[Senate Report 114-293]
[From the U.S. Government Publishing Office]
Calendar No. 113
114th Congress } { Report
SENATE
2d Session } { 114-293
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RECOVERY IMPROVEMENTS FOR SMALL ENTITIES AFTER DISASTER ACT OF 2015
_______
July 6, 2016.--Ordered to be printed
_______
Mr. Vitter, from the Committee on Small Business and Entrepreneurship,
submitted the following
R E P O R T
[To accompany S. 1470]
The Committee on Small Business and Entrepreneurship, to
which was referred the bill (S. 1470) to amend the Small
Business Act to provide additional assistance to small business
concerns for disaster recovery, and for other purposes, having
considered the same, reports favorably thereon with an
amendment in the nature of a substitute and recommends that the
bill, as amended, do pass.
I. INTRODUCTION
The Recovery Improvements for Small Entities (RISE) After
Disaster Act of 2015 (S. 1470) was introduced by Chairman
Vitter, on May 31, 2015. The bill incorporates language from
Senator Heitkamp's Small Business Disaster Reform Act of 2015
(S. 956), providing clarification of collateral requirements
for disaster loans. The purpose of the RISE Act is to provide
additional assistance to small business concerns for disaster
recovery. In order to achieve this, the RISE Act seeks to
provide long-term recovery loans to small businesses through
community banks after their opportunities to receive SBA
disaster assistance are no longer available. The bill will also
direct Federal agencies to utilize local contractors in
recovery efforts for disaster affected areas as well as
authorize counseling and technical assistance to help small
businesses in their recovery efforts and resume operations as
quickly as possible.
During the markup of the bill, the bill was approved
unanimously by voice vote.
II. HISTORY (PURPOSE AND NEED FOR LEGISLATION)
Hurricane Katrina struck Louisiana, Alabama, Florida, and
Mississippi in 2005, with residual effects going on to impact
much of the Northeast United States. New Orleans, Louisiana was
particularly hard hit by the storm. In the aftermath of a
disaster of this scale, the recovery process is extensive.
Unfortunately, recovery efforts were prolonged, in part,
because small businesses remained closed.
The primary provider of Federal disaster assistance loans
for private sector, non-agricultural, disaster victims is the
Small Business Administration's Office of Disaster Assistance.
Following Hurricane Katrina, a series of hearings and
roundtables highlighted shortcomings in the recovery process
following particularly large disasters, and found that small
businesses require additional help to aid in their recovery.
III. HEARINGS AND ROUNDTABLES
In the 109th Congress:
In the 109th Congress, the Senate Committee on Small
Business and Entrepreneurship held a hearing entitled ``The
impact of Hurricane Katrina on small businesses'' on September
22, 2005 to assess the current relief programs of various
federal agencies. Despite significant efforts by FEMA and the
SBA to rapidly increase the size of their disaster programs to
maximize aid, witnesses expressed the need for a more
comprehensive system to handle duplicate payments so that
business owners with insurance could receive additional aid
faster. Other ideas presented at the hearing included a greater
emphasis on local contracting in disaster recovery projects as
well as a grant program, in addition to the SBA's loan program,
to account for the difficulties in repaying loans after
disasters. The presiding Chair of the committee expressed a
desire to see certain bureaucratic barriers eliminated from the
process, such as agencies being unable to help business owners
that were outside of their jurisdiction.
The Committee also held a hearing entitled ``Strengthening
hurricane recovery efforts for small businesses'' on November
8, 2005, in which they discussed the failures of the SBA's loan
disaster program in quickly distributing aid after Hurricanes
Katrina and Rita. Business owners and members expressed extreme
frustration with the SBA's loan approval process, which left
business owners waiting for several months to receive any form
of notification regarding their request. The SBA Administrator
at the time introduced the GO Loans program, which was intended
to temporarily expedite the loan process following a disaster,
as he stated that the current loan program was intended for
long-term recovery and not equipped to handle the immediate
after-effects of such a large-scale disaster.
In the 110th Congress:
In the 110th Congress, the Senate Committee on Small
Business and Entrepreneurship held a hearing entitled
``Oversight: Gulf Coast disaster loans and the future of the
disaster assistance program'' on July 25, 2007. The hearing
assessed the SBA's disaster assistance program and its
shortcomings after Hurricanes Katrina and Rita. An SBA employee
testified that the organization was so overwhelmed by and
unequipped to handle the volume of loan applications that it
created a system centered on declining as many loans as
possible to take them out of the system. Witnesses repeatedly
expressed the need for a better, expedited loan process.
The Committee held a field hearing in Lake Charles, LA
entitled ``Rebuilding the Gulf Coast: small business recovery
in south Louisiana'' on February 20, 2008 to assess how federal
agencies were continuing to provide aid several years after the
disasters. Witnesses again expressed the need for an SBA grant
program to supplement the disaster loan program. The GO Loans,
temporarily implemented by the SBA in 2005 after Hurricanes
Katrina and Rita, were discussed favorably by Gulf Coast
business owners.
In the 111th Congress:
In the 111th Congress, the Senate Committee on Small
Business and Entrepreneurship held a hearing entitled ``A year
later: lessons learned, progress made, and challenges that
remain from Hurricane Ike'' on September 25, 2009 to discuss
the SBA and FEMA's responses to Hurricane Ike. Again, witnesses
expressed the need to expedite the loan approval process at the
SBA. Business owners also emphasized the importance of local
leaders having the ability to respond to disasters immediately,
rather than waiting for federal action.
The Committee also held a hearing entitled ``Impact of the
Deepwater Horizon oil spill on small business'' on May 27,
2010. The hearing analyzed the effects of and responses to the
Gulf oil spill. Witness reiterated the difficulties of paying
back the interest on SBA disaster loans as well as expressed
the need to change collateral requirements on loans. Because of
the influx of disaster loans in the Gulf region following the
series of disasters over several years, many businesses did not
have the collateral to secure loans, as it had already been
used to secure other outstanding loans.
In the 112th Congress:
In the 112th Congress, the Senate Committee on Small
Business and Entrepreneurship held a hearing entitled
``Hurricane Sandy: assessing the Federal response and small
business recovery efforts'' on December 13, 2012 to assess the
federal response to Hurricane Sandy. Witnesses reiterated the
need for an SBA grant program as well as an improved
application process. Although the SBA claimed it had
significantly decreased processing time, there were still very
few processed, approved, and distributed loans from the
disaster. The SBA also attempted to pull resources from various
offices as part of its ``One SBA'' approach; however, this was
only regional and did not utilize resources outside of the
immediate disaster area.
In the 114th Congress:
Several sections from this bill were later amended into,
and became law as part of, the RISE After Disaster Act of 2015,
H.R. 208 (Public Law No. 114-88).
IV. DESCRIPTION OF BILL
The bill works to address small business's access to
capital, as well as prioritize funding and assistance for small
business and streamlining federal involvement. The RISE After
Disaster Act of 2015 provides long-term recovery loans to small
businesses through community banks when opportunities to
receive SBA disaster assistance are no longer available. The
bill instructs federal agencies to utilize local contractors
for response and recovery efforts. Counseling and technical
assistance to help small businesses recover and resume
operations is also made available through the bill. The RISE
After Disaster Act also seeks to address contractor malfeasance
by allowing homeowners and businesses to increase the size of
their loans from the SBA to remediate their property. Small
businesses affected by major disasters are able to access
federal government surplus property in order to aid in their
recovery.
Additional provisions of the RISE After Disaster Act of
2015 include coordinating duplicative benefit reviews between
agencies; allowing for nation-wide assistance from Small
Business Development Centers; fast-tracking SBIC applications
to quickly return investment dollars to disaster areas;
allowing physical damage disaster loans to be used for
preventative measures; planning ahead for Business Recovery
Centers in order to prevent confusion and delay in delivering
services; and reducing paperwork so small businesses are not
further burdened while already struggling after a disaster.
V. COMMITTEE VOTE
In compliance with rule XXVI (7)(b) of the Standing Rules
of the Senate, the following vote was recorded on June 3, 2015.
A motion to adopt the Recovery Improvements for Small
Entities After Disaster Act of 2015, a bill to amend the Small
Business Act to provide for increased assistance to small
businesses affected by disaster, was favorably reported by
voice vote.
VI. COST ESTIMATE
The Congressional Budget Office estimate of the costs of
this measure has been requested but was not received at the
time the report was filed. When the report is available, the
Chairman will request it to be printed in the Congressional
Record for the advice of the Senate.
VII. EVALUATIONS OF REGULATORY IMPACT
In compliance with rule XXVI (11)(b) of the Standing Rules
of the Senate, it is the opinion of the Committee that no
significant additional regulatory impact will be incurred in
carrying out the provisions of this legislation. There will be
no additional impact on the personal privacy of companies or
individuals who utilize the services provided.
VIII. SECTION-BY-SECTION ANALYSIS
Section 1: Short title and table of contents
This section provides the title, the ``Recovery
Improvements for Small Entities After Disaster Act of 2015'' of
the ``RISE After Disaster Act of 2015''.
Section 2: Definitions
Section 101: Use of data sharing
Amends section 312 of the Robert T. Stafford Disaster
Relief and Emergency Assistance Act.
Section 102: Additional awards to small business development centers,
women's business centers, Score, and Fast recipients for
disaster recovery
Amends section 7(b) of the Small Business Act to allow the
Small Business Administration to provide financial assistance
to a small business that receives an award from the
administration to spur recovery after a disaster. This section
also specifies the form of financial assistance as well as
requirements for those receiving the funds. This section also
sets down a term for any form of financial aid given.
Section 103: Collateral requirements for disaster loans
Amends section 7(d)(6) of the Small Business Act by
increasing the amount of money given for disasters from $14,000
to $25,000. The section also sets down an expiration date for
the previous change, and mandates that a report be made to
gauge the benefits of the previous change.
Section 104: Assistance to out-of-state business concerns to aid in
disaster recovery
This section allows the Small Business Association to
provide services, such as development centers, to small
business concerns located outside of the State if the area of
the small business has been declared a major disaster. This
section also sets down a term for which this aid may be
provided, and guidelines regarding extensions to this aid.
This section states that the Administrator should try to
ensure that the small business center is reimbursed for any
legitimate expenses incurred.
Section 105: SBIC program
Amends section 301(c)(2) of the Small Business Investment
Act of 1958 by giving priority to applications for a license to
operate as a small business investment company that is from an
applicant within a disaster area.
The section also sets down rules for calculating the
outstanding leverage of a company licensed under section 301(c)
and the time limit for which these calculations shall be used.
Section 106: Fast program
Amends section 34(a) of the Small Business Act by giving
special consideration to applications located in an area
affected by a catastrophic disaster. This section also provides
for giving additional assistance to applicants in catastrophic
disaster areas.
It also amends section 34 of the Small Business Act by
changing ``2005'' to ``2017'' in subsection (h) and ``September
30, 2005'' to ``September 30, 2017'' in subsection (i).
Section 107: Use of federal surplus property in disaster areas
Section 107 amends the Small Business Act section
7(j)(13)(F) by allowing the Administrator to transfer
technology or surplus property to small business in a disaster
area on a priority basis. This section also sets down
regulations for the small businesses receiving a transfer.
Section 108: Recovery opportunity loans
This section amends section 7(a)(31) of the Small Business
Act by allowing the Administrator to guarantee an express loan
to a small business concern located in a disaster area. It also
specifies that the maximum for these loans is to be $150,000
and the guarantee rate shall not be more than 85 percent. This
section also states that the small business concern receiving a
guaranteed loan had to be in operation at the time of the
disaster. These guaranteed loans may only be made to small
business concerns that demonstrate sufficient capacity to repay
the loan. According to this section, the administrator shall
have 90 days after receiving an application to determine
whether to pay the guaranteed loan. The section also sets down
the procedure for fees concerning the guaranteed loans.
Section 109: Contractor malfeasance
Section 7(b) of the Small Business Act is amended by
allowing the Administrator to increase the amount of the loan
to a small business concern if a contractor engages in
malfeasance that results in substantial economic damage to the
recipient. The Administrator may increase the amount of the
loan as necessary to cover the cost of repairs, rehabilitation,
or replacement needed to address the cause of the economic
damage.
This section also sets down requirements that must be met
in order for the Administrator to increase the amount of the
loan. These include proper certification from the borrower and
the person performing the mitigation.
Section 110: Local contracting preferences and incentives
This section of the RISE After Disaster Act of 2015 amends
section 15 of the Small Business Act. This section states that
a contracting preference should be given to a small business
concern in the disaster area if the small business concern will
perform the work required in the disaster area. This section
also states that if preference is given to a small business
concern, the value of the contract should be doubled.
Section 111: Clarification of collateral requirements
This section amends the Small Business Act section 7(d)(6),
so that the owner of a small business concern is not required
to use his primary residence as collateral for a loan if the
Administrator determines that the owner has assets of equal
quality with equal or greater value. In this case, those other
assets may be used as collateral for a loan.
Section 201: Use of physical damage disaster loans
Amends section 7(b)(1)(A) by allowing loans used to modify
structures to include the construction of safe rooms and storm
shelters designed to protect property and occupants from
natural disasters.
Section 202: Business recovery centers
Section 202 amends section 7(b) of the Small Business Act
in order to identify locations that may be used as recovery
centers in the event of a disaster. This section also sets down
the requirements for identification of these recovery areas.
Section 301: Increased oversight of economic injury disaster loans
Section 7(b) of the Small Business Act is amended in this
section. Oversight of entities receiving loans shall be
increased. This increased oversight includes scheduled site
visits and reviews of the use of loan proceeds in order to
ensure compliance with requirements. This section states that
no additional funds should be used to carry out the
requirements of this section.
Section 302: Reduction of paperwork
This section states that it is the sense of Congress that
paperwork burdens on small business concerns should be reduced
when applying for disaster assistance. The application for
disaster assistance should deter and detect possibilities of
waste, fraud, and abuse.
Section 303: Report on web portal for disaster loan applicants
This section amends the Small Business Act to provide for a
report relating to the creation of a web portal to be used to
track the status of applications for disaster assistance. This
section also stipulates what information this report should
include.
Section 304: Local disaster contracting fairness
This section stipulates that when possible, local
subcontractors should be used to carry out contracts for debris
removal or demolition services in connection with natural
disaster reconstruction efforts. Preference should be given to
prime contractors who certify that any work that is to be
performed by subcontractors will be performed by local
subcontractors.
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