[Congressional Record (Bound Edition), Volume 159 (2013), Part 7]
[Senate]
[Pages 9339-9344]
[From the U.S. 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

[[Page 9340]]

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 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

[[Page 9341]]

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 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

[[Page 9342]]

     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.
       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

[[Page 9343]]

     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 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.

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       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.

                          ____________________