[Congressional Record (Bound Edition), Volume 148 (2002), Part 3]
[Senate]
[Pages 3943-3946]
[From the U.S. Government Publishing Office, www.gpo.gov]




          AMERICAN SMALL BUSINESS EMERGENCY RELIEF ACT OF 2001

  Mr. DODD. Mr. President, I ask unanimous consent that the Senate 
proceed to the immediate consideration of Calendar No. 186, S. 1499.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The legislative clerk read as follows:
  A bill (S. 1499) to provide assistance to small business concerns 
adversely impacted by the terrorist attacks perpetrated against the 
United States on September 11, 2001, and for other purposes.
  There being no objection, the Senate proceeded to consider the bill.


                           Amendment No. 3076

  Mr. DODD. Mr. President, I understand Senators Kerry and Bond have a 
substitute amendment at the desk. I ask unanimous consent that the 
Senate proceed to its immediate consideration, that the amendment be 
agreed to, and that the motion to reconsider be laid upon the table.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 3076) was agreed to.
  (The text of the amendment is printed in today's Record under ``Text 
of Amendments.'')
  Mr. KERRY. Mr. President, I would urge that there be no 
further delay, no further obstruction, and that the Senate act--at long 
last--to pass a bill that is very important to so many small businesses 
in this country crippled by the economic fall-out of September 11, 
including businesses that were already struggling before September 11 
during the recession and are now faced with even more difficult 
prospects.
  For months, tens of thousands of small businesses have been asking 
for help--an immediate helping hand--just to keep their businesses 
going--particularly working capital to meet payroll and pay the bills--
but they have been forced to make ends meet by using credit cards and 
depleting personal savings because small businesses doesn't have the 
same access as big business--to credit or otherwise. Left in the lurch 
by congressional inaction and delay, these businesses and their 
employees paid the price.
  Now it is time that the Senate delivers the relief the vast majority 
of us were prepared to deliver in the first weeks after September 11, 
urgent relief delayed by partisan gamesmanship.
  My American Small Business Emergency Relief and Recovery Act has 
gotten a lot of attention over the past 5 months. It has been blocked 
from even a meaningful debate on the Senate floor. What makes this week 
different?
  What makes it different is that we have reached final agreement with 
the White House on a compromise, thanks to our last resort--hardball 
tactics of our own--and the bill has at long last been cleared to pass 
the Senate by unanimous consent.
  I thank the 63 cosponsors of this bill. I thank the numerous small 
businesses and small business advocates who have worked so hard and 
used so much of their limited resources to free this bill for passage. 
This diverse coalition of business leaders and Democratic and 
Republican policy makers have stood by us from day one--their support 
should have been enough to guarantee passage way back then, but it 
wasn't enough to stop some from playing partisan games with even 
bipartisan legislation. Now, at long last, the good faith efforts of 
our supporters are being rewarded.
  It is my hope that having worked out our differences with the White 
House, we have cleared the way for passage not just through the Senate 
but also through the House. Once this help is enacted, small businesses 
will finally be able to receive desperately needed economic relief.
  I am pleased with the compromise. It preserves provisions that are 
really important for those small businesses that have needed help over 
the past few months but fell through the cracks in SBA's disaster loan 
program, or fell through the cracks in the private sector where lenders 
have cut back on loans to small businesses over the past year.
  It simply was not enough, not efficient, and not cost-effective to 
use only one of SBA's many lending programs to serve all the small 
businesses throughout this country that were hurt by the terrorist 
attacks or that have been struggling with the credit crunch. All of the 
SBA's tools should be used to help the affected small businesses, and 
this bill does just that. Because this bill was blocked from 
consideration, Senator Bond and I were forced to enact some of these 
provisions through a defense bill. I very much thank Senators Byrd and 
Hollings for including them. Specifically, we made it possible for 
small businesses to get working capital loans through the SBA's 7(a) 
loan program. SBA is calling these ``STAR loans,'' and compared to the 
economic injury disaster loans, borrowers are accessing capital faster. 
In just seven weeks, since the loans were

[[Page 3944]]

made available, nearly $38 million has been loaned to 129 small 
businesses. It reminds us that being able to go sit in the office of a 
lender in the same town is far more efficient and effective than 
requiring a small business in West Virginia or Puerto Rico to call a 1-
800 number in Niagara Falls for emergency assistance.
  One needs only to look at the record by comparison for economic 
injury disaster loans outside New York and Virginia to see the need for 
these STAR loans. After 22 weeks (nearly 6 months), only 2,600 loans 
have been approved, adding up to a denial rate of almost 50 percent . 
That doesn't even include the small businesses that were turned away 
before they even filled out an application because of outdated size 
standards. That has left a lot of small businesses across this country 
without assistance. A lot of small business owners turning are in their 
keys to the bank. As one small business advocate said today, in 
reference to the thousands of tour bus companies that went out of 
business, ``I understand the banks now own a wonderful fleet of tour 
buses.''
  Well, for those small tour bus owners who have been waiting for this 
bill to pass and still need a working capital loan to ramp back up in 
the upcoming tour season, the compromise preserves the refinancing of 
business debt under a disaster loan. They need this so that they can 
restructure debt to survive this business slump. We fought very hard to 
keep this assistance in the bill.
  For the owners of travel agencies--the majority of which are small 
businesses--we have increased the size standards for your industry so 
that more of your companies qualify for disaster loans and 7(a) 
emergency loans. Please spread the word to travel agencies that were 
turned away earlier in the year because they were considered too large. 
They might need working capital more than ever now that the airlines 
have completely eliminated commissions.
  For small businesses that need access to credit and can't get it 
because of the credit crunch, Senator Bond and I were able make SBA's 
programs more affordable by reducing the fees borrowers pay through 
September 2004. In both the Senate and the House, we have had hearing 
after hearing trying to get fairer fees for the borrowers who need 
capital and the lenders who make loans, but until now we haven't gotten 
any cooperation. This bill will make a difference. Whether you need 
working capital through SBA's 7(a) loan program or credit to buy a 
building or equipment through SBA's 504 loan program, it will now be 
less expensive. Stimulating lending and borrowing is good for the 
economy because it creates jobs and saves jobs. By law, small 
businesses that borrower money through the SBA 504 loan program have to 
hire or retain on employee for each $35,000 borrowed. This is a win-win 
situation for our economy.
  The overall purpose of this emergency legislation is to provide 
access to the full complement of SBA loans and business counseling in 
order to help small businesses hurt by the terrorist attacks of 
September 11th and their aftermath.
  This legislation will help mitigate bankruptcies, business closures, 
and lay-offs and address the shrinking availability of credit. However, 
small businesses doing business with the Federal Government have also 
felt the impact of the terrorist attacks.
  Small business contractors, because of very real and legitimate 
security concerns, have experienced a dramatic increase in costs for 
work in and around Federal Government facilities. We have heard reports 
of small businesses being denied access to their equipment on military 
bases, waiting for hours each day to enter government facilities and 
being limited in the hours they can work on their projects.
  Let me cite the situation faced by Dave Krueger, President of AS 
Horner Construction, Inc. out of Albuquerque, NM. Dave was currently 
doing work on a Federal contract at an Air Force facility pouring 
concrete parking aprons. Immediately after the attack, his company was 
locked out of the facility for nearly 2 weeks and currently has limited 
hours to access the construction site. Dave estimates that this will 
result in cost increases of at least 10 percent, meaning he will take a 
loss on this contract.
  Such situations cannot go unresolved. Small businesses are far too 
important, not just to our national economy, but to our national 
defense as well. Small business is a vital component of our national 
supply chain and essential to our national security interests. To 
address this, S. 1499 establishes an expedited procedure whereby 
Federal small business contractors can apply for an equitable 
adjustment to their contract if costs have been incurred due to 
security or other measures resulting from the terrorist attacks. In the 
interest of compromise, Senator Bond and I agreed to reduce the funding 
available for these provisions from $100 million to $50 million.
  The Kerry-Bond approach has always been cost-effective--about five 
times cheaper than the administration's approach. CBO estimated that 
providing this assistance to small businesses would cost $860 million. 
The final compromise, based on CBO's estimates, is down from $860 
million to $300 million.
  This is a good compromise. It will help small businesses in every 
State. It is a reasonable approach that maximizes existing resources 
and private sector help. I strongly and respectfully urge my colleagues 
to let this legislation pass. Small businesses in your State will thank 
you.
  I ask that a list of supporters of S. 1499 be printed in the Record.
  The list follows:

       S. 1499 Supporters: Airport Ground Transportation 
     Association; American Bus Asso- ciation; American 
     Subcontractors Association; Associated General Contractors of 
     America; Association of Women's Business Centers; CDC Small 
     Business Finance; Chicago Association of Neighborhood 
     Development Organizations; Citizens Financial Group, RI; 
     Clovis Community Bank, CA; Coastal Enterprises, ME; County of 
     San Diego; Delaware Community Reinvestment Act Council; 
     Fairness in Rural Lending; Florida Atlantic University Small 
     Business Development Center; Helicopter Association; HUBZone 
     Contractors National Council; National Association of 
     Government Guaranteed Lenders; National Community 
     Reinvestment Coalition; National League of Cities; National 
     Limousine Association; National Restaurant Association; 
     National Small Business United; National Tour Association; 
     New Jersey Citizen Action; Rural Housing Institute; Rural 
     Opportunities; Self Help Credit Union; Small Business 
     Legislative Council; U.S. Conference of Mayors; United 
     Motorcoach Association; United States Air Tour Association; 
     United States Chamber of Commerce; United States Tour 
     Operator Association; Women's Business Development 
     Center.

 Mr. BOND. Mr. President, I urge my colleagues in the Senate to 
vote in favor of S. 1499, the American Small Business Emergency Relief 
and Recovery Act. I thank my colleague from Massachusetts, Senator 
Kerry, for introducing the bill, and I am pleased to be its principal 
cosponsor. Since S. 1499 was introduced on October 4, 2001, 62 of our 
Senate colleagues have joined us as cosponsors.
  The measure before the Senate today is a comprehensive managers' 
substitute amendment to S. 1499, which incorporates significant changes 
that have been agreed to following lengthy negotiations with the staffs 
from the White House and the Office of Management and Budget, OMB. In 
particular, I thank Andy Card, the President's Chief of Staff, Dr. 
Lawrence Lindsey, Director of the National Economic Advisors, and Steve 
McMillin, Assistant Director at OMB, for their personal involvement in 
the negotiations.
  The managers' substitute amendment modifies S. 1499 to recognize 
changes in the disaster relief and credit programs at the Small 
Business Administration, SBA, that were enacted on January 10, 2002, in 
section 203 of the Department of Defense and Emergency Supplemental 
Appropriations for Recovery from and Response to Terrorists Attacks on 
the United States, P.L. 107-117 Emergency Disaster Supplemental.
  Enactment of S. 1499, as amended, will insure that valuable credit 
and management assistance will flow to small businesses that were 
harmed by the September 11 terrorist attacks on the World Trade Centers 
and the Pentagon. It is my understanding the House of Representatives 
is prepared to

[[Page 3945]]

act quickly on the bill soon after the 2-week recess, so that it can be 
sent to President Bush for his signature in the near future. Fast 
action by Congress is critical. Small businesses from across the United 
States are continuing to struggle under the dual pressures from the 
economy and the aftermath of the terrorist attacks.
  As the ranking member of the Committee on Small Business and 
Entrepreneurship, I have received pleas for help from small business in 
Missouri and across the nation: small restaurants that have lost much 
of their business due to the fall off in business travel; local flight 
schools that have been grounded as a result of the recent terrorist 
attacks; and Main Street retailers who are struggling to survive. The 
American Small Business Emergency Relief and Recovery Act contains 
sound initiatives to help our nation's small businesses and their 
employees. We in Congress must act and act soon to help our Nation's 
small businesses.
  In response to the urgent calls for strong and effective Federal 
Government action to reverse the decline in the economy and stimulate a 
business rebound, last October I introduced the Small Business Leads to 
Economic Recovery Act of 2001, S. 1493, which was designed to provide 
effective economic stimulus in three distinct but complementary ways: 
increasing access to capital for the nation's small enterprises; 
providing tax relief and investment incentives for our small firms and 
the self-employed; and directing one of the Nation's largest 
consumers--the Federal Government--to shop with small business in 
America.
  Historically, when our economy slows or turns into a recession, the 
strength of the small business sector helps to right our economic ship, 
with small businesses leading the Nation to economic recovery. Small 
businesses employ over one-half of the U.S. workforce and create 75 
percent of the net new jobs. Clearly, we cannot afford to ignore 
America's small businesses as we consider measures to stimulate our 
economy.
  S. 1499 goes to the heart of a major problem confronting thousands of 
small businesses today by taking on access to capital barriers. This 
bill is a bipartisan collaboration between Senator Kerry, and me and 
our staffs of the Committee on Small Business and Entrepreneurship. We 
have worked together to devise one-time modifications to the SBA 
Disaster Relief, 7(a) and 504 Loan Programs because the traditional 
approach to disaster relief will not address the critical needs of 
thousands of small businesses located at or around the World Trade 
Center, the Pentagon and in strategic locations throughout the United 
States.
  In New York City, it could be a year and more before many of the 
small businesses destroyed or shut down by the terrorist attacks can 
reopen their doors for business. Small firms near the Pentagon, such as 
those at the Reagan National Airport or Crystal City, VA, are also shut 
down or struggling. And there are small businesses throughout the 
United States that were shut down for national security concerns and 
continue to struggle to regain lost customers.
  Small enterprises located in the Presidentially declared disaster 
areas surrounding the World Trade Center and the Pentagon are not the 
only businesses experiencing extreme hardship as a direct result of the 
terrorist attacks of September 11. Nationwide, thousands of small 
businesses are unable to conduct business or are operating at a bare-
minimum level. Tens of thousands of jobs are at risk of being lost as 
small businesses weather the fall out from the September 11 attacks.
  Regular small business disaster loans fall short of providing 
effective disaster relief to help these small businesses. The Emergency 
Disaster Supplemental included a provision from S. 1499 as introduced 
that allows small businesses to defer for up to 2 years repayment of 
principal and interest on their SBA disaster relief loans. Interest 
that would otherwise accrue during the deferment period would be 
forgiven. The thrust of this essential ingredient is to allow the small 
businesses to get back on their feet without jeopardizing their credit 
or driving them into bankruptcy. The managers' substitute amendment 
restates this key provision.
  The managers' substitute amendment also retains the provision 
permitting small businesses located in the Presidentially declared 
disaster areas and those small businesses directly affected by the 
terrorist attack to refinance existing business debt. Repayment of 
principal shall be deferred for disaster loans to refinance existing 
business debt, however, interest would accrue during the deferment 
period.
  S. 1499 would provide a special financial tool to assist small 
businesses as they deal with these significant business disruption. 
Small businesses in need of working capital would be able to obtain 
SBA-guaranteed ``Emergency Relief Loans'' from their banks to help them 
during this period. Fees normally paid by the borrower to the SBA would 
be eliminated, and the SBA would guarantee 85 percent of the loan. A 
key feature of the bill is the authorization for banks to defer 
repayment of principal for up to one year. This section would remain in 
effect for 9 months after the date of enactment of the act.
  My colleagues and I have heard from thousands of small businesses 
since the terrorist attacks that small businesses are experiencing 
significant hardship. The downturn in business activity, however, was 
clearly underway prior to September 11. The downturn was further 
exacerbated by the terrorist attacks.
  S. 1499 would provide for changes in the SBA 7(a) Guaranteed Business 
Loan Program and the 504 Certified Development Company Loan Program to 
stimulate lending to small businesses that are most likely to grow and 
add new employees. The managers' substitute amendment incorporates the 
provision from the emergency supplemental that reduces the annual fee 
paid by lenders from 50 basis points, 0.50 percent, to 25 basis points, 
0.25 percent. In addition, the up front origination fee paid by small 
business borrowers would be reduced. These enhancements to the SBA's 
7(a) program, and comparable reductions in 504 loan program fees, are 
to continue through September 30, 2004. They are designed to make the 
programs operate more effectively and efficiently during the period 
when the economy is weak and banks have tightened their underwriting 
requirements for small business loans.
  Specifically, when the economy is slowing, it is normal for banks to 
raise the bar for obtaining commercial loans. However, making it harder 
for small businesses to survive is the wrong reaction to a slowing 
economy. By making these adjustments to the 7(a) and 504 loans to make 
them more affordable to borrowers and lenders, we will be working 
against history's rules governing a slowing economy, thereby adding a 
stimulus for small businesses. Essentially, we will be providing a 
counter-cyclical action in the face of a slow economy with the express 
purpose of accelerating the recovery.
  The SBA has a very effective infrastructure for providing management 
assistance to small businesses located nationwide. The Small Business 
Development Center, SBDC, SCORE, Women's Business Center and Microloan 
programs provide much needed counseling to small businesses that are 
struggling or facing problems in their start-up phase. With the U.S. 
economy under unusual stress, many segments of the small business 
community are today unable to cope with daily management issues.
  S. 1499 would authorize expansions in these programs so that the 
SBDCs, the SCORE chapters and the Women's Business Centers are 
positioned to address the needs of a large influx of small businesses 
looking for help. Our bill would create special authorization for each 
program to provide assistance tailored to the needs of small businesses 
following the September 11 terrorist attacks. In addition, the bill 
would increase the authorization levels by the following amounts: SBDC 
program, $25 million, SCORE $2 million, Women's Business Centers $2 
million, and Microloan technical assistance, $5 million.

[[Page 3946]]

  For small businesses that are doing business with the Federal 
Government section 9 of the managers' substitute amendment to S. 1499 
would authorize a fund of $50 million to compensate small businesses 
when Federal action as the result of the terrorist attacks, has caused 
the costs to increase for small businesses to meet the terms of their 
contracts. The fund would be administered by the Department of the 
Treasury. The Office of Federal Procurement Policy would establish 
guidelines for administering the program, and the contracting agencies 
would consult with the SBA when determining whether an award should be 
made.
  The American Small Businesses Emergency Relief and Recovery Act is 
important legislation that is needed to help the many struggling small 
businesses. Swift passage will be very helpful to the long-term 
survival of many of American's small businesses, and I urge each of my 
colleagues to vote in favor of the bill.
  Mr. DODD. Mr. President, I ask unanimous consent that the bill, as 
amended, be read the third time and passed; that the motion to 
reconsider be laid upon the table, with no intervening action or 
debate; and that any statements relating to the bill be printed in the 
Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The bill (S. 1499), as amended, was read the third time and passed.

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