Landrieu Legislation Reforms SBA's Disaster Recovery Role

Bill would also provide assistance to families impacted by Chinese-made drywall

United States Senate Committee on Small Business and Entrepreneurship Chair Mary L. Landrieu, D-La., today introduced "The Small Business Administration Disaster Recovery and Reform Act of 2009" (S. 2731), a bill to reform the disaster recovery programs run by the Small Business Administration (SBA).

"This legislation will have an immediate impact on recovering businesses in the Gulf Coast and on families across the country impacted by Chinese-made drywall," Senator Landrieu said. "Along with this recovery assistance, the bill makes commonsense disaster reforms to ensure the SBA's effectiveness after future disasters."

Following Hurricanes Katrina and Rita, impacted businesses -- including "pioneer businesses" that were the first to open after the storms -- struggled to secure assistance from the SBA, their insurance companies, or other sources. These pioneer businesses served as second responders by quickly reopening their doors following the disaster, helping to spur both commercial and residential recovery. These local gas stations, grocery stores, or restaurants serve as key indicators for homeowners looking to return, but are often in need of immediate, short-term capital to reopen, purchase inventory or pay employees.

To provide targeted SBA assistance for these pioneer businesses, Senator Landrieu created a short-term $150,000 expedited loan program in the 2008 Farm Bill to serve as bridge assistance while these businesses wait for SBA loans or insurance proceeds. S. 2731 improves the Pioneer Business Recovery Program by increasing loan limits from $150,000 to $250,000 and allowing the SBA to activate the program as needed for both major and catastrophic disasters. This would ensure that the SBA can address the needs of these pioneer businesses and spur immediate recovery in local neighborhoods.

"Every disaster is different and could range from a disaster on the scale of Hurricane Katrina or September 11th, to an ice storm or drought. The modification in my bill would allow the SBA additional options and flexibility in the kinds of relief they can offer a community," Senator Landrieu said. "We must ensure that the SBA has the tools necessary to help our second responders -- these pioneer business owners who reopen the local hardware store or gas station immediately following a disaster."

The bill also provides assistance to help homeowners affected by toxic Chinese-made drywall. In July, Senators Landrieu, Bill Nelson, Mark Warner and Jim Webb sent a letter to the SBA requesting a review of their authority to provide assistance to homeowners with defective drywall. Last week, the SBA responded that under the current law the agency did not have the authority to provide assistance for this type of disaster. S. 2731 would authorize the SBA to provide homeowner assistance for the repair or replacement of defective drywall in areas declared a disaster by a Governor.

"Many families in Louisiana and across the country are seeing their dream homes turn into nightmares," Senator Landrieu said. "Toxic fumes causing severe health problems are making these homes virtually unlivable. While I believe that the primary financial burden of replacing the defective drywall should be borne by the manufacturers of the product, there is a role that the Federal government should play in helping the impacted families. This legislation allows the SBA to provide immediate aid to homeowners by helping them replace this defective product from their homes."

The bill also includes:

    --  8(a) Extension: This provision would extend, for 2 years, eligibility
        for Gulf Coast businesses impacted by Katrina or Rita to participate in
        the SBA 8(a) program.
    --  State Bridge Loan Guarantee Program: This section would authorize SBA to
        guarantee approved state bridge loan programs following a major
        disaster. This would enhance existing Federal-State partnerships on
        bridge loans and allow states to provide more assistance following a
        disaster.
    --  Coordination Between the SBA and the U.S. Department of Agriculture
        (USDA) Disaster Programs: This provision requires the SBA to report
        within 120 days on gaps in small business assistance between the USDA
        and the SBA disaster programs. The SBA, in consultation with the USDA,
        must report on any legislative changes needed to improve these programs.

    --  Increase the SBA Loan Limits: This section increases the SBA disaster
        home loans from $40,000 to $80,000 for personal property and from
        $200,000 to $400,000 for repair or replacement of a primary residence.
        It also increases SBA disaster business loans from $2 million to $4
        million.

A section-by-section review of Senator Landrieu's bill can be viewed by clicking here.

To view a copy of the letter sent to the SBA, please click here.

To view a copy of the SBA's response, please click here.

SOURCE U.S. Senate Committee on Small Business & Entrepreneurship

http://sbc.senate.gov

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