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[Senate Report 115-448]
[From the U.S. Government Publishing Office]

115th Congress       }                         {              Report
                                 SENATE
 2d Session          }                         {              115-448

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    NATIONAL GUARD AND RESERVE ENTREPRENEURSHIP SUPPORT ACT OF 2018

                                _______
                                

               December 20, 2018.--Ordered to be printed

                                _______
                                

 Mr. Risch, from the Committee on Small Business and Entrepreneurship, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 3561]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Small Business and Entrepreneurship, to 
which was referred the bill (S. 3561) to support entrepreneurs 
serving in the National Guard and Reserve, and for other 
purposes, having considered the same, reports favorably thereon 
with amendments and recommends that the bill, as amended, do 
pass.

                            I. INTRODUCTION

    The National Guard and Reserve Entrepreneurship Support Act 
of 2018 (S. 3561) was introduced by Senator Jeanne Shaheen, for 
herself, and Senator Patrick J. Leahy on October 15, 2018. 
Senator Christopher A. Coons and Senator Maria Cantwell were 
also included as co-sponsors of the legislation.
    This bill modifies the eligibility requirements for the 
Military Reservist Economic Injury Disaster Loan and Repayment 
for Deferral for Active Daily Reservists, directs the SBA to 
increase its outreach in order to provide counseling and 
training programs for spouses of veteran and members of the 
reserve forces, including by working with the National Guard 
and State Adjutant Generals, and requires the President to 
report semiannually to Congress on loans made through this 
program.
    During the markup, the bill was approved unanimously by a 
roll call vote as part of a manager's package.

              II. HISTORY (PURPOSE & NEED FOR LEGISLATION)

    According to the Department of Defense (DOD), there are 
over one million reservists, readily available to support our 
military operations or assist with a national emergency. Since 
2001, the United States has conducted major military operations 
that have dramatically increased the operations tempo of the 
military services and required the large-scale mobilization of 
reservists. The military continues to rely heavily on its 
reserve components, and as of October 23, 2018, there were 
37,036 National Guard and Reserve personnel activated for 
overseas contingency operations and approximately 2,000 
National Guard personnel serving on the southwest border.
    Starting, growing, or maintaining a small business is a 
challenging endeavor, and veterans and active duty service 
members often face unique challenges and barriers due to their 
service to our country. According to a 2005 report and 
subsequent testimony provided by the Congressional Budget 
Office (CBO), many reservists lost income or experienced 
economic harm to their business as a result of deployments. 
Financial assistance through loans or grants and access to 
entrepreneurial development programs are key solutions to 
addressing these challenges and leveling the playing field for 
veterans, reservists, and National Guard members. In addition, 
small businesses that employ reservists or National Guard 
members can see their operations interrupted as a result of a 
deployment.
    The Committee first addressed this issue in the 106th 
Congress, when it established the Military Reservist Economic 
Injury Disaster Loan program. In the 110th Congress, the 
Committee made it a priority to once again address the 
challenges facing veterans and reservist entrepreneurs, and to 
ensure that federal agencies were committed to helping 
America's veterans and reservists succeed in business and the 
private sector during and after their service to our country.
    In the 106th Congress, on April 29, 1999, Senator Kerry 
introduced the Military Reservists Small Business Relief Act of 
1999 (S. 918). The Military Reservist Economic Injury Disaster 
Loan program, which was in Senator Kerry's bill, became law as 
part of the Veterans Entrepreneurship and Small Business 
Development Act of 1999 (P.L. 106-50). The program was intended 
to aid small businesses when an essential employee who was a 
reservist or National Guard member was called to active duty. 
The program was intended to protect service members, and those 
who employed them, from suffering the same financial hardships 
that disrupted the lives of men and women who served in Desert 
Storm. To accomplish this goal, the program authorized the 
Small Business Administration (SBA) to provide low-interest 
economic injury loans to small businesses that were adversely 
affected when essential employees were called to active duty 
during a time of military conflict.
    In the 107th Congress, on October 30, 2003, Chair Olympia 
Snowe formally requested that the CBO analyze the impact of 
reserve component call-ups on small businesses and examine the 
potential costs and effectiveness of options to alleviate 
hardships without weakening our national defense. In response 
to her letter, in May 2005, the CBO issued a report entitled, 
`The Effects of Reserve Call-Ups on Civilian Employers.' The 
report found that the Department of Defense had dramatically 
increased its reliance on the reserve forces, and that 
activations can create vacancies that firms would not otherwise 
have had, and that uncertainty about the timing and duration of 
call-ups may also have an effect. The report concluded the 
impact of call-ups was found to be greatest when the reservist 
is an essential employee, the business relies on employees with 
highly specialized skills, and the reservist is self-employed. 
On May 17, 2007, the CBO testified before the Commission on the 
National Guard and Reserves on the findings of the report.
    In the 110th Congress, on March 28, 2007, Chairman John 
Kerry issued a report, entitled ``The State of Veteran and 
Reservist Entrepreneurship,'' which outlined the obstacles 
facing veteran and reservist entrepreneurs and included 
specific recommendations for supporting veterans and reservists 
in small business. The report found that many recently 
discharged veterans were experiencing higher rates of 
unemployment and that a smaller percentage of small business 
loans were going to veterans. The report also found that many 
reservists were experiencing high rates of income loss during 
deployment, and included recommendations for increased 
oversight of federal contracting and new steps to increase 
contracting opportunities for service-disabled veterans.
    On March 28, 2007, in conjunction with the release of the 
aforementioned report, Senator Kerry introduced the Military 
Reservist and Veteran Small Business Reauthorization Act of 
2007 (S. 1005). The bill would have created a new, non-
collateralized loan of up to $100,000 for businesses affected 
by the deployment of a key employee. S. 1005 would have also 
changed the design of a program that provided reservist-
dependent businesses access to low-interest loans through the 
SBA's disaster loan program by expanding the application period 
for these loans and creating a method of pre-consideration so 
that businesses could apply for and access the capital they 
needed prior to incurring financial hardship. For small 
reservist-dependent firms that were unable to take on 
additional debt, the bill would have provided grants of up to 
$25,000, contingent upon the business providing a viable 
business plan. Finally, the bill would have authorized 
increased resources for the SBA's Office of Veterans Business 
Development. Senator Chuck Hagel was the lead cosponsor on the 
bill, and Senators Cardin, Tester, and Mark Pryor also 
cosponsored.
    On July 12, 2007, Chairman Kerry and Ranking Member Snowe 
introduced the Military Reservist and Veteran Small Business 
Reauthorization and Opportunity Act of 2007 (S. 1784). The bill 
would have improved the Military Reservist Economic Injury 
Disaster Loan program by providing a longer application 
deadline, creating a pre-application loan approval process, 
expanding outreach and technical assistance, and raising the 
maximum loan amount. It also would have created a loan 
participation program in which veterans can receive 7(a) loans 
while paying just 50 percent of the fees and a grant program to 
improve Small Business Development Centers' outreach to the 
veteran community. Additionally, it would have required Veteran 
Business Outreach Centers to increase their participation in 
the Transition Assistance Program and the Office of Veterans 
Business Development to create and disseminate information 
aimed at informing women veterans about the resources available 
to them. Finally, the bill would have required a GAO report on 
the needs of service-disabled veterans and how to improve 
relations between employers and reservist employees. The bill 
was based on the provisions of S. 1005 and the Veterans Small 
Business Opportunity Act of 2007 (S. 904), which Senator Snowe 
introduced on March 15, 2007. S. 1784 was cosponsored by 
Senators Hagel, Landrieu, Lieberman, Cantwell, and Tester. On 
October 1, 2007, an amendment modeled on S. 1784 passed the 
Senate as part of the 2008 Defense Authorization Act, but it 
was not included in the final version of the bill. The text of 
S. 1784 passed the Senate on December 19, 2007, as a substitute 
amendment to the Military Reservist and Veteran Small Business 
Reauthorization and Opportunity Act of 2008 (H.R. 4253). The 
House amended the bill with Senate-House compromise language, 
and this version passed the House on January 16, 2008. On 
January 31, 2008, the bill passed in the Senate by unanimous 
consent. On February 14, 2008, the bill was signed into law 
(P.L. 110-186). On August 15, 2008, as required by the Military 
Reservist and Veteran Small Business Reauthorization and 
Opportunity Act of 2008 (P.L. 110-186), the Government 
Accountability Office (GAO) issued a report entitled, 
``Military Personnel: Improvements Needed to Increase 
Effectiveness of DOD's Programs to Promote Positive Working 
Relationships between Reservists and Their Employers.'' The GAO 
was unable to determine the impact of increased call-ups 
following September 11, 2001, due to the absence of data. The 
report recommended that the DOD establish an annual performance 
plan that develops and facilitates the implementation of 
performance measures, conduct regular and recurring follow-up 
activities on efforts to maintain positive working 
relationships with employers, and develop initiatives to 
perform outreach to small businesses that employ reservists.

                      III. HEARINGS & ROUNDTABLES

    In the 114th Congress:
    On June 25, 2015, the Committee held a hearing entitled 
``Opening Doors to Economic Opportunity for Our Veterans and 
their Families.'' This hearing focused on SBA sponsored 
programs such as SCORE, SBDCs, and VBOCs and the resources they 
can provide to veterans seeking entrepreneurial ventures.
    In the 113th Congress:
    On June 4, 2014, the Senate Committee on Small Business and 
Entrepreneurship held a hearing entitled ``From Military 
Service to Small Business Owner: Supporting America's Veteran 
Entrepreneurs.'' This hearing discussed legislative proposals 
the Committee was considering relating to veterans' 
entrepreneurship and small business ownership. One of the main 
topics discussed was access to capital and the challenges 
veteran entrepreneurs face in obtaining funding.

                        IV. DESCRIPTION OF BILL

    The National Guard and Reserve Entrepreneurship Support Act 
of 2018 (S. 3561) amends the Small Business Act and The 
Veterans and Small Business Development Act of 1999. In 
particular, the bill updates existing statutory eligibility 
requirements for the Military Reservist Economic Injury 
Disaster Loan (MREIDL) and Repayment Deferral for Active Duty 
Reservists, which currently limit their use to Guard members or 
Reservists called up during ``periods of conflict.'' The bill 
changes this outdated eligibility to ``being ordered to perform 
active service for a period of more than 30 consecutive days,'' 
which reflects the shift reserve forces have experienced from a 
strategic reserve to an operational reserve.
    This bill also directs the SBA to grow relationships with 
private and public sector entities to provide counseling and 
training programs for spouses of veterans and members of the 
reserve forces. More specifically, it would require the SBA to 
develop a National Guard and Reserve Deployment Support and 
Business Training Program that will provide counseling and 
assistance to support members of the reserves of the armed 
forces and their spouses. The bill directs the SBA to 
collaborate with the National Guard Bureau and State Adjutant 
Generals to identify existing SBA programs relevant to members 
of the Guard and Reserves, and develop more targeted and 
effective outreach, particularly prior to deployment. The bill 
would also require the President to report semiannually to 
Congress on the number of loans made through the MREIDL.

                           V. COMMITTEE VOTE

    In compliance with rule XXVI(7)(b) of the Standing Rules of 
the Senate, the following vote was recorded on October 11, 
2018.
    A motion to adopt the National Guard and Reserve 
Entrepreneurship Act, a bill to support entrepreneurs serving 
in the National Guard and Reserve, and for other purposes, was 
approved unanimously by roll call vote as part of a manager's 
package. Senators Risch, Rubio, Paul, Scott, Ernst, Inhofe, 
Young, Enzi, Rounds, Kennedy, Cardin, Cantwell, Shaheen, 
Heitkamp, Markey, Booker, Coons, Hirono, and Duckworth voted 
for the bill.

                           VI. COST ESTIMATE

    In compliance with rule XXVI(11)(a)(1) of the Standing 
Rules of the Senate, the Committee estimates the cost of the 
legislation will be equal to the amounts discussed in the 
following letter from the Congressional Budget Office:
                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, November 14, 2018.
Hon. James E. Risch,
Chairman, Committee on Small Business and Entrepreneurship,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 3561, the National 
Guard and Reserve Entrepreneurship Support Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Stephen 
Rabent.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

S. 3561. The National Guard and Reserve Entrepreneurship Support Act

    Under its disaster loan program, the Small Business 
Administration (SBA) provides direct loans to people and small 
businesses; including those that suffered substantial economic 
injury because essential employees were ordered to active duty 
during a military conflict. S. 3561 would permit loan 
assistance when such a deployment is not part of a military 
conflict. The bill also would expand eligibility for a program 
that allows loan recipients to defer the repayment of principal 
and interest on disaster loans to include certain small 
businesses and borrowers who are ordered to active service for 
more than 30 consecutive days.
    Using information from the SBA about the disaster loan 
program, CBO estimates that the total amount of loans 
administered by the SBA would increase slightly under the bill. 
CBO estimates that increase would have an insignificant effect 
on the estimated subsidy cost of disaster loans; such spending 
would be subject to the availability of appropriated funds.\1\ 
(The subsidy cost of the program was $187 million in 2017.)
---------------------------------------------------------------------------
    \1\The subsidy cost is the estimated long-term cost to the 
government, calculated on a net-present-value basis. Present value is a 
single number that expresses a flow of current and future income (or 
payments) in terms of an equivalent lump sum received (or paid) at a 
specific time. That value depends on the rate of interest (called the 
discount rate) used to translate future cash flows into current 
dollars.
---------------------------------------------------------------------------
    S. 3561 also would expand the target of certain SBA 
outreach programs that provide training and assistance to 
include the spouses of veterans and members of the reserve 
component of the armed forces. Using information from the SBA 
about the administrative costs of those programs, CBO estimates 
that implementing those provisions would increase the agency's 
costs by an insignificant amount because the SBA is already 
expanding its outreach efforts toward those groups.
    S. 3561 would expand the pool of people who are eligible to 
defer the payment of principal and interest for disaster loans 
in certain circumstances. Because that provision could affect 
the timing of expected payments of loans currently outstanding, 
those changes would be treated as direct spending; therefore, 
pay-as-you-go procedures apply. Using information from the SBA, 
CBO estimates that the net effect on those expected payments 
would be insignificant over the 2019-2028 period. Implementing 
S. 3561 would not affect revenues.
    CBO estimates that enacting S. 3561 would not increase net 
direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2029.
    S. 3561 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Stephen Rabent. 
The estimate was reviewed by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

                  VII. EVALUATION 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

    This section provides for the title, ``National Guard and 
Reserve Entrepreneurship Support Act of 2018.''

Sec. 2. Extension of loan assistance and deferral eligibility to 
        reservists beyond periods of military conflict

    This section replaces the existing language of the current 
Small Business Act to allow the Military Reservists Economic 
Injury Disaster Loan (MREIDL) and Repayment Deferral for 
Activity Duty Reservists program to be used for those soldiers 
who are ``being ordered to perform active service for a period 
of more than 30 consecutive days.'' This change of wording from 
``periods of conflict'' would remove an obstacle preventing the 
SBA and the National Guard from providing services and training 
to those National Guard and Reserve personnel. This section 
also directs the President to submit a semiannual report to the 
Senate Committee on Small Business and Entrepreneurship and the 
Senate Committee on Appropriations and the House Committee on 
Small Business and the House Committee on Appropriations. This 
report will include the number of loans given out under the 
Military Reservist Economic Injury Disaster Loan program and 
the dollar volume. The report shall also contain the subsidy 
rate of the disaster loan program as authorized under section 
7(b) of the Small Business Act with the loans made under the 
Military Reservist Economic Injury Disaster Loan program and 
without those loans included.

Sec. 3. National Guard and Reserve Deployment and Business Training 
        Program

    This section directs the SBA, in carrying out its 
authorities to make grants and enter into cooperative 
agreements for veterans, to establish a National Guard and 
Reserve Deployment Support and Business Training Program to 
provide training and other assistance for reserve forces and 
their spouses. In carrying out these duties, the Administrator 
may modify programs and resources to provide pre-deployment 
information to Guard members and reservists, as well as 
collaborate with the Chief of the National Guard Bureau and 
State Adjutants General.

                                  [all]
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