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SBA Response to Hurricanes in Gulf States

Location: Washington, DC


Mr. KERRY. Mr. President, obviously somewhere in the next few days--we don't know when yet--we are going to be wrapping up our business here, and that will mark the end of the first session of the 109th Congress. Before we leave, Members on both sides of the aisle are very concerned that we will not have provided the assistance to the small businesses in the Gulf States region that they desperately need in order to recover from the effects of Hurricanes Katrina and Rita.

The effect is that literally hundreds of thousands of small businesses are in desperate need of assistance throughout that region. Without the jobs those small businesses provide, the economy of the gulf coast is going to have a much harder time coming back.

Since Hurricanes Katrina and Rita hit the gulf coast, regrettably--this has been commented on again by Senators on both sides of the aisle; it is not a partisan issue--there has been a stunningly slow response by the Administration to provide relief to small businesses.

The administration has now sent up three pieces of emergency legislation--three supplemental emergency spending bills worth more than $62 billion--and yet we have not adopted any direct relief for small businesses.

The latest supplemental request asks for $471 million in additional funding for SBA disaster loans and the SBA Inspector General. But, frankly, giving more money to the disaster loan program doesn't address small business needs. It's too narrow in scope and is not delivering relief with urgency.

Senator Lott has talked about the problems--Senator Cochran has too--and there is a recognition that you have a lot of small businesses that can't wait till their disaster loans are processed or disbursed. They need access to capital immediately.

It is a matter of record now, commented on in many national journals, that the SBA has done a completely inadequate job--abysmal may be a better word--of getting disaster loan funds into the hands of small businesses in the gulf region.

It is not because of the lack of funds or the lack of employees. The SBA has enough funding to grant $1.4 billion in disaster loans, and $249 million for administration and staff. The staffing has been increased from some 800 employees to 4,000 employees.

As of Monday of this week, almost 39,000 small businesses had applied for SBA disaster loans. Yet with all of these resources, both personnel and money, only 9,200 loans have been actually processed, which is 25 percent, and only 2,600, which is 7 percent, had actually been approved. Only 240 had actually seen a disbursement of money.

In addition, as of last week, the SBA had handed out only 10 of its new gulf opportunity loans the administration's answer to the business community's call for bridge loans.

We were assured by the SBA Administrator several weeks ago in a bipartisan committee hearing that those loans were on track, that they would respond rapidly, that they had enough people in place, that they were going to get the money out, and, indeed, here we are with the same record that was the incentive to have that hearing in the first place.

These loans, I might add, have an interest rate of as much as 13.5 percent. Why would we be providing a 13.5 percent loan to people who have been hit when you are trying to do it as a matter of disaster response? Frankly, that is beyond me.

The program has generated irate complaints from the very people whom it has been set up to try to help. One small business owner who called my office referred to the SBA and FEMA as ``blackwater mercenaries.'' They feel set upon, not helped. We are not going to help the small businesses down there until we pass comprehensive small business assistance.

Senators LOTT and COCHRAN have stated that the pace of reconstruction in their home State of Mississippi and the other Gulf States is ``unacceptable.''

Despite the assertion of the administration that the Nation's ``small business sector is vibrant,'' Senator Lott has said that the slow pace of approving disaster loans ``is preventing small businesses from coming back and jobs from returning or being created. Not unexpectedly, the unemployment rates in the two largest coastal counties, Harrison and Jackson, are more than quadruple the national average.''

Senator Lott is absolutely correct, and we need to do something about it.

So far, the best efforts of the Senate have been stymied. One bill passed 96-0 in the Senate during consideration of CJS. That was dropped in conference. Another bipartisan bill, S. 1807, the Small Business Hurricane Relief and Reconstruction Act, has been blocked by the White House since September 30. That is almost 2 1/2 months.

Small business owners such as Dr. Edward Lang and Dr. Angela Lang, who rushed to complete their disaster loan application in the weeks following the hurricane, believing that assistance was going to be there, have been told that everything was going to be done to help people recover. They have gone months now without hearing any response from the SBA whatsoever.

In the immediate aftermath of the storm, their small but successful podiatry office based out of New Orleans was deluged with 5 feet of water.

With their savings all but gone, and the ever-shrinking list of patients, all of whom have been displaced by the storm, the Langs are in dire need of assistance. They want to stay there. They want to rebuild their business there. It is essential to New Orleans that people who make that choice are empowered to be able to do so.

Despite repeated offers from out-of-state hospitals, they are sticking by their plan to try to rebuild in the city they love and the place they want to work. But the cold shoulder they received from the SBA is a virtual death sentence for their livelihood. They are just one example of countless other gulf coast businesses that have been ignored by the very governmental agencies that exist to serve them. On its face, that is unacceptable.

The request that has been put forward by the Small Business Committee for $720 million is a little more than 1 percent of the $62 billion the administration has requested for Katrina relief. This legislation is a very small cost compared to the total amount of money the Government is putting in, but an enormous return for the small businesses that need it.

Once again, we are seeing a situation where big business is able to walk away with most of the funding while the vast majority of the job base is in small business, and they are not getting the assistance they need.

What our bill does is to authorize $450 million for the impacted States to provide immediate assistance to small businesses struggling to get on their feet. It authorizes additional funding for SBA's partners--such as the small business development centers that are out in the field trying to provide business counseling to the many people and to the owners who are trying to determine what comes next.

There are too many businesses on the verge of bankruptcy in the hurricanes' wake. Since the goal shared in a bipartisan way by all of the Senate and the House is to try to get those businesses to be leveraged as best as possible, to be able to return as soon as possible, and each small business that returns helps the other small businesses to be able to return, all of those things will make a difference. Tax breaks will help. But the fact is, tax breaks are not enough because tax breaks do not make an impact until you file your taxes. They have nothing to do with the assistance one needs now to be able to have cash in the pocket, to be able to survive the gap. Small businesses need that additional relief, access to capital, immediate and longer-term.

Our bill also addresses the Administration's failure to contract with small businesses to rebuild the region. The New York Times reported more than 80 percent of FEMA contracts alone were awarded on the no-bid limited competition basis. This bill we have introduced--Senator Snowe, myself, and other members of the committee--encourages greater competition by implementing a 30-percent goal for prime contracts and a 40-percent subcontracting goal. With billions of dollars being allocated to relief and reconstruction, it is important to demand fair competition. We need to ensure that America's small businesses are not left behind.

The citizens of the gulf region are courageously and desperately trying to rebuild their communities. The empty promises of several weeks ago, ``we will do what it takes, we will stay as long as it takes,'' are ringing in their ears. Frankly, they are wondering where the actions are to back that up.

According to Mike Allen of Time magazine, one Presidential adviser is quoted as saying recently:

Katrina has fallen so far off the radar screen you can't even find it.

We need to find it. We need to put small businesses back on the radar screen. We need to follow through on the commitments to the victims of these devastating hurricanes. We need to ensure that we do not leave the citizens of the Gulf States behind.

There is bipartisan support to do this. The Senate passed this legislation previously. My hope is before we decide to go home, we will do what is necessary for the citizens who have been so badly impacted in the Gulf State region get the relief they have told us they need.

I yield back the remainder of my time.

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