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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 3664 Introduced in Senate (IS)]

109th CONGRESS
  2d Session
                                S. 3664

  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.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             July 14, 2006

    Ms. Landrieu (for herself, Mr. Kerry, Mr. Bayh, and Mr. Pryor) 
introduced the following bill; which was read twice and referred to the 
            Committee on Small Business and Entrepreneurship

_______________________________________________________________________

                                 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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Disaster Recovery 
Assistance Improvements Act of 2006''.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) 43 percent of businesses that close following a natural 
        disaster never reopen;
            (2) an additional 29 percent of businesses close down 
        permanently within 2 years of a natural disaster;
            (3) businesses affected by a natural disaster require, 
        within the first 60 days following the disaster, immediate 
        access to capital and technical assistance to fully recover and 
        prosper;
            (4) in the aftermath of Hurricanes Katrina and Rita of 
        2005, due to initial Administration response issues, as well as 
        extensive destruction in the region and wide distribution of 
        affected business owners around the country--
                    (A) Administration loan approvals took longer than 
                3 months, on average, for homeowner disaster loans, and 
                longer than 2 months, on average, for business disaster 
                loans; and
                    (B) closings on disaster loans added an additional 
                month to the process;
            (5) the Administration requires new tools and authority to 
        be more effective in responding to major disasters and to be 
        responsive to the needs of affected small business concerns and 
        homeowners;
            (6) for major disasters, State-administered bridge loan 
        programs can serve as an effective means of providing immediate 
        capital, to allow businesses to make repairs, make payroll, and 
        continue operations, as demonstrated by the fact that--
                    (A) following the 2004 hurricanes in Florida, the 
                Florida State Bridge Loan Program was a successful 
                program in providing immediate capital to struggling 
                businesses, providing 1,679 small business concerns 
                with $35,400,000 in bridge loans;
                    (B) following the 2005 impacts of Hurricanes 
                Katrina and Rita on the Louisiana Gulf Coast, the 
                Louisiana Bridge Loan Program was a successful program 
                in providing immediate capital to struggling 
                businesses, providing 407 small business concerns with 
                $9,750,000 in bridge loans;
                    (C) following the 2005 impact of Hurricane Katrina 
                on the Mississippi Gulf Coast, the Mississippi Bridge 
                Loan Program was a successful program in providing 
                immediate capital to struggling businesses, providing 
                464 small business concerns with $11,233,850 in bridge 
                loans; and
                    (D) following the 2005 impact of Hurricane Wilma on 
                the Florida Gulf Coast, the Florida State Bridge Loan 
                Program was a successful program in providing immediate 
                capital to struggling businesses, providing 593 small 
                business concerns with $12,900,000 in bridge loans;
            (7) in the aftermath of Hurricane Katrina of 2005 and 
        Hurricane Rita of 2005, small business development centers had 
        difficulties entering and utilizing disaster recovery centers 
        of the Administration, resulting in delays of technical 
        assistance service to affected businesses; and
            (8) there is a need for greater cooperation between the 
        Federal Government and State governments on bridge loans 
        programs to respond to major disasters.

SEC. 3. DEFINITIONS.

    In this Act--
            (1) the terms ``Administration'' and ``Administrator'' mean 
        the Small Business Administration and the Administrator 
        thereof, respectively;
            (2) the term ``approved State Bridge Loan Program'' means a 
        State Bridge Loan Program approved under section 5(b);
            (3) the term ``major disaster'' has the meaning given the 
        term in section 102 of the Robert T. Stafford Disaster Relief 
        and Emergency Assistance Act (42 U.S.C. 5122);
            (4) the term ``small business concern'' has the meaning 
        given the term in section 3 of the Small Business Act; and
            (5) the term ``State'' means any State of the United 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the Northern Mariana Islands, the Virgin Islands, Guam, 
        American Samoa, and any territory or possession of the United 
        States.

SEC. 4. EMERGENCY BRIDGE LOANS AND GRANTS AFTER MAJOR DISASTERS.

    Section 7(b) of the Small Business Act (15 U.S.C. 636(b)) is 
amended by inserting immediately after paragraph (3) the following:
            ``(4) Emergency bridge loans and business recovery grants 
        after major disasters.--
                    ``(A) Definitions.--In this paragraph--
                            ``(i) the term `disaster area' means an 
                        area for which a major disaster was declared, 
                        during the period of such declaration; and
                            ``(ii) the term `major disaster' has the 
                        meaning given the term in section 102 of the 
                        Robert T. Stafford Disaster Relief and 
                        Emergency Assistance Act (42 U.S.C. 5122).
                    ``(B) Bridge loans.--
                            ``(i) Definition.--In this subparagraph, 
                        the term `qualified small business concern' 
                        means a small business concern--
                                    ``(I) located in a disaster area; 
                                and
                                    ``(II) that is directly adversely 
                                affected by the major disaster for 
                                which such disaster area was declared.
                            ``(ii) Loan authority.--The Administrator 
                        shall make such loans under this subparagraph 
                        (either directly (including through a district 
                        office of the Administration located in a 
                        disaster area) or in cooperation with banks or 
                        other lending institutions through agreements 
                        to participate on an immediate or deferred 
                        basis) as the Administrator determines 
                        appropriate to a qualified small business 
                        concern, to provide assistance until such small 
                        business concern is able to obtain funding 
                        through insurance claims, other Federal 
                        assistance programs, or other sources, based on 
                        such criteria as the Administrator may set by 
                        rule, regulation, or order.
                            ``(iii) Loan terms.--
                                    ``(I) Prepayment.--A loan under 
                                this subparagraph may have no 
                                prepayment penalty.
                                    ``(II) Interest.--For not more than 
                                6 months after the date on which a loan 
                                is made under this subparagraph, the 
                                interest rate on such a loan may be the 
                                same as for a loan under paragraph (2).
                                    ``(III) Transfer.--A loan under 
                                this subparagraph may include as a term 
                                that such loan may be transferred to a 
                                local bank or other financial 
                                institution in a disaster area.
                                    ``(IV) Technical assistance.--The 
                                borrower for a loan under this 
                                subparagraph shall certify the intent 
                                of such borrower to participate in 
                                technical assistance consultation 
                                (either with a local small business 
                                development center or other technical 
                                assistance group approved by the 
                                Administrator) before the borrower may 
                                utilize funds received under the loan.
                            ``(iv) Use of funds.--A loan under this 
                        subparagraph may be used for--
                                    ``(I) paying salaries, bills, and 
                                other existing financial obligations;
                                    ``(II) making minor repairs;
                                    ``(III) purchasing inventory; or
                                    ``(IV) paying other costs.
                            ``(v) Maximum amount.--Notwithstanding any 
                        other provision of law, the Administrator may 
                        make a loan under this subparagraph of not more 
                        than $150,000 to a qualified small business 
                        concern.
                            ``(vi) Deferred payment.--
                                    ``(I) In general.--The 
                                Administrator, or a bank or other 
                                lending institution, may defer payments 
                                of principal and interest on a loan 
                                under this subparagraph for not more 
                                than 180 days after the date on which 
                                the loan is made.
                                    ``(II) Capitalization of 
                                interest.--If payments are deferred 
                                under subclause (I), any interest 
                                accrued during the period for which 
                                such payments are deferred shall be 
                                capitalized.
                            ``(vii) Notice to borrowers.--In making any 
                        loan under this subparagraph--
                                    ``(I) the borrower shall be made 
                                aware that such loans are for those 
                                directly adversely affected by the 
                                major disaster; and
                                    ``(II) if such loans are made in 
                                cooperation with a bank or other 
                                lending institution, the lender shall 
                                document for the Administrator how the 
                                borrower was directly adversely 
                                affected by the major disaster.
                            ``(viii) Reports.--
                                    ``(I) Inspector general.--For any 
                                major disaster, not later than 6 months 
                                after the date on which such disaster 
                                is declared, and every 6 months 
                                thereafter until the date that is 18 
                                months after the date on which such 
                                disaster is declared, the Inspector 
                                General of the Administration shall 
                                submit a report to the Committee on 
                                Small Business and Entrepreneurship of 
                                the Senate and the Committee on Small 
                                Business of the House of 
                                Representatives regarding loans 
                                described in clause (vii)(II), 
                                including verification that the program 
                                is being administered appropriately and 
                                that such loans are being used for 
                                purposes authorized by this 
                                subparagraph.
                                    ``(II) GAO.--Not later than 12 
                                months after the date on which a final 
                                report for a major disaster is 
                                submitted by the Inspector General 
                                under subclause (I), the Comptroller 
                                General of the United States shall 
                                conduct a review of the loan program 
                                authorized under this subparagraph and 
                                submit a report to the Committee on 
                                Small Business and Entrepreneurship of 
                                the Senate and the Committee on Small 
                                Business of the House of 
                                Representatives containing the findings 
                                of the review and any recommendations.
                    ``(C) Business recovery grants.--
                            ``(i) Definition.--In this subparagraph, 
                        the term `eligible small business concern' 
                        means a small business concern--
                                    ``(I) directly adversely affected 
                                by a major disaster;
                                    ``(II) that has been declined for 
                                other assistance under this subsection 
                                and from private lending institutions 
                                and State-provided bridge loans;
                                    ``(III) that certifies that it 
                                intends--
                                            ``(aa) to reopen in the 
                                        disaster area for which the 
                                        major disaster described in 
                                        subclause (I) was declared; and
                                            ``(bb) to participate in 
                                        technical assistance 
                                        consultation (either with a 
                                        local small business 
                                        development center or other 
                                        technical assistance group 
                                        approved by the Administrator).
                            ``(ii) Authorization.--The Administrator 
                        shall make such grants under this subparagraph 
                        as the Administrator determines appropriate to 
                        an eligible small business concern, to assist 
                        such small business concern in recovery from a 
                        major disaster.
                            ``(iii) Maximum amount.--The Administrator 
                        may make a grant in an amount not more than 
                        $25,000 under this subparagraph.
                            ``(iv) Documentation of technical 
                        assistance.--An eligible small business concern 
                        receiving a grant under this subparagraph shall 
                        submit to the Administrator documentation 
                        indicating that such small business concern 
                        received technical assistance support through a 
                        small business development center or other 
                        technical assistance provider determined 
                        appropriate by the Administrator.
                    ``(D) Authorization of appropriations.--There are 
                authorized to be appropriated to the Administration 
                such sums as are necessary to carry out this 
                paragraph.''.

SEC. 5. STATE BRIDGE LOAN GUARANTEE.

    (a) Authorization.--After issuing guidelines under subsection (c), 
the Administrator may guarantee loans made under an approved State 
Bridge Loan Program.
    (b) Approval.--
            (1) Application.--A State desiring approval of a State 
        Bridge Loan Program shall submit an application to the 
        Administrator at such time, in such manner, and accompanied by 
        such information as the Administrator may require.
            (2) Criteria.--The Administrator may approve an application 
        submitted under paragraph (1) based on such criteria as the 
        Administrator may establish under this section.
    (c) Guidelines.--
            (1) In general.--Not later than 90 days after the date of 
        enactment of this Act, the Administrator shall issue to the 
        appropriate economic development officials in each State, the 
        Committee on Small Business and Entrepreneurship of the Senate, 
        and the Committee on Small Business of the House of 
        Representatives, guidelines regarding approved State Bridge 
        Loan Programs.
            (2) Contents.--The guidelines issued under paragraph (1) 
        shall--
                    (A) identify appropriate uses of funds under an 
                approved State Bridge loan Program;
                    (B) set terms and conditions for loans under an 
                approved State Bridge loan Program;
                    (C) address whether--
                            (i) an approved State Bridge Loan Program 
                        may charge administrative fees; and
                            (ii) loans under an approved State Bridge 
                        Loan Program shall be disbursed through local 
                        banks and other financial institutions; and
                    (D) establish the percentage of a loan the 
                Administrator will guarantee under an approved State 
                Bridge Loan Program.

SEC. 6. AUTHORITY TO MAKE EXPEDITED 7(A) DISASTER LOANS TO SMALL 
              BUSINESS CONCERNS.

    Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is 
amended by adding at the end the following:
            ``(32) Expedited loans.--
                    ``(A) Definitions.--In this paragraph--
                            ``(i) the term `disaster area' means an 
                        area for which a major disaster was declared, 
                        during the period of such declaration;
                            ``(ii) the term `major disaster' has the 
                        meaning given the term in section 102 of the 
                        Robert T. Stafford Disaster Relief and 
                        Emergency Assistance Act (42 U.S.C. 5122); and
                            ``(iii) the term `essential small business 
                        concern in good standing' means a small 
                        business concern that the Administrator, in 
                        consultation with appropriate officials in 
                        district offices of the Administration 
                        determines has the ability to repay the subject 
                        loan, and--
                                    ``(I) is in good standing and has a 
                                history of compliance with the terms of 
                                a program of the Administration 
                                (including having repaid, or being in 
                                the process of repaying, a loan under a 
                                program of the Administration, as 
                                required under the terms of such loan); 
                                or
                                    ``(II) has a bona fide reason for 
                                receiving an expedited loan under this 
                                paragraph (including being a major 
                                source of employment in a disaster area 
                                or essential to economic recovery of 
                                the area, such as by supplying building 
                                materials, housing, or debris removal 
                                services).
                    ``(B) Loan authorization.--Notwithstanding any 
                other provision of law, the Administrator may make a 
                loan under this subsection to an essential small 
                business concern in good standing under expedited 
                procedures, including expedited loss verification, loan 
                processing, and approval.
                    ``(C) Authorization of appropriations.--There are 
                authorized to be appropriated to the Administrator, 
                such sums as are necessary to carry out this 
                paragraph.''.

SEC. 7. MAXIMUM LOAN AMOUNTS.

    (a) In General.--Section 7(a)(3)(A) of the Small Business Act is 
amended by striking ``$1,500,000 (or if the gross loan amount would 
exceed $2,000,000'' and inserting ``$2,250,000 (or if the gross loan 
amount would exceed $3,000,000''.
    (b) Disaster Loans.--Section 7(c)(6) of the Small Business Act (15 
U.S.C. 636(c)(6)) is amended--
            (1) by striking ``$500,000'' each place such term appears 
        and inserting ``$2,250,000'';
            (2) by striking ``$100,000'' and inserting ``$250,000''; 
        and
            (3) by striking ``$20,000'' and inserting ``$50,000''.
    (c) Conforming Amendment.--Chapter I of the Emergency Supplemental 
Appropriations for Relief From the Major, Widespread Flooding in the 
Midwest Act of 1993 (Public Law 103-75; 107 Stat. 740) is amended by 
striking ``: Provided further, That notwithstanding any other provision 
of law, the $500,000 limitation on the amounts outstanding and 
committed to a borrower provided in paragraph 7(c)(6) of the Small 
Business Act shall be increased to $1,500,000 for disasters commencing 
on or after April 1, 1993''.

SEC. 8. INCREASING COLLATERAL REQUIREMENTS.

    Section 7(c)(6) of the Small Business Act (15 U.S.C. 636(c)(6)) is 
amended by striking ``$10,000'' and inserting ``$20,000''.

SEC. 9. CATASTROPHIC REGIONAL OR NATIONAL DISASTERS.

    Section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)) is 
amended--
            (1) by redesignating subparagraphs (A), (B), (C), and (D) 
        as clauses (i), (ii), (iii), and (v), respectively;
            (2) by striking ``(2) to make such loans'' and inserting 
        ``(2)(A) to make such loans'';
            (3) in subparagraph (A), as so designated by this section--
                    (A) by striking ``or'' at the end of each of 
                clauses (i), (ii), and (iii), as so redesignated by 
                paragraph (1) of this section;
                    (B) by inserting after clause (iii), as so 
                redesignated by paragraph (1) of this section, the 
                following:
                    ``(iv) a catastrophic regional or national 
                disaster, as declared by the Secretary of Homeland 
                Security, that is an actual or potential high-impact 
                event that requires a coordinated and effective 
                response by an appropriate combination of Federal, 
                State, local, tribal, nongovernmental, or private-
                sector entities in order to save lives and minimize 
                damage and provide the basis for long-term community 
                recovery and mitigation activities; or''; and
                    (C) in clause (v), as so redesignated by paragraph 
                (1) of this section, by striking ``subparagraph (A), 
                (B), or (C)'' and inserting ``clause (i), (ii), (iii), 
                or (iv)''; and
            (4) by adding at the end the following:
            ``(B) Notwithstanding subsection (c)(6), in the case of a 
        catastrophic regional or national disaster declared under 
        subparagraph (A)(iv) of this paragraph, the Administrator may 
        increase the maximum amount that may be outstanding and 
        committed to borrower under this paragraph to $10,000,000.''.

SEC. 10. FULL-TIME DISASTER PLANNING STAFF.

    (a) Increase in Small Business Administration Full-Time Disaster 
Planning Staff.--The Administrator shall hire a full-time disaster 
planning specialist in the Office of Disaster Assistance of the 
Administration.
    (b) Responsibilities.--The disaster planning specialist hired under 
subsection (a) shall be responsible for--
            (1) creating and maintaining the comprehensive disaster 
        response plan of the Administration;
            (2) ensuring in-service and pre-service training procedures 
        for the disaster response staff of the Administration;
            (3) coordinating Administration training exercises, 
        including mock disaster responses, with other Federal agencies; 
        and
            (4) other responsibilities, as determined by the 
        Administrator.
    (c) Authorization of Appropriations.--
            (1) In general.--There are authorized to be appropriated to 
        the Administration such sums as are necessary to carry out this 
        section.
            (2) Availability of funds.--Amounts made available under 
        this section shall remain available until expended.

SEC. 11. ADDITIONAL AUTHORITY FOR DISTRICT OFFICES OF THE 
              ADMINISTRATION.

    Section 7(b) of the Small Business Act (15 U.S.C. 636(b)) is 
amended by inserting immediately after paragraph (4), as added by this 
Act, the following:
            ``(5) Use of district offices.--In the event of a major 
        disaster (as that term is defined in section 102 of the Robert 
        T. Stafford Disaster Relief and Emergency Assistance Act (42 
        U.S.C. 5122)), the Administrator may authorize a district 
        office of the Administration to process loans under paragraph 
        (1) or (2).''.

SEC. 12. ECONOMIC INJURY DISASTER LOANS TO NONPROFITS.

    (a) In General.--Section 7(b)(2)(A) of the Small Business Act, as 
redesignated by this Act, is amended--
            (1) in the matter preceding clause (i)--
                    (A) by inserting after ``small business concern'' 
                the following: ``, private nonprofit organization,''; 
                and
                    (B) by inserting after ``the concern'' the 
                following: ``, organization,''; and
            (2) in clause (v), by inserting after ``small business 
        concerns'' the following: ``, private nonprofit 
        organizations,''.
    (b) Conforming Amendment.--Section 7(c) of the Small Business Act 
(15 U.S.C. 636(c)) is amended in paragraph (5)(C), by inserting ``, 
organization,'' after ``business''.

SEC. 13. SMALL BUSINESS DEVELOPMENT CENTER PORTABILITY GRANTS.

    Section 21(a)(4) of the Small Business Act (15 U.S.C. 648(a)(4), as 
amended by this Act, is amended by adding at the end the following:
            ``(E) Waiver of maximum amount.--In the event of a major 
        disaster (as that term is defined in section 102 of the Robert 
        T. Stafford Disaster Relief and Emergency Assistance Act (42 
        U.S.C. 5122)), the Administrator may waive the maximum amount 
        of $100,000 for grants under subparagraph (C)(viii), and such 
        grants shall be made available for small business development 
        centers assisting small business concerns adversely affected by 
        such major disaster.''.

SEC. 14. DISASTER LOAN PROGRAM MONTHLY ACCOUNTING REPORT.

    (a) Definition.--In this section, the term ``applicable period'' 
means the period beginning on the date on which the President declares 
a major disaster and ending on the date that is 30 days after the later 
of the closing date for applications for physical disaster loans for 
such disaster and the closing date for applications for economic injury 
disaster loans for such disaster.
    (b) Report to Congress.--Not later than the 5th business day of 
each month during the applicable period for a major disaster, the 
Administrator shall provide to the Committee on Small Business and 
Entrepreneurship and the Committee on Appropriations of the Senate and 
to the Committee on Small Business and the Committee on Appropriations 
of the House of Representatives a report on the operation of the 
disaster loan program authorized under section 7 of the Small Business 
Act (15 U.S.C. 636) for such disaster during the preceding month.
    (c) Content of Reports.--Each report under subsection (b) shall 
include--
            (1) the daily average lending volume, in number of loans 
        and dollars, and the percent by which each category has 
        increased or decreased since the previous report under 
        subsection (b);
            (2) the weekly average lending volume, in number of loans 
        and dollars, and the percent by which each category has 
        increased or decreased since the previous report under 
        subsection (b);
            (3) the amount of funding spent over the month for loans, 
        both in appropriations and program level, and the percent by 
        which each category has increased or decreased since the 
        previous report under subsection (b);
            (4) the amount of funding available for loans, both in 
        appropriations and program level, and the percent by which each 
        category has increased or decreased, noting the source of any 
        additional funding;
            (5) an estimate of how long the available funding for such 
        loans will last, based on the spending rate;
            (6) the amount of funding spent over the month for staff, 
        along with the number of staff, and the percent by which each 
        category has increased or decreased since the previous report 
        under subsection (b);
            (7) the amount of funding spent over the month for 
        administrative costs, and the percent by which such spending 
        has increased or decreased since the previous report under 
        subsection (b);
            (8) the amount of funding available for salaries and 
        expenses combined, and the percent by which such funding has 
        increased or decreased, noting the source of any additional 
        funding; and
            (9) an estimate of how long the available funding for 
        salaries and expenses will last, based on the spending rate.

SEC. 15. DISASTER LOANS AFTER MAJOR DISASTERS.

    Section 7(b) of the Small Business Act (15 U.S.C. 636(b)) is 
amended by inserting immediately after paragraph (5), as added by this 
Act, the following:
            ``(6) Authority for lenders to process disaster loans.--The 
        Administrator may enter into an agreement with a qualified 
        lender, as determined by the Administrator, to process loans 
        under this section, under which the Administrator shall pay the 
        lender a fee for each loan processed.
            ``(7) Authority for the administrator to contract with 
        lenders for loan loss verification services.--The Administrator 
        may enter into an agreement with a qualified lender or loss 
        verification professional, as determined by the Administrator, 
        to verify losses for loans under this section, under which the 
        Administrator shall pay the lender or verification professional 
        a fee for each loan for which such lender or verification 
        professional verifies losses.''.

SEC. 16. WAIVER OF GEOGRAPHIC RESTRICTIONS ON SBDC COUNSELORS.

    Section 21(b) of the Small Business Act (15 U.S.C. 648(b)) is 
amended by adding at the end the following:
    ``(4) Waiver of Geographic Restrictions on SBDC Counselors.--
            ``(A) In general.--The Administrator shall authorize any 
        small business development center, regardless of location, to 
        provide advice, information, and assistance, as described in 
        subsection (c), to a small business concern located in an area 
        in which the President declared a major disaster (as defined in 
        section 102 of the Robert T. Stafford Disaster Relief and 
        Emergency Assistance Act (42 U.S.C. 5122)), during the period 
        of such declaration.
            ``(B) Continuity of services.--A small business development 
        center that provides counselors to an area described in 
        subparagraph (A) shall, to the maximum extent practicable, 
        ensure continuity of services in the State it currently serves.
            ``(C) Access to disaster recovery facilities.--For purposes 
        of providing recovery assistance under this paragraph, the 
        Administrator shall permit small business development center 
        personnel to use any site or facility designated by the 
        Administration for use for such purpose.''.
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