FOOD, CONSERVATION, AND ENERGY ACT OF 2008--CONFERENCE REPORT -- (Senate - May 15, 2008)
BREAK IN TRANSCRIPT
Mr. KERRY. Madam President, nearly 3 years after the tragedy of Hurricanes Katrina, Rita and Wilma, we have enacted meaningful reforms in the way the Small Business Administration comes to the aid of disaster victims.
The farm bill conference report includes bipartisan legislation which I have been working on since the fall of 2005 with my ranking member, Senator Snowe, and Senators Landrieu and Vitter. Both Louisiana Senators are members of the Committee on Small Business and Entrepreneurship. We held many hearings in our committee and received testimony regarding the inadequate response of the Small Business Administration to the destructive gulf coast hurricanes of 2005. S. 163, the Small Business Disaster Response and Loan Improvements Act of 2007, the latest version of the Senate's small business disaster legislation, was included as an amendment to the farm bill late last year. During the last several months, we conferenced with our colleagues in the House to reconcile the differences between our legislation and companion legislation adopted by the House. I am pleased that we were able to come to an agreement. I want to acknowledge the hard work of all the staffs, and the support of Senator Harkin and his Agriculture Committee staff as we conferenced on this bill. I also want to thank SBA Administrator Preston for his support of this legislation back in August when it first passed the Senate, and during the conference negotiations. This package of provisions does not include everything I would have wanted but it is a significant response to the gulf coast hurricanes of 2005.
These large-scale disasters taught us lessons and showed us our vulnerabilities in their wake. They also inspired novel ideas as to how to respond which we have incorporated into these reforms.
This bill gives the SBA several tools to better and more quickly assist disaster victims. One of the key issues after Hurricane Katrina was getting money to people quickly so they could keep their businesses afloat and start rebuilding their lives. This bill creates two bridge loan programs for the private sector to administer small-dollar, short-term disaster loans to businesses. It allows the SBA, in a catastrophic disaster, to authorize private lenders to make 180-day loans of up to $150,000 at not more then 1 percent over the prime rate to businesses that are otherwise eligible for a disaster loan. In all disasters, private lenders can make loans of up to $25,000 and receive an SBA guaranty within 36 hours for up to 85 percent of the loan amount. Both loans would be rolled into a standard SBA disaster loan once it has been made. These bridge loans will get financial assistance to businesses while they await processing or disbursement of their conventional SBA loan or insurance payments.
This bill also creates a program to allow private lenders to make disaster loans after a catastrophic disaster. This will leverage the relationships people already have with their local lenders and ease the burden on the SBA to make a huge volume of loans quickly. These loans will carry the same terms and benefits as conventional SBA disaster loans. All lenders would be eligible to make loans to small businesses, but only lenders who are preferred lenders could make loans to individuals. The bill also provides the SBA with authority to pay a fee to private lenders to process loans during times when the SBA's processing capabilities are overwhelmed in order to prevent application backlogs and ensure timely approval and disbursement of loan proceeds. Tools such as these will dramatically cut the time it takes to process and disburse loans in the event of a future disaster.
After a catastrophic disaster, while the disaster area clearly feels the brunt of the damage, businesses throughout the country can be dramatically affected by the incident. This could be because one of their suppliers or buyers is located in the disaster area, because they receive energy from the disaster area, or a myriad of other reasons. This bill authorizes the SBA to make economic injury disaster loans to businesses located outside the geographic area of a catastrophic disaster, if they suffer economic injury as a direct result of the disaster.
This bill also updates and increases the maximum amount of an SBA disaster loan from the current level of $1,500,000 to $2,000,000, and raises the maximum amount of unsecured disaster loans from $10,000 to $14,000. It was well past time to raise these caps given the increasing costs of doing business and these provisions give the SBA the flexibility to get people the help that they need. The bill also gives the SBA Administrator the authority to make new disaster loans and refinance existing loans from Hurricanes Katrina and Rita with a 4-year deferment period giving people time to get back on their feet before their payments come due.
Finally, the bill improves SBA's coordination with other agencies, its communication with the public, and its preparation for a future disaster. The bill adds several requirements to improve the SBA's coordination with FEMA as they are the two main agencies responsible to respond to a major disaster. The agency will also be required to conduct biennial disaster simulation exercises and create a comprehensive disaster response plan for various disaster scenarios. The SBA will be required to improve its communication with the public when disaster assistance is made available. The bill also creates a new position for high-level disaster planning to oversee the disaster planning and readiness of the agency.
I applaud my colleagues for helping pass this important piece of legislation as part of the farm bill. I expect to see immediate dividends as the SBA is better able to assist disaster victims in the short term, and I know that the passage of these provisions will be looked upon as an essential rebuilding tool if we ever have another tragedy on the scale of 9/11 or Hurricanes Katrina and Rita.