Last Thursday, after President Bush's Gulf Coast visit, Sen. John Kerry [D-Mass.] had some harsh words. Kerry, chair of the U.S. Senate Committee on Small Business and Entrepreneurship, is the lead sponsor of bipartisan legislation to overhaul the government's disaster loan program, which the Bush Administration has been blocking since September 2005.
"Long-term recovery for the Gulf Coast requires a whole lot more than 18 months of empty promises," said Kerry. "Businesses that were once the heart of the Gulf Coast economy are now hanging on by a thread. Yet the bipartisan proposals in Congress to get these businesses back up and running have been blocked by the Bush Administration at every turn.
"On his last visit to the Gulf Coast, the President predicted a bright future for the region's entrepreneurs. Yet, in the six months since that visit, nothing's changed. While the Go Zone legislation represented a good first step, we still need fundamental reform of the government's disaster loan program to permanentlyremove delays and red tape that have prevented businesses from getting timely financial assistance."
The Small Business Disaster Response and Loan Improvements Act of 2007 [S.163], sponsored by Kerry and cosponsored by Sen. Mary Landrieu [D-La.], Sen. Olympia Snowe [R-Maine] and Sen. David Vitter [D-La.], would:
* Establish a Private Disaster Loan [PDL] program that allows banks to make loans directly to victims after meeting Small Business Administration [SBA] criteria. The SBA will provide an 85 percent guarantee for these loans;
* Require the SBA to draft rules within one year that would create a new "expedited disaster assistance business loan program." These short-term loans would have low interest rates similar to regular disaster loans. This would provide businesses with short-term assistance while they await other forms of federal assistance or insurance payouts following future disasters. It specifically addresses one of the major issues following Hurricanes Katrina and Rita -- a lack of access to immediate capital to keep businesses afloat;
* Create a new presidential declaration of "Catastrophic National Disaster," which will allow the SBA to issue nationwide economic-injury disaster loans to small businesses affected by a large-scale disaster;
* Allow the SBA to provide relief to fuel-dependent small businesses when energy prices increase at extraordinarily high rates.
* Provide key tools for processing disaster loan applications more quickly by authorizing the SBA to enter into agreements with qualified private contractors to process disaster loans, and requiring the SBA to analyze and report to Congress on how the disaster loan application process can be improved; and
* Increase the maximum size of an SBA disaster loan from $1.5 million to $5 million, and allow non-profit groups to be eligible for disaster loans.
Sen. Kerry also called on major federal agencies awarding contracts after disasters to issue and enforce contracting plans, to ensure small firms and disadvantaged businesses receive their fair share of contracts.
A Government Accountability Report released today found that there needs to be better transparency and enforcement at agencies responsible for 94 percent of federal disaster recovery contracts after Hurricane Katrina. Those agencies are the Departments of Homeland Security [DHS] and Defense [DOD], the General Services Administration [GSA], and the Army Corps of Engineers [Corps].
"All the presidential photo opportunities in the world haven't resulted in more small and local business participation in rebuilding communities devastated by Hurricane Katrina," said Kerry. "This GAO report reveals a severe gap in the information we need to ensure small businesses are afforded every opportunity to win contracts and help recover after a disaster. We need more information and better oversight to ensure the government is following the law."
Kerry sent a letter to the heads of DHS, DOD, GSA and the Corps, calling on the agencies to implement the GAO's recommendations to: 1] issue guidance to key personnel reinforcing the importance of subcontracting plan requirements; and 2] consider requesting that the agencies' Inspectors General review compliance with this guidance.
To read the GAO report, visit: http://www.gao.gov/new.items/d07205.pdf.
To read the text of the letter, click here.
Sources: Library of Congress [via THOMAS], U.S. Senate Committee on Small Business and Entrepreneurship
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