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Public Statements

Statements on Introduced Bills and Joint Resolutions

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Location: Washington, DC


STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - July 14, 2006)

By Ms. LANDRIEU (for herself, Mr. KERRY, Mr. BAYH, and Mr. PRYOR):

S. 3663. A bill to amend the Small Business Act to increase the maximum amount for international trade loans, to direct the Administrator of the Small Business Administration to assign an international finance specialist, and for other purposes; to the Committee on Small Business and Entrepreneurship.

Ms. LANDRIEU. Mr. President, the gulf coast has made good progress in rebuilding after last year's hurricanes. Our small businesses and entrepreneurs have led the way in this recovery. As all of my colleagues know small businesses are the engines of our economy driving innovation and growth.

Following Katrina and Rita, one problem for our business owners in the gulf was that their customer bases were dispersed around the country by the storms and were slow to return. Without this revenue from their customers, many businesses struggled to make ends meet and relied upon U.S. Small Business Administration, SBA, disaster loans, insurance payouts, and in some cases, State-administered bridge loan funding to keep going.

We also have businesses that export goods and services to foreign countries. The 2,000 exporters in Louisiana, in addition to the other help available, were also able to rely on their international partners to stay in business. Their international customers showed great faith and commitment to our exporters by placing new orders after the storms.

I am introducing the Small Business International Trade Enhancements Act of 2006 to give all small businesses the opportunity to expand their operations into international markets. I am pleased to have Senator KERRY, the ranking member of the Senate Small Business Committee, as well as Senators PRYOR and BAYH, as cosponsors.

As I mentioned we have 2,000 exporters in Louisiana. However, there are many other businesses who are exporters, but they do not even realize it. They may have overseas Internet sales, or they focus operations on domestic sales, but have some international buyers as well. In fact, the Small Business Administration has stated that over 96 percent of all exporters of goods and services are small businesses.

Given the importance of these exporters to my State and to the rest of the gulf coast, I would like to improve their competitive edge in the international market and give them every resource they need to succeed. As they continue to recover, one of the main issues being faced by our small business is accessing capital. Our exporters are no different. They need help accessing export financing to cover export-related costs such as purchasing equipment, purchasing inventory, or financing production costs.

To help our small businesses access export financing, my legislation will create a gulf coast international finance specialist within SBA located in New Orleans to focus on the needs of businesses affected by Katrina and Rita. New Orleans had a finance specialist from 1998 until mid-2003, when that individual retired from the agency. SBA left the post vacant due to lack of funding. I believe it is important to locate this finance specialist in New Orleans because that is where the majority of Louisiana's exporters and export financing institutions are located. In New Orleans, this finance specialist also is in a prime location, within easy travel distance to the gulf coast sections of Mississippi and Alabama--where a majority of the exporters and export financing institutions in these States are located as well.

Fifteen SBA finance specialists operate out of 100 U.S. export assistance centers administered by the Department of Commerce around the country. That is a record staffing low for this program, down from a peak of 22 finance specialists in 2000. To ensure that all smaller exporters nationwide will continue to have access to export financing, this bill establishes a floor of 16 international finance specialists. I believe this will send a signal to our exporters that, despite current budget deficits, we are committed to our exporters and want to provide them with the necessary resources to compete internationally.

Mr. President, I realize that the need for export financing is not just limited to the gulf coast. There are small businesses nationwide that are looking to find markets overseas. One tool that they can use is the SBA's international trade loan, ITL, program. International trade loans can help exporters develop and expand overseas markets; upgrade equipment or facilities; and assist exporters that are being hurt by import competition. Exporters can borrow up to $2 million, with $1,750,000 guaranteed by SBA.

However, as currently structured these loans are not user-friendly to lenders or borrowers and, as a result, are underutilized. Let me explain what I mean. First, the $250,000 difference between the loan cap and the guarantee requires borrowers to take out a second SBA loan to take full advantage of the $2 million guarantee. ITLs can only be used to acquire fixed assets and not working capital, a common need for exporters. Furthermore, ITLs do not have the same collateral or refinancing requirements as SBA 7(a) loans. Because of these issues, lenders do not use these loans.

My legislation will reduce the paperwork by increasing the maximum loan guarantee to $2,750,000 and the loan cap to $3,670,000 to bring it more in line with the 7(a) program. This bill also creates a more flexible ITL by setting out that working capital is an eligible use for loan proceeds, in addition to making the ITL consistent with regular 7(a) loans by allowing the same collateral and refinancing terms as with 7(a).

The SBA international trade and export loans are valuable tools for exporters but they are useless if there is no one to assist borrowers with identifying which loans are right for them. Local lending institutions that specialize in export financing can help but at a cost over less than $2 million per year, the current group of finance specialists has obtained bank financing for more than $10 billion in U.S. exports since 1999. The $10 billion in export sales financed by these specialists helped to create over 140,000 new, high-paying U.S. jobs.

The Small Business International Trade Enhancements Act of 2006 is an important first step, not just for exporters in the gulf coast, but also for small businesses nationwide who are looking to open markets overseas. I urge my colleagues to support this legislation since it will help our exporters in the gulf coast recover and also give small businesses nationwide more options when they are seeking export financing.

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By Ms. LANDRIEU (for herself, Mr. KERRY, Mr. BAYH, and Mr. PRYOR):

S. 3664. A bill to amend the Small Business Act to improve assistance after a major disaster, to authorize emergency bridge loans, bridge loan guarantees, and recovery grants, and for other purposes; to the Committee on Small Business and Entrepreneurship.

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 last year. Things are better now and the region is slowly recovering. But we are in the second month of another hurricane season and 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 last year.

Today, I am introducing legislation to improve the disaster response of one agency that had a great deal of problems last year, the Small Business Administration, SBA. While it did improve during the course of the months after the storm, it became clear to me that SBA needs additional tools for future disasters. SBA approached Katrina and the massive floods after the storm, using the same tools that it uses for much smaller, much less damaging disasters. I do not blame all of the people who work at this agency for the problems we saw in the gulf. They found themselves in a system that was insufficient to address this disaster.

My legislation, the Small Business Disaster Recovery Assistance Improvements Act of 2006, 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 bridge loans 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 make emergency bridge loans of up to $150,000 to affected small businesses in a declared disaster area. These bridge 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. My 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 bridge 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--bridge loans would be very helpful.

My legislation also would 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 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 has a positive record with SBA or those that 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.

We had a lot of small business owners in the gulf coast who did not qualify for SBA disaster loans, or may not have had enough insurance to cover their losses. These people usually have to expend their personal finances or seek out small grants from non-profits to keep going. My legislation authorizes a small business disaster grant program to provide small grants of up to $25,000 to businesses that are not able to get access to get other assistance. These grants will only go to business owners that certify their intent to reopen in the disaster area and pursue technical assistance to continue their operations.

Following Katrina, it is clear that disaster loan amounts need to be updated to reflect current business needs and the average cost of housing today. The bill raises the cap on SBA disaster loans for businesses from $1.5 million to $2.25 million; the cap on SBA personal property loans from $40,000 to $50,000; and the cap on real property homeowner loans from $200,000 to $250,000.

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.

I was surprised to learn that the SBA did not have a full-time disaster planner on board before Katrina, nor did it have a comprehensive disaster response plan in place. While SBA is not a first-responder disaster agency like FEMA, they do hit the ground within days of a disaster strike. As the only Federal nonagricultural disaster lender, SBA should have an analytical, proactive plan in place to respond to disasters.

I pushed to get language in the recent hurricane supplemental appropriations bill to require SBA to develop a disaster plan and report to Congress on its contents by July 15, 2006. I look forward to this report. But writing a plan and making it work are two different things. SBA needs a full-time staff in place to ensure that this plan is implemented properly. My legislation directs the SBA to hire a full-time disaster planner to maintain this disaster response plan and to assist the SBA with its overall disaster preparedness, including coordination with other disaster response agencies like FEMA.

As we reflect next month on the 1-year anniversary of the worst natural disaster to hit our nation, now is the time for action--not words or empty promises. I want to be able to go back to my constituents and reassure them that if, God forbid, another natural disaster should hit my state or another part of the country, that the Small Business Administration is better prepared and more responsive to the needs of those impacted.

The Small Business Disaster Recovery Assistance Improvements Act will provide essential tools to make the SBA more proactive, flexible, and most important, more efficient during future disasters. In the coming weeks, I look forward to working with both Chairwoman SNOWE and Ranking Member KERRY on the Senate Small Business Committee to ensure that the SBA has everything it needs to meet these goals.

Mr. President, I am pleased to be joined on this legislation by the ranking member of the Small Business Committee, Senator KERRY, as well as my colleagues from the Small Business Committee, Senators PRYOR and BAYH. We urge our other colleagues to support this important legislation.

I thank the Chair and ask unanimous consent that a copy of the bill be printed in the RECORD, along with the accompanying materials.

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