[Congressional Record (Bound Edition), Volume 153 (2007), Part 16]
[Senate]
[Pages 22937-22940]
[From the U.S. Government Publishing Office, www.gpo.gov]




   SMALL BUSINESS DISASTER RESPONSE AND LOAN IMPROVEMENT ACT OF 2007

  Mr. REID. Mr. President, I ask unanimous consent that the Senate 
proceed to the consideration of Calendar No. 139, S. 163, the Small 
Business Disaster Response and Loan Improvement Act of 2007; that the 
committee-reported amendment be withdrawn, and that the substitute 
amendment that is at the desk be considered; that the Bond and Coburn 
amendments, which are at the desk, be considered and agreed to, en 
bloc; that the substitute amendment, as amended, be agreed to; that the 
bill, as amended, be read a third time and passed; that the motions to 
reconsider be laid upon the table, en bloc; and that any statements 
relating to the bill be printed in the Record, with no intervening 
action or debate.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The committee-reported amendment was withdrawn.
  The amendment (No. 2650) was agreed to.
  (The amendment is printed in today's Record under ``Text of 
Amendments.'')
  The amendments (Nos. 2651 and 2652) were agreed to, as follows:


                Amendment No. 2651 to Amendment No. 2650

     (Purpose: To strike the title relating to energy emergencies)

       On page 50, strike line 15 and all that follows through 
     page 60, line 3.


                Amendment No. 2652 to Amendment No. 2650

  (Purpose: To require appropriate reporting regarding the number of 
full-time employees for either the Office of Disaster Assistance or the 
    Disaster Cadre of the Small Business Administration, to provide 
    appropriate assistance in the event of a catastrophic national 
                   disaster, and for other purposes)

       On page 24, line 2, strike ``shall'' and insert ``may''.
       On page 24, strike line 9, and all that follows through 
     page 28, line 5, and insert the following:
       ``(B) Report.--In carrying out this subsection, if the 
     number of full-time employees for either the Office of 
     Disaster Assistance or the Disaster Cadre of the 
     Administration is below the level described in subparagraph 
     (A) for that office, not later than 21 days after the date on 
     which that staffing level decreased below the level described 
     in subparagraph (A), the Administrator shall submit to the 
     Committee on Appropriations and the Committee on Small 
     Business and Entrepreneurship of the Senate and the Committee 
     on Appropriations and Committee on Small Business of the 
     House of Representatives, a report--
       ``(i) detailing staffing levels on that date;
       ``(ii) requesting, if practicable and determined 
     appropriate by the Administrator, additional funds for 
     additional employees; and
       ``(iii) containing such additional information, as 
     determined appropriate by the Administrator.''.

                       TITLE II--DISASTER LENDING

     SEC. 201. CATASTROPHIC NATIONAL DISASTER DECLARATION.

       Section 7(b) of the Small Business Act (15 U.S.C. 636(b)) 
     is amended by inserting immediately after paragraph (10), as 
     added by this Act, the following:
       ``(11) Catastrophic national disasters.--
       ``(A) In general.--The President may make a catastrophic 
     national disaster declaration in accordance with this 
     paragraph.
       ``(B) Promulgation of rules.--
       ``(i) In general.--Not later than 6 months after the date 
     of enactment of this paragraph, the Administrator, with the 
     concurrence of the Secretary of Homeland Security and the 
     Administrator of the Federal Emergency Management Agency, 
     shall promulgate regulations establishing a threshold for a 
     catastrophic national disaster declaration.
       ``(ii) Considerations.--In promulgating the regulations 
     required under clause (i), the Administrator shall establish 
     a threshold that--

       ``(I) is similar in size and scope to the events relating 
     to the terrorist attacks of September 11, 2001, and Hurricane 
     Katrina of 2005;
       ``(II) requires that the President declares a major 
     disaster before making a catastrophic national disaster 
     declaration under this paragraph;
       ``(III) requires consideration of--

       ``(aa) the dollar amount per capita of damage to the State, 
     its political subdivisions, or a region;
       ``(bb) the number of small business concerns damaged, 
     physically or economically, as a direct result of the event;
       ``(cc) the number of individuals and households displaced 
     from their predisaster residences by the event;
       ``(dd) the severity of the impact on employment rates in 
     the State, its political subdivisions, or a region;
       ``(ee) the anticipated length and difficulty of the 
     recovery process;
       ``(ff) whether the events leading to the relevant major 
     disaster declaration are of an unusually large and calamitous 
     nature that is orders of magnitude larger than for an average 
     major disaster; and
       ``(gg) any other factor determined relevant by the 
     Administrator.
       ``(C) Authorization.--If the President makes a catastrophic 
     national disaster declaration under this paragraph, the 
     Administrator may make such loans under this paragraph 
     (either directly or in cooperation with banks or other 
     lending institutions through agreements to participate on an 
     immediate or deferred basis) as the Administrator determines 
     appropriate to small business concerns located anywhere in 
     the United States that are economically adversely impacted as 
     a result of that catastrophic national disaster.
       ``(D) Loan terms.--A loan under this paragraph shall be 
     made on the same terms as a loan under paragraph (2).''.
       On page 28, strike lines 15 through 18 and insert the 
     following:
       ``(A) the term `disaster area' means any area for which the 
     President declared a major disaster (as that term is defined 
     in section 102 of the Robert T. Stafford Disaster Relief and 
     Emergency Assistance Act (42 U.S.C. 5122)) that subsequently 
     results in the President making a catastrophic national 
     disaster declaration under subsection (b)(11);
       On page 34, lines 8 and 9, strike ``a disaster declaration 
     is made'' and inserting ``the President makes a catastrophic 
     disaster declaration under paragraph (11) of section 7(b) of 
     the Small Business Act (15 U.S.C. 636(b)), as added by this 
     Act,''
       On page 34, lines 20 and 21, strike ``under section 7(b) of 
     the Small Business Act (15 U.S.C. 636(b))'' and insert 
     ``under paragraph (11) of section 7(b) of the Small Business 
     Act (15 U.S.C. 636(b)), as added by this Act''.

  Mr. KERRY. Mr. President, this month marks the 2-year anniversary of 
Hurricane Katrina, and still thousands

[[Page 22938]]

of small business owners in New Orleans and across the gulf coast are 
still struggling to keep their doors open, keep their employees 
working, and get the economy back on its feet.
  Since the days immediately following the storm, I have worked with 
Senators Snowe, Landrieu, and Vitter to produce a comprehensive package 
to reform the SBA's Disaster Assistance program. Nearly 2 years of 
bipartisan negotiations have produced a piece of legislation that has 
broad bipartisan support as well as the support of the administration. 
Today that legislation will pass the Senate, and is one step closer to 
authorizing the tools needed by the SBA to respond to large scale 
disasters.
  This bill includes directives for the SBA to create a private 
disaster loan program, to allow for lenders to issue guaranteed 
disaster loans in the aftermath of a catastrophic disaster. To ensure 
that these loans are borrower-friendly, we provide authorization for 
appropriations so that the agency can subsidize the interest rates. In 
addition, the administrator is authorized to enter into agreements with 
private contractors in order to expedite loan application processing 
for direct disaster loans.
  The bill also includes language directing SBA to create an expedited 
disaster assistance loan program to provide businesses with short-term 
loans so that they may keep their doors open until they receive 
alternative forms of assistance. The days immediately following a 
disaster are crucial for business owners--statistics show that once 
they close their doors, they likely will not open them again. These 
short-term will be available following a disaster of catastrophic 
proportions so that processing delays such as the ones experienced 
after the 2005 gulf coast storms will not result in widespread business 
failure.
  A presidential declaration of catastrophic national disaster will 
allow the Administrator to offer economic injury disaster loans to 
adversely affected business owners beyond the geographic reach of the 
disaster area. In the event of a large-scale disaster, businesses 
located far from the physical reach of the disaster can be affected by 
the magnitude of a localized destruction. We saw this when the 
terrorist attacks of September 11, 2001 affected businesses from coast 
to coast, and we saw it again with the 2005 gulf coast hurricanes. 
Should another catastrophic disaster strike, the President should have 
the authority to provide businesses across the country with access to 
the same low-interest economic injury loans available to businesses 
within the declared disaster area.
  Nonprofit entities working to provide services to victims should be 
rewarded and given access to the capital they require to continue their 
services. To this end, the administrator is authorized to make disaster 
loans to non-profit entities, including religious organizations.
  Construction and rebuilding contracts being awarded are likely to be 
larger than the current $2 million threshold currently applied to the 
SBA Surety Bond Program, which helps small construction firms gain 
access to contracts. This bill increases the guarantee against loss for 
small business contracts up to $5 million and allows the administrator 
to increase that level to $10 million, if required.
  The bill also provides for small business development centers to 
offer business counseling in disaster areas and to travel beyond 
traditional geographic boundaries to provide services during declared 
disasters. To encourage small business development centers located in 
disaster areas to keep their doors open, the maximum grant amount of 
$100,000 is waived.
  So that Congress may remain better aware of the status of the 
administration's Disaster Loan Program, this bill directs the 
administration to report to the Committee on Small Business and 
Entrepreneurship of the Senate and to the Committee on Small Business 
of the House of Representatives regularly on the fiscal status of the 
disaster loan program as well as the need for supplemental funding. The 
administration is also directed to report on the number of Federal 
contracts awarded to small businesses, minority-owned small businesses, 
women-owned businesses, and local businesses during a disaster 
declaration.
  Though it took many, many months to pass this much-needed 
legislation, I am confident that our extensive negotiations have 
produced a piece of legislation that, when enacted, will provide the 
tools that the administrator requires to swiftly and effectively 
respond to future disasters, both large and small. I thank Ranking 
Member Snowe as well as Senators Landrieu, and Vitter for their 
extraordinary efforts over the past 2 years. I also thank Senators Bond 
and Coburn for their ability to see the need for this important 
legislation and to work through disagreements in order to get this bill 
passed. I look forward to working with the House of Representatives to 
address any differences that remain between the House and Senate 
versions of the bill so that we can put in place a more comprehensive 
disaster response program at the SBA as quickly as possible.
  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 of 2005. Things are better now, and the region is 
slowly recovering. But as I stand here tonight, we are exactly 63 days 
into the 2007 Atlantic hurricane season. Two years ago, the U.S. Small 
Business Administration's, SBA, response to Hurricanes Katrina and Rita 
was too slow and lacking in urgency, threatening the very survival of 
impacted businesses and homeowners. This failure occurred because SBA 
lacked the necessary tools and resources to respond swiftly and 
effectively to a large-scale disaster. Thanks in part to the efforts of 
Administrator Steven Preston, much has been done to improve the SBA 
disaster assistance program in the past year. However, many in Congress 
remain concerned that despite these efforts, the agency lacks the 
additional legislative authority and resources required to respond to a 
large-scale disaster. This is because 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.
  I am proud that legislation, of which I am an original cosponsor, is 
passing the Senate tonight. This is because I strongly believe that we 
cannot afford to adjourn for August, the heart of hurricane season, 
without moving this important legislation forward--legislation which 
would immediately provide SBA with the resources it needs to 
effectively respond to natural or manmade disasters. In particular, 
this legislation improves the disaster response of one agency that had 
a great deal of problems last year, the SBA. This bill, S. 163, 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 2 years and was introduced shortly before the 109th Congress 
adjourned as S. 4097 by Senator Snowe. Unfortunately, there was no 
action on that bill, so it was reintroduced in January 2007, at the 
start of the 110th Congress, by Senator Kerry as S. 163. On May 7, 
2007, the Committee on Small Business and Entrepreneurship unanimously 
reported out S. 163 and sent it to the full Senate for consideration. 
This bipartisan legislation features comprehensive SBA reforms as 
outlined in the attached summary. S. 163 also has the full support of 
the SBA, who assisted the committee in drafting many of the provisions 
as well as the support of our Louisiana business community. As 
mentioned above, although this bill was reported out of committee 86 
days ago, S. 163 was blocked from passage, most recently on July 17 due 
to a Republican objection. The committee worked closely with the 
Republican

[[Page 22939]]

Senator to address his specific concerns, but unfortunately after this 
hold was lifted last night, it appeared as if there would be an 
additional hold from the Republican side. Given the urgent nature of 
this legislation, in addition to the fact that the House of 
Representatives passed companion legislation on April 18, 2007, my 
colleagues and I were pleased that we could work out these remaining 
issues and pass this bill tonight because stalling this legislation 
would send the wrong signal to America's small businesses.
  As mentioned previously, this bill is reflective of my priorities as 
well as those from Senators Kerry and Snowe, respectively chair and 
ranking member of the Senate Small Business Committee. For my part, I 
have heard loudly and clearly from our impacted businesses that SBA 
reforms should be implemented as soon as possible. In fact, as of 
August 29, 2007, these reforms will be 2 years overdue. That is why I 
have worked tirelessly alongside my colleagues on the Small Business 
Committee to secure passage of this legislation. Like my colleagues, I 
have led when appropriate, pushed back when pushed, and negotiated when 
needed so that S. 163 could pass the Senate before we adjourn for 
August recess.
  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 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 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 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 have a 
positive record with SBA or those who 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, 
due to my request, the agency provided the completed disaster response 
plan to our committee on June 1, 2007. That said, it is one thing to 
draft up a plan but it is not worth the time and effort if there is no 
one to monitor its implementation and update it when needed. For this 
reason, I included a provision in this bill to require the 
administrator to designate one agency employee, who would report 
directly to him/her, to be responsible for this plan. This disaster 
planning designee would be responsible for the plan, and more 
importantly, would be accountable to Congress if it fails. Following 
Hurricanes Katrina and Rita, not only is execution important but also 
just as important is clear accountability if these best laid plans 
fail.
  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 in the 
coming weeks to begin discussions with our House colleagues to resolve 
differences on both the Senate-passed bill and the House-passed bill. 
The goal of both these bills is to ensure that the SBA has everything 
it needs to better respond following future disasters, so I am hopeful 
that we can work out a reasonable agreement.
  I ask unanimous consent that a copy of a June 29, 2007, letter of 
support from Administrator Preston, along with a July 31, 2007, letter 
from Greater New Orleans, Inc. be printed in the Record at the 
conclusion of my statement.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                Small Business Administration,

                                    Washington, DC, June 29, 2007.
     Hon. John F. Kerry,
     Chairman, Committee on Small Business and Entrepreneurship, 
         U.S. Senate, Washington, DC.
       Dear Mr. Chairman: I am writing to express my thanks for 
     the efforts you and your colleagues have made to work with 
     the U.S. Small Business Administration and to address the 
     Administration's concerns with some of the provisions in S. 
     163, ``The Small Business Disaster Response and Loan 
     Improvements Act of 2007''.
       At this point, if amended by the Bond Amendment, the 
     Administration has no objections to Senate passage of S. 163. 
     However, the Administration would request a longer extension 
     of the authorization language in Section 3 to avoid the need 
     for concern over unintended expiration of programs and 
     activities. We would also recommend clarifying that the 
     Administrator would have flexibility under Section 205 to 
     designate portions of a declared catastrophic national 
     disaster area as a HUBZone area, without extending this 
     designation to an entire disaster area.
       We look forward to working with you when the bill goes into 
     conference discussions with the U.S. House of 
     Representatives. If you have any questions or comments, 
     please contact me directly.
           Sincerely yours,
                                                Steven C. Preston,
     Administrator.
                                  ____



                                    Greater New Orleans, Inc.,

                                   New Orleans, LA, July 31, 2007.
     Hon. John Kerry,
     Chairman, Senate Committee on Small Business and 
         Entrepreneurship, Russell Senate Office Building, 
         Washington, DC.
     Hon. Olympia Snowe,
     Ranking Member, Senate Committee on Small Business and 
         Entrepreneurship, Russell Senate Office Building, 
         Washington, DC.
       Dear Chairman Kerry and Ranking Member Snowe: Greater New 
     Orleans, Inc., the 10-parish economic development 
     organization for the New Orleans, Louisiana region, would 
     like to express strong support of S. 163, The Small Business 
     Disaster Response and Loan Improvements Act of 2007 reported

[[Page 22940]]

     unanimously by the Senate Small Business Committee in May of 
     this year, after months of thorough committee deliberations.
       In our assessment, S. 163 sponsored by Senator Kerry and 
     co-sponsored by five other Senators represents significant 
     legislation to improve SBA's response to future storm events, 
     as part of overall Congressional efforts to improve the 
     federal government's role, learning from the catastrophic 
     hurricanes of 2004 and 2005.
       More specifically, the legislation would provide a new 
     level of SBA response for catastrophic disasters, expedited 
     assistance to small businesses, adjustment of the loan 
     guarantee levels and loan caps, a better coordination process 
     with FEMA, increased response resources, improved access and 
     overall accountability of SBA services. These policy changes 
     will go a long way to helping local communities get back on 
     their feet in future federally declared disasters.
       Two years after the tragedy of Hurricane Katrina, our 
     region is still struggling to restore our population, housing 
     stock, healthcare services, infrastructure, and basic 
     economy. 18,000 small businesses in our area were directly 
     impacted by the hurricane, experiencing significant physical 
     and economic damages. As these businesses fight to restore 
     operations, hire adequate staff, find affordable insurance, 
     and meet payroll, it seems appropriate to have their trials 
     and tribulations be cause for new federal policies.
       By many accounts and measures the SBA capacity, resources, 
     process and policies following Hurricane Katrina were 
     inadequate to meet the needs of the devastated business 
     community. However, rather than complain about the past, it 
     would be more productive to make every effort to improve the 
     SBA disaster program and protocols, changes requiring 
     aggressive congressional action. It appears that S. 163 is a 
     significant step in that direction.
       We applaud your leadership of this issue, and that of our 
     Louisiana Senators Landrieu and Vitter, in forwarding this 
     important legislation to step up federal efforts and capacity 
     in future storms to protect our nation's assets and citizens 
     who may be impacted in the coming months and years. As we 
     approach the peak of the 2007 hurricane season, we urge the 
     full Senate to expedite this legislation in order to pass 
     these vital SBA reforms.
       Thank you for your consideration.
           Sincerely,
                                                  Mark C. Drennen,
                                                  President & CEO.

  The bill (S. 163), as amended, was ordered to be engrossed for a 
third reading, was read the third time, and passed.
  (The bill will be printed in a future edition of the Record.)

                          ____________________