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.
Short title; table of contents
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 RECOVER Act
.
Table of contents
The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
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 concerns 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.
Planning
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:
Comprehensive disaster response plan
Plan required
The Administrator shall develop, implement, and maintain a comprehensive written disaster response plan. The plan shall include the following:
For each region of the Administration, a description of the disasters most likely to occur in that region.
For each disaster described under paragraph (1)—
an assessment of the disaster;
an assessment of the demand for Administration assistance most likely to occur in response to the disaster;
an assessment of the needs of the Administration, with respect to such resources as information technology, telecommunications, human resources, and office space, to meet the demand referred to in subparagraph (B); and
guidelines pursuant to which the Administration will coordinate with other Federal agencies and with State and local authorities to best respond to the demand referred to in subparagraph (B) and to best use the resources referred to in that subparagraph.
Completion; revision
The first plan required by subsection (a) shall be completed not later than 180 days after the date of the enactment of this section. Thereafter, the Administrator shall update the plan on an annual basis and following any incident of national significance (as declared by the President or his designee).
Knowledge required
The Administrator shall carry out subsections (a) and (b) through an individual with substantial knowledge in the field of disaster readiness and emergency response.
Report
The Administrator shall include a report on the plan whenever the Administrator submits the report required by section 47(a).
.
Annual disaster simulation exercise
The Small Business Act is amended by inserting after section 37 (as added by section 101) the following:
Annual disaster simulation exercise
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 capacity, all of the information technology and telecommunications systems of the Administration that are vital to the activities of the Administration during such a disaster.
Report
The Administrator shall include a report on the disaster simulation exercise whenever the Administration submits the report required by section 47(a).
.
Disaster reserve corps
The Small Business Act is amended by inserting after section 38 (as added by section 102) the following:
Disaster reserve corps
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—
does not ordinarily have the duties of a full-time officer or employee of the Administration; but
is able to assume duties related to disaster response when the Administrator so requires.
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.
Geographic distribution
The Administrator shall ensure that not more than 30 percent of the individuals in the corps reside in any one region of the Administration.
Report
The Administrator shall include a report on the corps whenever the Administration submits the report required by section 47(a).
.
Plans to secure additional office space
The Small Business Act is amended by inserting after section 39 (as added by section 103) the following:
Plans to secure additional office space
Plans required
The Administrator shall develop long-term plans to secure additional office space to accommodate an expanded workforce in times of disaster.
Report
The Administrator shall include a report on the plans whenever the Administration submits the report required by section 47(a).
.
Coordination of disaster assistance programs with FEMA
The Small Business Act is amended by inserting after section 40 (as added by section 104) the following:
Coordination of disaster assistance programs with FEMA
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.
Regulations required
The Administrator, in consultation with the Director of the Federal Emergency Management Agency, shall establish regulations to ensure that each application for disaster assistance is submitted as quickly as practicable to the Administration or directed to the appropriate agency under the circumstances.
Completion; revision
The initial regulations shall be completed not later than 270 days after the date of the enactment of this section. Thereafter, the regulations shall be revised on an annual basis.
Report
The Administrator shall include a report on the regulations whenever the Administration submits the report required by section 47(a).
.
Associate Administrator for Disaster Assistance
The Small Business Act is amended by inserting after section 41 (as added by section 105) the following:
Associate Administrator for Disaster Assistance
In general
There is established in the Administration an Associate Administrator for Disaster Assistance, appointed by the President by and with the advice and consent of the Senate, from among individuals who have—
proven management ability; and
substantial knowledge in the field of disaster readiness and emergency response.
Director of Disaster Planning
Appointment
There is established in the Administration a Director for Disaster Planning, appointed by the Administrator from among the personnel of the Administration.
Duties
Subject to the authority, direction, and control of the Associate Administrator for Disaster Assistance, the Director shall—
develop and implement the Administration’s plans for responding to disasters; and
direct the Administration’s training exercises with respect to disasters.
Coordination
In carrying out the duties under paragraph (2), the Director shall coordinate with—
the Associate Administrator for the Office of Disaster Assistance of the Administration;
the Director of the Federal Emergency Management Agency; and
other Federal, State, and local disaster planning offices, as necessary.
Director of Disaster Lending
Appointment
There is established in the Administration a Director for Disaster Lending, appointed by the Administrator from among the personnel of the Administration.
Duties
Subject to the authority, direction, and control of the Associate Administrator for Disaster Assistance, the Director shall direct all aspects of the disaster lending program under section 7(b).
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.
.
Lending
Incidents of National Significance
Disaster loans to private nonprofit organizations
Section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)) is amended—
in subparagraph
(D) by striking the period at the end and inserting ; or
;
and
by inserting after subparagraph (D) the following:
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 requirements of this paragraph, to a private nonprofit organization (as that term is defined in section 29(a)(2)) that is located in an area affected by the incident of national significance.
.
Mitigation loans to small business concerns
Section 7 of the Small Business Act (15 U.S.C. 636) is amended by inserting after subsection (d) the following:
Disaster mitigation loans
Authority
The Administrator may make or guarantee a mitigation loan to a small business concern that receives a loan under section 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.
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 destruction referred to in paragraph (1). The total amount shall be calculated without regard for any costs for which the small business concern is reimbursed under any insurance policy or otherwise.
.
Applicability for fiscal year 2006 to Hurricanes Katrina, Rita, and Wilma
In general
For fiscal year 2006, the Administrator—
may carry out subsection (e) of section 7 of the Small Business Act (as added by subsection (b) of this section) with respect to a private nonprofit organization that was located, as of August 28, 2005, in a hurricane-affected area; and
may carry out such subsection (e) with respect to a small business concern that was located, as of August 28, 2005, in a hurricane-affected area, for damage or destruction by reason of Hurricane Katrina, Hurricane Rita, or Hurricane Wilma.
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 reason of Hurricane Katrina, Hurricane Rita, or Hurricane Wilma under disaster declaration 10176, 10177, 10178, 10179, 10180, 10181, 10203, 10204, 10205, 10206, 10222, or 10223.
Information tracking and follow-up system
The Small Business Act is amended by inserting after section 42 (as added by section 106) the following:
Information tracking and follow-up system for disaster assistance
System required
The Administrator shall develop, implement, and maintain a centralized information system to track communications between personnel of the Administration and applicants for disaster assistance. The system shall ensure that whenever an applicant for disaster assistance communicates with such personnel on a matter relating to the application, the following information is recorded:
The method of communication.
The date of communication.
The identity of the personnel.
A summary of the subject matter of the communication.
Follow-up required
The Administrator shall ensure that an applicant for disaster assistance receives, by telephone, mail, or electronic mail, follow-up communications from the Administration at all critical stages of the application process, including the following:
When the Administration determines that additional information or documentation is required to process the application.
When the Administration determines whether to approve or deny the loan.
When the primary contact person managing the loan application has changed.
.
Immediate Disaster Assistance program
The Small Business Act is amended by inserting after section 43 (as added by section 202) the following:
Immediate Disaster Assistance program
Program required
The Administrator shall carry out a program, to be known as the Immediate Disaster Assistance program, under which the Administration participates on a deferred (guaranteed) basis in 85 percent 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 disaster.
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).
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.
Approval or disapproval
The Administrator 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 Administration receives the application.
.
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:
Additional requirements for 7(b) loans
Increased deferment authorized
In general
In making loans under section 7(b), the Administrator may provide, to the person receiving the loan, an option to defer repayment on the loan.
Period
A deferment under subparagraph (A) may not exceed 4 years.
.
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:
Revised repayment terms
In making loans under section 7(b), the Administrator—
shall not require repayment to be made until 12 months after the date on which the final disbursement of approved amounts is made; and
shall calculate the amount of repayment based solely on the amounts disbursed.
.
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:
Revised disbursement process
In making loans under section 7(b), the Administrator shall disburse the loan amounts in stages as follows:
Loans up to $150,000
If the total amount approved is less than or equal to $150,000—
the first disbursement shall consist of 40 percent of the total loan amount, or a lesser percentage of the total loan amount if the Administrator and the borrower agree on such a lesser percentage;
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 produced satisfactory receipts to demonstrate the proper use of the first half of the first disbursement; and
the third disbursement shall consist of the amounts that remain after the preceding disbursements, and shall be made when the borrower has produced satisfactory receipts to demonstrate the proper use of the first disbursement and the first half of the second disbursement.
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—
the first disbursement shall consist of 20 percent of the total loan amount, or a lesser percentage if the Administrator and the borrower agree on such a lesser percentage;
the second disbursement shall consist of 30 percent of the total loan amount remaining after the first disbursement, and shall be made when the borrower has produced satisfactory receipts to demonstrate the proper use of the first half of the first disbursement;
the third disbursement shall consist of 25 percent of the total loan amount remaining after the first and second disbursements, and shall be made when the borrower has produced satisfactory receipts to demonstrate the proper use of the first disbursement and the first half of the second disbursement; and
the fourth disbursement shall consist of the amounts that remain after the preceding disbursements, and shall be made when the borrower has produced satisfactory receipts to demonstrate the proper use of the first and second disbursements and the first half of the third disbursement.
Loans greater than $500,000
If the total amount approved is more than $500,000—
the first disbursement shall consist of at least $100,000, or a lesser amount if the Administrator and the borrower agree on such a lesser amount; and
the number of disbursements after the first, and the amount of each such disbursement, shall be in the discretion of the Administrator, but the amount of each such disbursement shall be not less than $100,000.
.
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:
Revised collateral requirements
In making a business loan under section 7(b), the 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.
.
Enhanced lending authority for private lenders
The Small Business Act is amended by inserting after section 44 (as added by section 203) the following:
Enhanced lending authority for private lenders
Program authorized
The Administrator may, and during a period specified in subsection (b) shall, carry out a program under which the Administrator permits banks and other financial institutions to process, approve, close, and service disaster loans under section 7(b) for a fee not to exceed 2 percent of the total loan amount.
Periods during which program is required
The program under subsection (a) is required to be carried out during the following periods:
Any period of an incident of national significance (as declared by the President or his designee).
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.
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 Administrator may do any one or more of the following:
Exclude the lender from participating in the program under subsection (a).
Exclude the lender from participating in the Preferred Lenders Program under section 7(a)(2)(C)(ii).
Factor in Preferred Lenders Program
In determining whether a lender is to be certified or recertified to participate in the Preferred Lenders Program under section 7(a)(2)(C)(ii), the Administrator may consider as a factor the following:
The loans processed, approved, and closed by the lender under the program under subsection (a).
The participation or non-participation of the lender in the program under subsection (a).
.
Disaster processing redundancy
The Small Business Act is amended by inserting after section 45 (as added by section 208) the following:
Disaster processing redundancy
In general
The Administrator shall ensure that the Administration has in place a facility for disaster loan processing that, whenever the Administration’s primary facility for disaster loan processing becomes unavailable, is able to take over all disaster loan processing from that primary facility within 2 days.
Authorization of appropriations
There are authorized to be appropriated to carry out this section such sums as may be necessary.
.
Grant program
Section 7(b) of the Small Business Act (15 U.S.C. 636(b)) is amended by inserting immediately after paragraph (3) the following:
Grants to disaster-affected small businesses
In general
The Administrator may make a grant of up to $100,000 to a small business concern that—
was located in a designated disaster 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 Hurricanes Katrina, Rita, or Wilma of 2005, experienced a loss of at least 100 housing units, experienced a loss of at least 1 percent of available housing stock, and required Federal infrastructure assistance of a least $200,000;
submits to the Administrator a certification by the owner of the concern of intent to reestablish the concern in the same county or parish in which the business was originally located, or in any other county or parish described in clause (i);
has applied for, and was rejected for, a conventional disaster assistance loan under section 7(b); and
was in existence for at least 2 years before the date on which the applicable disaster declaration was made.
Priority
In making grants under this paragraph, the Administrator shall give priority to a small business concern that the Administrator determines is economically viable but unable to meet short-term financial obligations.
Definition
In this paragraph, the term disaster-affected area means an area that has been designated by the Administrator as a disaster area.
Authorization of appropriations
There are authorized to be appropriated for grants under this paragraph such funds as may be necessary.
.
Hurricane Assistance Replacement Grant Program
Program established
The Administrator may carry out a program under which the Administrator may, in the Administrator’s discretion, make grants to individuals who—
are victims of a disaster under disaster declaration 10176, 10177, 10178, 10179, 10180, 10181, 10203, 10204, 10205, 10206, 10222, or 10223; and
receive (whether before, on, or after the date of the enactment of this Act) 7(b) disaster assistance because of that disaster.
Authorization of appropriations
There are authorized to be appropriated such sums as may be necessary to carry out this section.
Eligibility
An individual is eligible to receive a grant under this section only if the individual—
receives benefits (other than the 7(b) disaster assistance) because of the disaster; and
is required to remit those benefits to the Small Business Administration because of a duplication of benefits.
Amount
The amount of a grant under this section to an individual shall not exceed the amount of the benefits required to be remitted by the individual, as described in subsection (c).
Time
The Administrator shall ensure that, to the maximum extent practicable, a grant made under this section is made—
concurrent with the Administration’s receipt of the remittance, if the remittance is made after the date of the enactment of this Act; and
as soon as possible after the Administration’s receipt of the remittance, in all other cases.
Treatment of Grants
Grants made under this section shall not be considered a duplication of benefits by the Administrator.
Definitions
In this section:
The term Administrator means the Administrator of the Small Business Administration.
The term 7(b) disaster assistance means assistance under paragraph (1) or (2) of section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)).
Increase legislative limit
Section
7(b)(3)(E) of the Small Business Act (15 U.S.C. 636(b)(3)(E)) is amended
by striking $1,500,000
and inserting $3,000,000
both places such term appears.
Net earnings clauses prohibited
Section 7 of the Small Business Act is amended in subsection (f) by adding after paragraph (4) (as added by section 207) the following:
Net earnings clauses prohibited
In making loans under section 7(b), the Administrator shall not require the borrower to pay any non-amortized amount for the first 5 years after repayment begins.
.
Economic injury disaster loans to nonprofits
In general
Section 7 of the Small Business Act (15 U.S.C. 636) is amended in subsection (b)(2)—
in the matter preceding subparagraph (A)—
by inserting after
small business concern
the following: , private nonprofit
organization,
; and
by inserting after
the concern
the following: , organization,
;
and
in subparagraph
(D) by inserting after small business concerns
the following:
, private nonprofit organizations,
.
Conforming amendment
Such section is
further amended in subsection (c)(5)(C) by inserting after
business
the following: , organization,
.
Applicants that will constitute a major source of employment due to changed economic circumstances
Section
7(b)(3)(E) of the Small Business Act (15 U.S.C. 636(b)(3)(E)) is amended
by inserting after constitutes
the following: , or will
due to changed economic circumstances constitute,
.
Preliminary application process for assistance for small business concerns with essential employees ordered to serve on active duty in the Armed Forces
Section 7(b)(3) of the Small Business Act (15 U.S.C. 636(b)(3)) is amended—
in subparagraph (C)—
by striking
90 days
and inserting 1 year
; and
by adding at the
end the following: The Administrator may, when appropriate (as
determined by the Administrator), waive the ending date specified in the
preceding sentence and provide a later ending date.
; and
by adding at the end the following new subparagraph:
The Administrator shall establish a process under which a small business concern described in subparagraph (B) may file a preliminary application for assistance under this paragraph, accompanied by supporting documentation, before the date on which the essential employee is ordered to active duty. The Administrator may not actively consider such an application or provide assistance to the small business concern based on such an application until the date on which the essential employee is ordered to active duty.
.
Economic injury disaster loans in cases of ice storms and blizzards
Section 3(k)(2) of the Small Business Act (15 U.S.C. 632(k)(2)) is amended—
in subparagraph
(A) by striking and
;
in subparagraph
(B) by striking the period at the end and inserting ; and
;
and
by adding at the end the following:
ice storms and blizzards.
.
Report regarding lack of snow fall
Not later that 6 months after the date of enactment of this Act, the Administrator of the Small Business Administration shall conduct a study of, and submit a report to the Committee on Small Business of the House of Representatives and the Committee on Small Business and Entrepreneurship of the Senate that describes—
the ability of the Administrator to provide loans under section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)) to small business concerns that depend on high snow fall amounts and sustain economic injury (as described under that section) due to a lack of snow fall;
the criteria the Administrator would use to determine whether to provide a loan under section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)) to a small business concern that has been adversely affected by a lack of snow fall;
other Federal assistance (including loans) available to small business concerns that are adversely affected by a lack of snow fall; and
the history relating to providing loans under section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)) to small business concerns that have been adversely affected by a lack of snow fall.
Gulf Coast Disaster Loan Refinancing Program
In general
The Administrator of the Small Business Administration may carry out a program to refinance Gulf Coast disaster loans.
Terms
The terms of a Gulf Coast disaster loan refinanced under the program shall be identical to the terms of the original loan, except that the Administrator may provide an option to defer repayment on the loan. Such a deferment may not exceed 4 years after the date on which the initial disbursement under the original loan was made.
Amount
The amount of a Gulf Coast disaster loan refinanced under the program shall not exceed the amount of the original loan.
Disclosure of accrued interest
Whenever the Administrator provides an option to defer repayment under subsection (b), the Administrator shall disclose the accrued interest that must be paid under the option.
Definition
In this section, the term Gulf Coast disaster loan means a loan—
made under section 7(b) of the Small Business Act;
in response to Hurricane Katrina, Hurricane Rita, or Hurricane Wilma of 2005; and
for a small business located in a county or parish designated by the Administrator as a disaster area by reason of such Hurricane Katrina, Hurricane Rita, or Hurricane Wilma under disaster declaration 10176, 10177, 10178, 10179, 10180, 10181, 10203, 10204, 10205, 10206, 10222, or 10223.
Authorization of appropriations
There are authorized to be appropriated such sums as may be necessary to carry out this section.
Oversight
Reports on disaster assistance
The Small Business Act is amended by inserting after section 46 (as added by section 209) the following:
Reports on disaster assistance
Annual report required
Not later than 45 days after the end of a fiscal year, the Administrator shall submit to the Committee on Small Business of the Senate and the Committee on Small Business of the House of Representatives a report on the disaster assistance operations of the Administration for that fiscal year. The report shall—
specify the number of Administration personnel involved in such operations;
describe any material changes to those operations, such as changes to technologies used or to personnel responsibilities;
describe and assess the effectiveness of the Administration in responding to disasters during that fiscal year, including a description of the number and amounts of loans made for damage and for economic injury; and
describe the plans of the Administration for preparing to respond to disasters during the next fiscal year.
Incidents of national significance
During the period of an incident of national significance (as declared by the President or his designee), the Administrator shall, on a monthly basis, submit to the committees specified in subsection (a) a report on the disaster assistance operations of the Administration with respect to that incident of national significance. The report shall specify—
the number of applications distributed;
the number of applications received;
the average time for the Administration to approve or disapprove an application;
the amount of disaster loans approved;
the average time for initial disbursement of loan proceeds; and
the amount of disaster loan proceeds disbursed.
.
Passed the House of Representatives April 18, 2007.
Lorraine C. Miller,
Clerk.
Marjorie C. Kelaher,
Deputy Clerk.
August 3, 2007
Read twice and placed on the calendar