation.
       ``(F) For purposes of assistance under this paragraph, no 
     declaration of a disaster area shall be required.''.

     SEC. 4. BUSINESS DEVELOPMENT AND MANAGEMENT ASSISTANCE FOR 
                   MILITARY RESERVISTS' SMALL BUSINESSES.

       (a) In General.--Section 8 of the Small Business Act (15 
     U.S.C. 637) is amended by adding at the end the following:
       ``(l) Management Assistance for Small Businesses Affected 
     by Military Operations.--The Administration shall utilize, as 
     appropriate, its entrepreneurial development and management 
     assistance programs, including programs involving State or 
     private sector partners, to provide business counseling and 
     training to any small business concern adversely affected by 
     the deployment of units of the Armed Forces of the United 
     States in support of a period of military conflict (as 
     defined in section 7(n)(1)).''.
       (b) Enhanced Publicity During Operation Allied Force.--For 
     the duration of Operation Allied Force and for 120 days 
     thereafter, the Administration shall enhance its publicity of 
     the availability of assistance provided pursuant to the 
     amendments made by this Act, including information regarding 
     the appropriate local office at which affected small 
     businesses may seek such assistance.

     SEC. 5. GUIDELINES.

       Not later than 30 days after the date of enactment of this 
     Act, the Administrator of the Small Business Administration 
     shall issue such guidelines as the Administrator determines 
     to be necessary to carry out this Act and the amendments made 
     by this Act.

     SEC. 6. EFFECTIVE DATES.

       (a) In General.--Except as provided in subsection (b), the 
     amendments made by this Act shall take effect on the date of 
     the enactment of this Act.
       (b) Disaster Loans.--The amendments made by section 3 shall 
     apply to economic injury suffered or likely to be suffered as 
     the result of a period of military conflict occurring or 
     ending on or after March 24, 1999.

  Mr. KERRY. Mr. President, after weeks of difficult decisions, 
decisions which have in too many respects divided us by party, we have 
today an easy vote--a vote on which we can all agree. We can support 
reservists and small business by voting for S. 918, the Military 
Reservists Small Business Relief Act of 1999. When I introduced this 
bill on April 29th, it had 31 cosponsors. It now has the endorsement of 
52 Senators--31 Democrats and 21 Republicans.
  A majority of the Senate--Senators from Maine to Utah, Michigan to 
North Carolina--have said that the men and women who serve as 
reservists need and deserve help maintaining their businesses while 
they are serving on active duty. That is an important statement about 
our commitment to the reservists who serve our country.
  Today, more than 4,700 reservists are serving on active duty around 
the world. Where are they? In Haiti, Iraq, Bosnia, and Kosovo. And 
where are their businesses and jobs? Pick any state--Massachusetts, 
Arizona, Georgia, Ohio, Michigan.
  When these men and women are called to action, they often have little 
notice, and their families face financial and emotional hardships. With 
half of America's military forces serving in reserve and National Guard 
units--a total of 1.4 million Americans--the Pentagon has acknowledged 
that extensive missions now require quicker call-ups. As a veteran of 
the Vietnam War and Ranking Member of the Small

[[Page 17966]]

Business Committee, I know how disruptive active service can be for 
reservists who are suddenly called away from their families and work to 
serve our country.
  What does a small business with few financial or personal reserves do 
without the owner, manager or employee who is essential to the daily 
operation and success of the small business? If you're in a rural area 
or small town, it will be hard to find a replacement. And if your 
family steps in, often they don't have the experience or time to run 
the business. A Commander from Danvers, Mass, who owns two gas station 
convenience stores said the tight job market only exacerbates the 
difficulty of finding a replacement, and that training someone well 
enough to ``leave the business in [their] hands would be near 
impossible.'' We need to help these men and women, their families and 
communities, bridge the gap between when the troops leave and when they 
return.
  The Military Reservists Small Business Relief Act of 1999 offers 
small businessmen and women three types of assistance. First, it 
authorizes the SBA to defer loan repayments and to reduce interest 
rates on any of its direct loans, including disaster loans. The 
deferrals and reductions authorized by this bill are available from the 
date that the military reservist is called to active duty until 180 
days after his or her release from active duty.
  For microloans and loans guaranteed under the SBA's financial 
assistance programs, such as the 504 and 7(a) loan programs, the bill 
directs the Agency to develop policies that encourage and facilitate 
ways for SBA lenders to defer or reduce loan repayments. For example, a 
microlenders' ability to repay its debt to the SBA is dependent upon 
payments from microborrowers. So, with this bill's authority, if a 
microlender extends or defers loan repayment to a borrower who is a 
deployed military reservist, in turn the SBA would extend repayment 
obligations to the microlender.
  Second, the bill establishes a low-interest economic injury loan 
program to be administered by the SBA through its disaster loan 
program. These loans would be available to provide interim operating 
capital to any small business when the departure of a miliary reservist 
to active duty causes substantial economic injury. Under the bill, such 
harm includes three general cases: inability to make loan payments; 
inability to pay ordinary and necessary operating expenses; or 
inability to market, produce or provide a service or product that it 
ordinarily provides. Under this provision, an eligible small business 
may apply for an economic injury loan from the date that the company's 
military reservist is ordered to active duty until 90 days after 
release from active duty.
  Third, the bill directs the SBA and all of its private sector 
partners, such as the Small Business Development Centers and the 
Women's Business Centers, to make every effort to reach out to those 
businesses affected by call up of military reservists to active duty 
and offer business counseling and training. Those left behind to run 
the business, whether it's a spouse, a child, or an employee, while the 
military reservist is serving, may be inexperienced in running the 
business and need quick access to management and marketing counseling. 
We need to do what we can to help them keep their doors open and reduce 
the impact of military conflicts and national emergencies on the 
economy.
  Finally, at the insightful suggestion of my colleague Senator Levin, 
the bill will be effective for all qualified reservists who are 
demobilized as of March 24th, 1999. According to the Department of 
Defense, 1,266 reservists have been demobilized from Bosnia, Iraq and 
Kosovo since the 24th.
  The provisions for this bill should already be available for those 
who need it, and I deeply regret that this bill hasn't been acted on 
earlier. The nature of the legislation is uncontroversial, it passed 
the Committee on Small Business June 9th, almost 50 days ago, by 
unanimous consent and, to repeat, it has the endorsement of 51 
Senators. Since then, it has also passed the full House and the Senate 
Committee on Small Business as part of H.R. 1568, the Veterans 
Entrepreneurship and Small Business Development Act of 1999.
  As much as I am frustrated by the delay on this bill, it probably 
doesn't compare to that of reservists who are on active duty and losing 
sleep over how they are going to keep their businesses going and avoid 
ruining their credit records. Ask the truck driver who serves in the 
Missouri National Air Guard and reported to active duty four months 
ago. He bought a new rig shortly before being called up and has hefty 
monthly payments to meet. He lined up a replacement to drive his truck 
while he was gone to keep money coming in, but the driver backed out of 
the agreement right before the reservist was to leave.
  He tried to do the right thing--to implement a contingent plan--and 
yet something beyond his control interfered. It's hard to keep your 
customers happy when their merchandise isn't getting delivered. And 
it's even harder to make your loan payments when you're not bringing in 
enough money.
  Or ask the reservist from Oklahoma who has supported his wife and 
four children for the past five years with a carpet and upholstery 
business. In 1998, he was called up for eight months, and he's been 
active this year since May 8th. What made it particularly damaging for 
his business this year was that he was called up at the beginning of 
the industry's high season. January to April are slow times, and April 
to December are the money-making months. He called my office a month 
ago to find out about this bill and find out how he could get 
assistance.
  Though this bill was still waiting for action by the full Senate, we 
put him in contact with the SBA headquarters in Oklahoma to find some 
way to help. After reviewing his options and what it would take to 
resuscitate his business, he called to say that he was closing shop for 
good: ``I'm just going to close my business down. I'm not going to try 
to get a small business loan. I want to cut my losses now. . . .''
  We have yet to know the full impact on and needs of reservists 
currently deployed, but, unfortunately, we know the veteran reservists 
of the Persian Gulf War, Operation Desert Storm, suffered substantial 
set-backs while away from their businesses. They left their businesses 
or companies in good shape and returned to hardships ranging from 
bankruptcy to financial ruin, from deserted clients to layoffs.
  When I introduced this bill, I talked about a small-business owner 
from New England, a physician and Lieutenant Commander in the Navy 
Reserve. He was called up for Operation Desert Storm as a flight 
surgeon in January 1991. For ten years, he had been a solo 
practitioner. After six months of service, he had to file bankruptcy. 
That bankruptcy affected not only him and his wife, but also his two 
employees and their families. After one year on duty, he returned home 
to face civilian life without a business or a job. He was only one of 
many. We must never let that happen again.
  The Military Reservists Small Business Relief Act is timely because 
it can help those 6,500 reservists who have been serving in Kosovo 
since as far back as March. Even those who have already come home and 
are struggling to keep their businesses afloat. However, it is also 
important for future reservists because it can offer them relief if 
they serve any future contingency operations such as Kosovo, military 
conflicts or national emergencies.
  For example, in 1993, the National Guard in Missouri was deployed for 
two months to help with the devastating flood of the Missouri and 
Mississippi Rivers that left 14 miles of Missouri river-front land 
under water. While on active duty, two reservists, one with a 
successful hair salon in a suburb of St. Louis and another with a 
painting business in Rolla, lost so many of their clients they 
eventually had to close their small businesses. One of them resigned 
from the National Guard after that experience because he felt it had 
taken too big a toll on his life. At a time when America so badly needs 
more of our citizens to give of themselves, to sign up as military 
reservists, to make a sacrifice, we must pass this bill to make sure 
that service will not mean financial ruin. We must pass

[[Page 17967]]

this legislation to take a stand for our reservists.
  In closing, I want to thank and acknowledge Jan Behon of Pittsburgh, 
Pennsylvania, and Dr. Harold V. Nelson of Louisville, Kentucky, who 
volunteer for SERRR, the Self-Employed Recalled Reservists and Retirees 
committee, for their support, years of sacrifice and experience that 
they lent to this bill.
  I also want to thank the National Guard Association of the United 
States for backing this legislation and ask that the Association's 
letter of support be included in the Record.
  Mr. President, I thank my colleagues, particularly the 51 cosponsors 
of my bill, for their support of this important legislation.
  Mr. SESSIONS. Mr. President, I ask unanimous consent that the 
Committee substitute amendment be agreed to, the bill, as amended, be 
read the third time, and passed, and the motion to reconsider be laid 
upon the table, and that any statements relating to the bill be printed 
in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The committee amendment was agreed to.
  The bill (S. 918), as amended, was read the third time, and passed.

                          ____________________