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Legislation News & Report (TM) TheWeekInCongress.com (TM) Managing America: Disaster Relief |
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TheWeekInCongress.com (TM) Week Ending April 20, 2006
H.R.1361 To improve the disaster relief programs of the Small Business Administration, and for other purposes.
This bill aims to prepare the Administrator of the Small Business Administration for a response to disasters impacting small businesses. The bill provides for business disaster response planning, lending, grants and oversight. Ice storms and blizzards are added as disasters as well as businesses affected by lack of snow fall.
As it is that 40% of disaster impacted businesses fail to recover and 60% fail completely after a disaster the Administrator is directed, within 180 days of enactment of this bill, to develop, implement and maintain a comprehensive written disaster plan to include disasters most likely to occur in any given SBA region, an assessment of a disaster and the most likely demand for SBA help in the aftermath. The SBA plan must also outline the SBA’s needs for information technology, telecommunications, human resources, office space needed to meet demand, and how it will coordinate with other federal agencies. The Administrator must also appoint a Director for Disaster Planning and a Director for Disaster Lending. The President will appoint an Associate Administrator for Disaster Assistance who has proven management ability and substantial knowledge in the disaster readiness and emergency response field.
An annual disaster simulation exercise is ordered once each year, at least and shall include no less than half the individuals in the administration’s disaster reserve corps and shall test all information technology and telecommunications systems vital to the response activities. The disaster reserve corps is to be created and implemented within the SBA and must consist of at least 1,000 individuals who are not ordinarily have the duties of a full-time officer or employee but is able to assume duties related to disaster response when necessary. Training is authorized and not more than 30% of the response individuals will come from any one region.
Loans to private non-profit organizations in the disaster area are authorized. Mitigation of damage or destruction loans may not exceed 20% of the total amount of the cost of the damage or destruction to the business. The loans will not be affected by the business having been reimbursed for the damage under any insurance policy or other method of mitigation. An amendment to change that provision failed as did an amendment that would block reconsideration of grants to businesses previously denied the aid.
Immediate disaster relief is addressed in a program that guarantees 85% loan coverage if the balance is equal to or less than $25,000. Immediate loans must be used to pay off earlier loans before using the remaining amounts. Loan applicants would get a response within 36 hours. Repayment of the loan can be deferred up to 12 months. Loan amounts may be disbursed incrementally. $150,000 would be doled out in the first installment of 40% or less, the second would be 50% after documentation of spending of at least fifty percent of the first amount. The final amount comes with documentation of all the spending for the first installment and 50 % of the second installment. $500,000 is paid out by 20%, 30%, 25% and 25%. Loans over $500,000 will be distributed in installments of $100,000 or less followed by successive payouts of $100,000.
On amounts lent equal to or less than $100,000 the borrower does not have to put up his/her home as collateral.
The bill identifies Alabama, Florida, Mississippi, Louisiana and Texas as hurricane affected areas as the term relates to this bill. Businesses in those areas may be eligible for grants up to $100,000 if the loss was of at least 100 housing units, 1% of housing stocks and required federal infrastructure assistance of at least $200,000. the grant recipient must be in the designated areas has applied for and was rejected for a conventional disaster assistance loan and was in business at least two years prior to the disaster. The business must be unable to meet short-term financial obligations.
The Administrator may allow private lenders to write the loans for a fee not more than 2%. Lenders with inordinate default rates may be prohibited from participating in the program.
SBA relief programs will be coordinated with FEMA’s response. A report to Congress is due each year to include number of personnel involved in disaster response, material changes and effectiveness
Sponsor: Rep. Nydia M. Valazquez (D-NY-12th) Vote: Passed House 267 158 April 19, 2007 RC 225. A motion to recommit the bill with instructions failed 204 to 218 April 19, 2007 RC 224 Cost to the taxpayers: “CBO estimates that authorizing SBA to waive the duplication of benefits requirement would increase the subsidy rate for outstanding disaster loans by about 2 percentage points, at an estimated cost of $215 million over the 2007-2009 period. That cost would be incurred without enactment of any subsequent legislation. In addition, CBO estimates that implementing other provisions of H.R. 1361 would cost $347 million over the 2008-2012 period, subject to the appropriation of the necessary funds.” Earmark Certification: Not applicable to this bill. ## All Rights Reserved. © 2007 TheWeekInCongress.com(TM) No reproduction, language translation or distribution without written permission from TheWeekInCongress.com.(TM) AMENDMENTS 1. H.AMDT.85 to H.R.1361 An amendment numbered 1 printed in
House Report 110-97 to strike section 211, thereby requiring anyone
receiving both a grant and a disaster loan to use the grant to repay the
disaster loan thereby preventing the government from compensating the same
person twice for the same disaster. 2. H.AMDT.86 to H.R.1361 An amendment numbered 2 in House Report
110-97 to strike section 210, thereby eliminating the authority of the
Administrator of the Small Business Administration to offer grants to
certain small businesses that were severely affected by Hurricanes
Katrina, Rita, or Wilma but that were denied disaster loans. 3. H.AMDT.87 to H.R.1361 An amendment numbered 3 printed in
House Report 110-97 to provide Hurricanes Katrina, Rita, and Wilma
disaster victims with an option of receiving an increased four year
deferment period for disaster loans. Section 204 of the underlying bill
extends this option to future disaster victims; the amendment makes it
retroactive to the 2005 hurricanes.
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