II 
Calendar No. 334 
110TH CONGRESS 
1ST SESSION H. R. 1361 
IN THE SENATE OF THE UNITED STATES 
APRIL 19, 2007 
Received 
AUGUST 3, 2007 
Read twice and placed on the calendar 
AN ACT 
To improve the disaster relief programs of the Small 
Business Administration, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Relief for Entrepreneurs: Coordination of Objectives and 
Values for Effective Recovery Act of 2007’’ or the ‘‘RE-
COVER Act’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
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TITLE I—PLANNING 
Sec. 101. Comprehensive disaster response plan. 
Sec. 102. Annual disaster simulation exercise. 
Sec. 103. Disaster reserve corps. 
Sec. 104. Plans to secure additional office space. 
Sec. 105. Coordination of disaster assistance programs with FEMA. 
Sec. 106. Associate Administrator for Disaster Assistance. 
TITLE II—LENDING 
Sec. 201. Incidents of National Significance. 
Sec. 202. Information tracking and follow-up system. 
Sec. 203. Immediate Disaster Assistance program. 
Sec. 204. Increased deferment period. 
Sec. 205. Revised repayment terms. 
Sec. 206. Revised disbursement process. 
Sec. 207. Revised collateral requirements. 
Sec. 208. Enhanced lending authority for private lenders. 
Sec. 209. Disaster processing redundancy. 
Sec. 210. Grant program. 
Sec. 211. Hurricane Assistance Replacement Grant program. 
Sec. 212. Increase legislative limit. 
Sec. 213. Net earnings clauses prohibited. 
Sec. 214. Economic injury disaster loans to nonprofits. 
Sec. 215. Applicants that will constitute a major source of employment due to 
changed economic circumstances. 
Sec. 216. Preliminary application process for assistance for small business con-
cerns with essential employees ordered to serve on active duty 
in the Armed Forces. 
Sec. 217. Economic injury disaster loans in cases of ice storms and blizzards. 
Sec. 218. Report regarding lack of snow fall. 
Sec. 219. Gulf Coast Disaster Loan Refinancing program. 
TITLE III—OVERSIGHT 
Sec. 301. Reports on disaster assistance. 
TITLE I—PLANNING 
SEC. 101. COMPREHENSIVE DISASTER RESPONSE PLAN. 
The Small Business Act is amended by redesignating 
section 37 as section 99 and by inserting after section 36 
the following: 
‘‘SEC. 37. COMPREHENSIVE DISASTER RESPONSE PLAN. 
‘‘(a) PLAN REQUIRED.—The Administrator shall de-
velop, implement, and maintain a comprehensive written 
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disaster response plan. The plan shall include the fol-
lowing: 
‘‘(1) For each region of the Administration, a 
description of the disasters most likely to occur in 
that region. 
‘‘(2) For each disaster described under para-
graph (1)— 
‘‘(A) an assessment of the disaster; 
‘‘(B) an assessment of the demand for Ad-
ministration assistance most likely to occur in 
response to the disaster; 
‘‘(C) an assessment of the needs of the Ad-
ministration, with respect to such resources as 
information 
technology, 
telecommunications, 
human resources, and office space, to meet the 
demand referred to in subparagraph (B); and 
‘‘(D) guidelines pursuant to which the Ad-
ministration will coordinate with other Federal 
agencies and with State and local authorities to 
best respond to the demand referred to in sub-
paragraph (B) and to best use the resources re-
ferred to in that subparagraph. 
‘‘(b) COMPLETION; REVISION.—The first plan re-
quired by subsection (a) shall be completed not later than 
180 days after the date of the enactment of this section. 
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Thereafter, the Administrator shall update the plan on an 
annual basis and following any incident of national signifi-
cance (as declared by the President or his designee). 
‘‘(c) KNOWLEDGE REQUIRED.—The Administrator 
shall carry out subsections (a) and (b) through an indi-
vidual with substantial knowledge in the field of disaster 
readiness and emergency response. 
‘‘(d) REPORT.—The Administrator shall include a re-
port on the plan whenever the Administrator submits the 
report required by section 47(a).’’. 
SEC. 102. ANNUAL DISASTER SIMULATION EXERCISE. 
The Small Business Act is amended by inserting after 
section 37 (as added by section 101) the following: 
‘‘SEC. 38. ANNUAL DISASTER SIMULATION EXERCISE. 
‘‘(a) EXERCISE REQUIRED.—The Administrator shall 
conduct a disaster simulation exercise at least once each 
fiscal year. The exercise shall include the participation of, 
at a minimum, not less than half of the individuals in the 
disaster reserve corps and shall test, at maximum capac-
ity, all of the information technology and telecommuni-
cations systems of the Administration that are vital to the 
activities of the Administration during such a disaster. 
‘‘(b) REPORT.—The Administrator shall include a re-
port on the disaster simulation exercise whenever the Ad-
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ministration submits the report required by section 
47(a).’’. 
SEC. 103. DISASTER RESERVE CORPS. 
The Small Business Act is amended by inserting after 
section 38 (as added by section 102) the following: 
‘‘SEC. 39. DISASTER RESERVE CORPS. 
‘‘(a) CORPS REQUIRED.—The Administrator shall 
maintain within the Administration a disaster reserve 
corps, the purpose of which is to perform the functions 
of the Administration related to disaster response. The 
corps shall consist of at least 1,000 individuals, each of 
whom— 
‘‘(1) does not ordinarily have the duties of a 
full-time officer or employee of the Administration; 
but 
‘‘(2) is able to assume duties related to disaster 
response when the Administrator so requires. 
‘‘(b) TRAINING.—The Administrator shall ensure 
that each individual in the corps receives training each 
year in one or more functions relating to disaster response. 
To the maximum extent practicable, the function in which 
an individual is trained in one year shall be different from 
the function in which the individual was trained in prior 
years. 
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‘‘(c) GEOGRAPHIC DISTRIBUTION.—The Adminis-
trator shall ensure that not more than 30 percent of the 
individuals in the corps reside in any one region of the 
Administration. 
‘‘(d) REPORT.—The Administrator shall include a re-
port on the corps whenever the Administration submits 
the report required by section 47(a).’’. 
SEC. 104. PLANS TO SECURE ADDITIONAL OFFICE SPACE. 
The Small Business Act is amended by inserting after 
section 39 (as added by section 103) the following: 
‘‘SEC. 40. PLANS TO SECURE ADDITIONAL OFFICE SPACE. 
‘‘(a) PLANS REQUIRED.—The Administrator shall 
develop long-term plans to secure additional office space 
to accommodate an expanded workforce in times of dis-
aster. 
‘‘(b) REPORT.—The Administrator shall include a re-
port on the plans whenever the Administration submits 
the report required by section 47(a).’’. 
SEC. 105. COORDINATION OF DISASTER ASSISTANCE PRO-
GRAMS WITH FEMA. 
The Small Business Act is amended by inserting after 
section 40 (as added by section 104) the following: 
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‘‘SEC. 41. COORDINATION OF DISASTER ASSISTANCE PRO-
GRAMS WITH FEMA. 
‘‘(a) COORDINATION REQUIRED.—The Administrator 
shall ensure that the disaster assistance programs of the 
Administration are coordinated, to the maximum extent 
practicable, with the disaster assistance programs of the 
Federal Emergency Management Agency. 
‘‘(b) REGULATIONS REQUIRED.—The Administrator, 
in consultation with the Director of the Federal Emer-
gency Management Agency, shall establish regulations to 
ensure that each application for disaster assistance is sub-
mitted as quickly as practicable to the Administration or 
directed to the appropriate agency under the cir-
cumstances. 
‘‘(c) COMPLETION; REVISION.—The initial regula-
tions shall be completed not later than 270 days after the 
date of the enactment of this section. Thereafter, the regu-
lations shall be revised on an annual basis. 
‘‘(d) REPORT.—The Administrator shall include a re-
port on the regulations whenever the Administration sub-
mits the report required by section 47(a).’’. 
SEC. 106. ASSOCIATE ADMINISTRATOR FOR DISASTER AS-
SISTANCE. 
The Small Business Act is amended by inserting after 
section 41 (as added by section 105) the following: 
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‘‘SEC. 42. ASSOCIATE ADMINISTRATOR FOR DISASTER AS-
SISTANCE. 
‘‘(a) IN GENERAL.—There is established in the Ad-
ministration an Associate Administrator for Disaster As-
sistance, appointed by the President by and with the ad-
vice and consent of the Senate, from among individuals 
who have— 
‘‘(1) proven management ability; and 
‘‘(2) substantial knowledge in the field of dis-
aster readiness and emergency response. 
‘‘(b) DIRECTOR OF DISASTER PLANNING.— 
‘‘(1) APPOINTMENT.—There is established in 
the Administration a Director for Disaster Planning, 
appointed by the Administrator from among the per-
sonnel of the Administration. 
‘‘(2) DUTIES.—Subject to the authority, direc-
tion, and control of the Associate Administrator for 
Disaster Assistance, the Director shall— 
‘‘(A) develop and implement the Adminis-
tration’s plans for responding to disasters; and 
‘‘(B) direct the Administration’s training 
exercises with respect to disasters. 
‘‘(3) COORDINATION.—In carrying out the du-
ties under paragraph (2), the Director shall coordi-
nate with— 
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‘‘(A) the Associate Administrator for the 
Office of Disaster Assistance of the Administra-
tion; 
‘‘(B) the Director of the Federal Emer-
gency Management Agency; and 
‘‘(C) other Federal, State, and local dis-
aster planning offices, as necessary. 
‘‘(c) DIRECTOR OF DISASTER LENDING.— 
‘‘(1) APPOINTMENT.—There is established in 
the Administration a Director for Disaster Lending, 
appointed by the Administrator from among the per-
sonnel of the Administration. 
‘‘(2) DUTIES.—Subject to the authority, direc-
tion, and control of the Associate Administrator for 
Disaster Assistance, the Director shall direct all as-
pects of the disaster lending program under section 
7(b). 
‘‘(d) RESOURCES.—The Administrator shall ensure 
that the Associate Administrator for Disaster Assistance, 
the Director of Disaster Planning, and the Director of 
Disaster Lending have adequate resources to carry out the 
duties under this section.’’. 
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TITLE II—LENDING 
SEC. 201. INCIDENTS OF NATIONAL SIGNIFICANCE. 
(a) DISASTER LOANS TO PRIVATE NONPROFIT OR-
GANIZATIONS.—Section 7(b)(2) of the Small Business Act 
(15 U.S.C. 636(b)(2)) is amended— 
(1) in subparagraph (D) by striking the period 
at the end and inserting ‘‘; or’’; and 
(2) by inserting after subparagraph (D) the fol-
lowing: 
‘‘(E) an incident of national significance, 
as declared by the President or his designee, in 
which case assistance under this paragraph may 
be provided, subject to the other applicable re-
quirements of this paragraph, to a private non-
profit organization (as that term is defined in 
section 29(a)(2)) that is located in an area af-
fected by the incident of national significance.’’. 
(b) MITIGATION LOANS TO SMALL BUSINESS CON-
CERNS.—Section 7 of the Small Business Act (15 U.S.C. 
636) is amended by inserting after subsection (d) the fol-
lowing: 
‘‘(e) DISASTER MITIGATION LOANS.— 
‘‘(1) AUTHORITY.—The Administrator may 
make or guarantee a mitigation loan to a small busi-
ness concern that receives a loan under section 
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7(b)(1)(A) for the damage or destruction, by reason 
of an incident of national significance (as declared 
by the President or his designee), of property owned 
by the small business concern. 
‘‘(2) AMOUNT OF LOAN.—The amount of a loan 
under paragraph (1) shall not exceed 20 percent of 
the total amount of the cost of the damage or de-
struction referred to in paragraph (1). The total 
amount shall be calculated without regard for any 
costs for which the small business concern is reim-
bursed under any insurance policy or otherwise.’’. 
(c) APPLICABILITY FOR FISCAL YEAR 2006 TO HUR-
RICANES KATRINA, RITA, AND WILMA.— 
(1) IN GENERAL.—For fiscal year 2006, the 
Administrator— 
(A) may carry out subsection (e) of section 
7 of the Small Business Act (as added by sub-
section (b) of this section) with respect to a pri-
vate nonprofit organization that was located, as 
of August 28, 2005, in a hurricane-affected 
area; and 
(B) may carry out such subsection (e) with 
respect to a small business concern that was lo-
cated, as of August 28, 2005, in a hurricane- 
affected area, for damage or destruction by rea-
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son of Hurricane Katrina, Hurricane Rita, or 
Hurricane Wilma. 
(2) HURRICANE-AFFECTED AREA DEFINED.—In 
this section, the term ‘‘hurricane-affected area’’ 
means a county or parish in the State of Alabama, 
Florida, Mississippi, Louisiana, or Texas, that has 
been designated by the Administrator of the Small 
Business Administration as a disaster area by rea-
son of Hurricane Katrina, Hurricane Rita, or Hurri-
cane Wilma under disaster declaration 10176, 
10177, 10178, 10179, 10180, 10181, 10203, 10204, 
10205, 10206, 10222, or 10223. 
SEC. 202. INFORMATION TRACKING AND FOLLOW-UP SYS-
TEM. 
The Small Business Act is amended by inserting after 
section 42 (as added by section 106) the following: 
‘‘SEC. 43. INFORMATION TRACKING AND FOLLOW-UP SYS-
TEM FOR DISASTER ASSISTANCE. 
‘‘(a) SYSTEM REQUIRED.—The Administrator shall 
develop, implement, and maintain a centralized informa-
tion system to track communications between personnel 
of the Administration and applicants for disaster assist-
ance. The system shall ensure that whenever an applicant 
for disaster assistance communicates with such personnel 
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on a matter relating to the application, the following infor-
mation is recorded: 
‘‘(1) The method of communication. 
‘‘(2) The date of communication. 
‘‘(3) The identity of the personnel. 
‘‘(4) A summary of the subject matter of the 
communication. 
‘‘(b) FOLLOW-UP REQUIRED.—The Administrator 
shall ensure that an applicant for disaster assistance re-
ceives, by telephone, mail, or electronic mail, follow-up 
communications from the Administration at all critical 
stages of the application process, including the following: 
‘‘(1) When the Administration determines that 
additional information or documentation is required 
to process the application. 
‘‘(2) When the Administration determines 
whether to approve or deny the loan. 
‘‘(3) When the primary contact person man-
aging the loan application has changed.’’. 
SEC. 203. IMMEDIATE DISASTER ASSISTANCE PROGRAM. 
The Small Business Act is amended by inserting after 
section 43 (as added by section 202) the following: 
‘‘SEC. 44. IMMEDIATE DISASTER ASSISTANCE PROGRAM. 
‘‘(a) PROGRAM REQUIRED.—The Administrator shall 
carry out a program, to be known as the Immediate Dis-
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aster Assistance program, under which the Administration 
participates on a deferred (guaranteed) basis in 85 per-
cent of the balance of the financing outstanding at the 
time of disbursement of the loan if such balance is less 
than or equal to $25,000 for businesses affected by a dis-
aster. 
‘‘(b) ELIGIBILITY REQUIREMENT.—To receive a loan 
guaranteed under subsection (a), the applicant must also 
apply for, and meet basic eligibility standards for, a loan 
under section 7(b). 
‘‘(c) USE OF PROCEEDS.—A person who receives a 
loan under section 7(b) must use the proceeds of that loan 
to repay all loans guaranteed under subsection (a), if any, 
before using the proceeds for any other purpose. 
‘‘(d) APPROVAL
OR DISAPPROVAL.—The Adminis-
trator shall ensure that each applicant for a loan under 
the program receives a decision approving or disapproving 
of the application within 36 hours after the Administra-
tion receives the application.’’. 
SEC. 204. INCREASED DEFERMENT PERIOD. 
Section 7 of the Small Business Act (15 U.S.C. 636) 
is amended by inserting after subsection (e) (as added by 
section 201(b)) the following: 
‘‘(f) 
ADDITIONAL
REQUIREMENTS
FOR
7(b) 
LOANS.— 
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‘‘(1) INCREASED DEFERMENT AUTHORIZED.— 
‘‘(A) IN
GENERAL.—In making loans 
under section 7(b), the Administrator may pro-
vide, to the person receiving the loan, an option 
to defer repayment on the loan. 
‘‘(B) PERIOD.—A deferment under sub-
paragraph (A) may not exceed 4 years.’’. 
SEC. 205. REVISED REPAYMENT TERMS. 
Section 7 of the Small Business Act (15 U.S.C. 636) 
is amended in subsection (f) by adding after paragraph 
(1) (as added by section 204) the following: 
‘‘(2) REVISED REPAYMENT TERMS.—In making 
loans under section 7(b), the Administrator— 
‘‘(A) shall not require repayment to be 
made until 12 months after the date on which 
the final disbursement of approved amounts is 
made; and 
‘‘(B) shall calculate the amount of repay-
ment based solely on the amounts disbursed.’’. 
SEC. 206. REVISED DISBURSEMENT PROCESS. 
Section 7 of the Small Business Act (15 U.S.C. 636) 
is amended in subsection (f) by adding after paragraph 
(2) (as added by section 205) the following: 
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‘‘(3) REVISED
DISBURSEMENT
PROCESS.—In 
making loans under section 7(b), the Administrator 
shall disburse the loan amounts in stages as follows: 
‘‘(A) LOANS UP TO $150,000.—If the total 
amount approved is less than or equal to 
$150,000— 
‘‘(i) the first disbursement shall con-
sist of 40 percent of the total loan amount, 
or a lesser percentage of the total loan 
amount if the Administrator and the bor-
rower agree on such a lesser percentage; 
‘‘(ii) the second disbursement shall 
consist of 50 percent of the amounts that 
remain after the first disbursement, and 
shall be made when the borrower has pro-
duced satisfactory receipts to demonstrate 
the proper use of the first half of the first 
disbursement; and 
‘‘(iii) the third disbursement shall 
consist of the amounts that remain after 
the preceding disbursements, and shall be 
made when the borrower has produced sat-
isfactory receipts to demonstrate the prop-
er use of the first disbursement and the 
first half of the second disbursement. 
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‘‘(B) LOANS FROM $150,000 TO $500,000.— 
If the total amount approved is more than 
$150,000 but less than or equal to $500,000— 
‘‘(i) the first disbursement shall con-
sist of 20 percent of the total loan amount, 
or a lesser percentage if the Administrator 
and the borrower agree on such a lesser 
percentage; 
‘‘(ii) the second disbursement shall 
consist of 30 percent of the total loan 
amount remaining after the first disburse-
ment, and shall be made when the bor-
rower has produced satisfactory receipts to 
demonstrate the proper use of the first 
half of the first disbursement; 
‘‘(iii) the third disbursement shall 
consist of 25 percent of the total loan 
amount remaining after the first and sec-
ond disbursements, and shall be made 
when the borrower has produced satisfac-
tory receipts to demonstrate the proper use 
of the first disbursement and the first half 
of the second disbursement; and 
‘‘(iv) the fourth disbursement shall 
consist of the amounts that remain after 
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the preceding disbursements, and shall be 
made when the borrower has produced sat-
isfactory receipts to demonstrate the prop-
er use of the first and second disburse-
ments and the first half of the third dis-
bursement. 
‘‘(C) LOANS GREATER THAN $500,000.—If 
the total amount approved is more than 
$500,000— 
‘‘(i) the first disbursement shall con-
sist of at least $100,000, or a lesser 
amount if the Administrator and the bor-
rower agree on such a lesser amount; and 
‘‘(ii) the number of disbursements 
after the first, and the amount of each 
such disbursement, shall be in the discre-
tion of the Administrator, but the amount 
of each such disbursement shall be not less 
than $100,000.’’. 
SEC. 207. REVISED COLLATERAL REQUIREMENTS. 
Section 7 of the Small Business Act is amended in 
subsection (f) by adding after paragraph (3) (as added 
by section 206) the following: 
‘‘(4) REVISED COLLATERAL REQUIREMENTS.— 
In making a business loan under section 7(b), the 
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total approved amount of which is less than or equal 
to $100,000, the Administrator shall not require the 
borrower to use the borrower’s home as collateral.’’. 
SEC. 208. ENHANCED LENDING AUTHORITY FOR PRIVATE 
LENDERS. 
The Small Business Act is amended by inserting after 
section 44 (as added by section 203) the following: 
‘‘SEC. 45. ENHANCED LENDING AUTHORITY FOR PRIVATE 
LENDERS. 
‘‘(a) PROGRAM AUTHORIZED.—The Administrator 
may, and during a period specified in subsection (b) shall, 
carry out a program under which the Administrator per-
mits banks and other financial institutions to process, ap-
prove, close, and service disaster loans under section 7(b) 
for a fee not to exceed 2 percent of the total loan amount. 
‘‘(b) PERIODS DURING WHICH PROGRAM IS RE-
QUIRED.—The program under subsection (a) is required 
to be carried out during the following periods: 
‘‘(1) Any period of an incident of national sig-
nificance (as declared by the President or his des-
ignee). 
‘‘(2) Any period during which the average time 
for the Administration to approve disaster loans in 
response to any single disaster is 30 days or more. 
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‘‘(c) EXCLUSION OF LENDERS.—If the number or 
rate of defaults on loans processed, approved, and closed 
by a lender under the program under subsection (a) are 
inordinate, as determined by the Administrator, the Ad-
ministrator may do any one or more of the following: 
‘‘(1) Exclude the lender from participating in 
the program under subsection (a). 
‘‘(2) Exclude the lender from participating in 
the Preferred Lenders Program under section 
7(a)(2)(C)(ii). 
‘‘(d) FACTOR IN PREFERRED LENDERS PROGRAM.— 
In determining whether a lender is to be certified or recer-
tified to participate in the Preferred Lenders Program 
under section 7(a)(2)(C)(ii), the Administrator may con-
sider as a factor the following: 
‘‘(1) The loans processed, approved, and closed 
by the lender under the program under subsection 
(a). 
‘‘(2) The participation or non-participation of 
the lender in the program under subsection (a).’’. 
SEC. 209. DISASTER PROCESSING REDUNDANCY. 
The Small Business Act is amended by inserting after 
section 45 (as added by section 208) the following: 
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‘‘SEC. 46. DISASTER PROCESSING REDUNDANCY. 
‘‘(a) IN GENERAL.—The Administrator shall ensure 
that the Administration has in place a facility for disaster 
loan processing that, whenever the Administration’s pri-
mary facility for disaster loan processing becomes unavail-
able, is able to take over all disaster loan processing from 
that primary facility within 2 days. 
‘‘(b) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated to carry out this section 
such sums as may be necessary.’’. 
SEC. 210. GRANT PROGRAM. 
Section 7(b) of the Small Business Act (15 U.S.C. 
636(b)) is amended by inserting immediately after para-
graph (3) the following: 
‘‘(4) GRANTS TO DISASTER-AFFECTED SMALL 
BUSINESSES.— 
‘‘(A) IN
GENERAL.—The Administrator 
may make a grant of up to $100,000 to a small 
business concern that— 
‘‘(i) was located in a designated dis-
aster area affected by disaster declaration 
10176, 10177, 10178, 10179, 10180, 
10181, 10203, 10204, 10205, 10206, 
10222, or 10233, and was located in a 
county or parish that, as a result of Hurri-
canes Katrina, Rita, or Wilma of 2005, ex-
VerDate Aug 31 2005 
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