Donald Manzullo

Mr. MANZULLO

Mr. MANZULLO. Mr. Chairman, this amendment strikes sections 202 and section 201 and section 202. Section 202 violates House rule XXI by authorizing in an appropriations bill, and it is the same argument with section 201. I would ask for the support of the Committee on Appropriations on this.

Mr. MANZULLO. I yield to the gentleman from Florida.

Mr. MANZULLO. Mr. Chairman, I am finished.

Mr. MANZULLO. Mr. Chairman, I offer an amendment.

Mr. MANZULLO. Mr. Chairman, this amendment, which I offer along with the ranking minority member, the gentlewoman from New York (Ms. Velazquez), will allow the $140 million appropriated in this emergency supplemental to also go towards the 7(a) and 504 loan program of the Small Business Administration if not all the funds have been used for disaster relief. The initial appropriation of $100 million last September and this additional funding of $140 million is designed to support $1 billion in disaster relief. As of November 19, the SBA approved nearly $142 million in total disaster relief, with only $24 million being actually disbursed. It is quite conceivable that the SBA may not use the entire allotment provided in this appropriations. My amendment simply gives the SBA administrator the flexibility to use all these funds to provide additional relief to small business borrowers who use the main lending programs of the SBA, the 7(a) General Business Loan program and the 504 Certified Development Company program. The $240 million set aside for the SBA in P.L. 107-38 and H.R. 3338 should be used to help as many small businesses as possible. I urge my colleagues to support this amendment.

Mr. MANZULLO. Mr. Chairman, will the gentleman yield?

Mr. MANZULLO. Mr. Chairman, that is correct.

Mr. MANZULLO. Yes, I wish to be heard on the point of order. This amendment simply gives the flexibility to the SBA administrator to use leftover funds already appropriated to also go towards a 7(a) and 504 loan program. There is sufficient authorization already in place to cover the expected increase in demand as those turned down for disaster look to other sources for assistance. This amendment does not require that this funding go towards 7(a) in a 504 loan program, it simply provides discretion to the SBA administrator. On line 3 and 4 the amendment clearly states that funds made available to the Small Business Administration from amounts available in P.L. 107-38 may be obligated for emergency expenses and business loan assistance for the purpose of disaster loan programs and also the 7(a) and the 504 programs. We would argue that this is not an open-ended commitment; this is a one-time emergency response to a credit crisis facing small businesses across the Nation. Earlier this month the Federal Reserve released reports which stated that banks are imposing tougher standards on business loans over the last 3 months because of the slowing economy. We need fee relief in the 7(a) and 504 loan programs in order to get our economy back on track. So this does not spend any extra money, it simply works within the parameters of the discretion of the SBA administrator and, therefore, I do not believe that we are legislating on an appropriations bill.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, will the gentlewoman yield?

Mr. MANZULLO. Mr. Speaker, I ask unanimous consent to take from the Speaker's table the Senate bill (S. 1196) to amend the Small Business Investment Act of 1958, and for other purposes, and ask for its immediate consideration in the House.

Mr. MANZULLO. Mr. Speaker, I yield myself such time as I may consume. As I stated, the purpose of the amendment is to decrease the fees of the 7(a) program and the 504 program effective October 1 of the year 2002. Mr. Speaker, I yield back the balance of my time.

Mr. MANZULLO. Mr. Speaker, I offer an amendment in the nature of a substitute.

Mr. MANZULLO. Mr. Speaker, I rise in support of S. 1196, the Small Business Investment Company Amendments Act of 2001. This is a fairly straightforward bill--it will keep venture capital flowing to small businesses during this critical time in our nation's economic recovery. Right now, there are 30 participating securities license applicants awaiting approval of this bill, with $600 million private equity capital at stake. In 1958, Congress created the SBIC program to assist small business owners in locating investment capital. The problems are still the same as they were 40 years ago, which are magnified by the collapse of many ``dot.coms,'' the general economic slowdown, and the tragic events of September 11th. However, with other sources of private venture capital drying up, the SBIC program is becoming more and more critically important. Last year, SBIC financed 4,600 venture capital deals, investing $5.6 billion in fast-growing small businesses. Since 1996, investing by SBIC-licensed firms accounted for about half of all venture capital deals made in the United States. Since its inception, the SBIC program has also returned $700 million directly to the U.S. Treasury. Indirectly, the SBIC program has generated millions of dollars in corporate tax revenue from companies as diverse as Federal Express, Apple Computer, Intel Corporation, America Online, Callaway Golf, and the Outback Steakhouse. They all had their start with an infusion of venture capital from SBIC-licensed firms. The main purpose of S. 1196 is to adjust the fees charged to Participating Security SBICs from 1.0 percent to 1.38 percent. This change is necessary because both the President and Congress have agreed to eliminate funding for this program. The FY '02 Commerce/Justice/ State Appropriations bill (H.R. 2500), which passed both bodies earlier this week, contained no funding for the Participating Securities SBIC program. The Debentures SBIC program already operates at zero cost to the taxpayer. If the President signs H.R. 2500 without any funding or and S. 1196, with a fee increase, does not reach his desk, then the SBIC Participating Securities program terminates. According to a letter I received from the SBA Administrator, Hector Barreto, which I include for the record, there are currently 30 participating securities license applicants awaiting approval backed by approximately $600 million dollars in capital. If S. 1196 does not pass, these and all future small business investment opportunities through the SBIC program would vanish. H.R. 2500 also contains increased program levels for the SBIC program. S. 1196 is needed to accommodate the anticipated increased demand for venture capital financing as the private sector has withdrawn from the marketplace. The SBIC program serves best as a counter cyclical program--it is particularly needed during a downturn in our economy. The other provisions in S. 1196 affecting the SBIC program strengthen the oversight and authority of the SBA to take action against bad actors within the program, promoting the integrity of the program, and streamline its operation. The House amendments to S. 1196 modestly lower the fees in the other main access to capital programs of the SBA--the 7(a) General Business loan program and the 504 Certified Development Company (CDC) program. In 1995, Congress increased the fees in the programs to lower the cost to the taxpayer. Since then, the Office of Management and Budget (OMB), the Congressional Budget Office (CBO), and the General Accounting Office (GAO) have all agreed that small business borrowers and lenders have paid in far too much fees to keep the program operating at no cost to the taxpayer. In fact, CBO estimates that participants in the 7(a) program alone have overpaid the U.S. Treasury in terms of higher fees to the tune of $1.258 billion over the past nine years. These amendments are a small beginning to rectify this problem. The fee changes include lowering the fees on 7(a) loans from between $150,000 to $250,000 to two percent. For all loans above $250,000, the fees would be three percent. This amendment eliminates the 3.5 percent fee on loans above $700,000. The annual fee would drop in half from 0.25 percent to 0.50 percent. In addition, 504 fees would be reduced in terms of both the upfront and on-going fee for the entire life of the loan. It should be made clear that fee reductions contained in the House amendments to S. 1196 are applicable only after October 1, 2002--at the beginning of the next fiscal year. Thus, there should be no interruption in the level of service offered small business borrowers and lenders during this fiscal year. Also, these changes are subject to appropriations, which I am optimistic will be addressed when OMB makes its promised changes to the subsidy rate calculation model. Mr. Speaker, I rise in support of S. 1196 as amended, and I urge my colleagues to support these needed changes to these programs. Ms. Velazquez. Mr. Speaker, I withdraw my reservation of objection.

Mr. MANZULLO. Mr. Speaker, the purpose is so that the 7(a) program and the 504 program, it will reduce fees in both those programs effective on October of next year; but the overall bill is important because it continues the SBIC programs going. Small Business Administration, Washington, DC, November 14, 2001. Hon. Donald A. Manzullo, Chairman, Committee on Small Business, House of Representatives, Rayburn House Office Building, Washington, DC. Dear Mr. Chairman: Congress will soon pass H.R. 2500, Departments of Commerce, Justice, and State, the Judiciary and Related Agencies Appropriations Act, 2002. As you know, under the terms of the Continuing Resolution, upon enactment of H.R. 2500 its provisions will immediately take effect. That enactment will have a significant impact upon the Small Business Investment Company (SBIC) participating securities program. Under H.R. 2500, there is no subsidy budget authority available for the participating securities program. The Committee on Appropriations removed that funding in anticipation of legislation from the Committee on Small Business to enhance the fee structure of the participating securities program. Those legislative changes would result in a zero subsidy rate for the participating securities program. This legislation was part of the Administration's budget submission to the Congress and is supported by the SBIC industry. Unfortunately, the authorizing language has not yet passed the Congress. Absent the authorizing language the Small Business Administration will be unable to make future commitments for participating securities leverage until the authorizing language is passed. I fear that such disruption will have a chilling effect upon private sector participation in the SBIC program. There are currently 30 participating securities license applicants awaiting approval backed by approximately $600 million dollars in capital. This capital, enhanced by SBA's leverage, represents a significant potential investment in America's small businesses, an investment that could be negatively affected by the uncertainty of a suspension. Mr. Chairman, the SBIC participating securities program has invested billions of dollars in small businesses and created thousands of jobs, and has the potential to create so many more. I urge you and your colleagues to work quickly to pass the requisite legislation to raise the fee structure in the participating securities program by 37.6 basis points and prevent the suspension of the program. The SBA stands ready to work with you on this legislation and help keep this program working for small business. Sincerely, Hector V. Barreto, Administrator.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, I ask unanimous consent that the call of the Private Calendar be dispensed with today.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, renewing Trade Promotion Authority for the President is vitally important for small business exporters. Many will be surprised to learn that 97 percent of all U.S. exporters are small businesses and that 69 percent of all U.S. exporters employ less than 20 workers. In addition, the number of small business exporters has increased from 66,000 in 1987 to 224,000 in 1999. Lowering foreign trade barriers helps small business exporters more than large companies. While most large companies can either export or set up a factory overseas, most small business exporters have only one choice, and that is to export from America. There are many complicated issues that face small business exporters, such as streamlining foreign customs practice. Let us give the President the tools he needs to negotiate away these unfair trade barriers.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, I am pleased to join with my good friends, Representatives Jim Moran and Jerrold Nadler in introducing the American Small Business Emergency Relief and Recovery Act of 2001. The purpose of this emergency legislation is to help small businesses meet their payments on existing debts, finance their businesses, and maintain jobs in the aftermath of the terrorist attacks on September 11 by strengthening and expanding access to the Small Business Administration's (SBA) loan and management counseling programs. To help turn the economy around, this bill includes changes to two of SBA's main nondisaster lending programs in order to encourage borrowing and lending for new and growing small businesses that may otherwise be reluctant to start or expand their businesses in the post-September 11 economy. This bill also includes provisions to aid our small business federal contractors facing increased costs such as when they have found it difficult to access federal facilities to work on existing contracts due to security constraints. Finally, this bill increase authorization levels for SBA's various technical assistance programs to insure that adequate individualized help is available to small businesses coping with the aftermath of the terrorist attacks. This bill includes changes that will be included in the manager's amendment in the nature of a substitute to the Senate counterpart of this legislation, introduced by the chairman and ranking member of the Senate Small Business and Entrepreneurship Committee, Senators John Kerry and Christopher ``Kit'' Bond (S. 1499). Most of the changes contained in the manager's amendment in the nature of a substitute to the original S. 1499 are technical in nature mainly to accommodate concerns raised by the Congressional Budget Office, the SBA, and the Office of Legislative Counsel. These changes have been developed jointly between the Senate and House Small Business Committees, and are identical, word for word. After two hearings and listening to dozens of small business owners across the Nation, small businesses in need of help fall into three categories for the purposes of this Act: (1) those suffering from direct, physical damage, (2) those suffering from indirect damage, and (3) those in need of general economic stimulus. This legislation is not the only source of help for our nation's small businesses. It is meant to complement--not supplant--the efforts undertaken by other congressional committees and the executive branch to revitalize our economy. For those small businesses still suffering from direct damage as a result of the terrorist attacks on September 11, this legislation first modifies the SBA's disaster loan program to deal with concerns raised by small businesses, particularly from the downtown Manhattan area. For small businesses located in the areas of New York, Virginia, or contiguous areas declared disaster areas, the bill increases loan amounts from $1.5 million to $6 million for both economic injury disaster loans and physical disaster business loans. It also increases the aggregate amount that a small business may borrow through the SBA from $1.5 million to $12 million. The bill increases the size standards for certain industries, in terms of number of employees or gross annual receipts and gives the SBA Administrator the authority to waive or increase a size standard through an expedited process. It also defers the payments and forgives the interest on these loans for 2 years. Second, for those small businesses suffering indirect damage, this legislation modifies the 7(a) or General Business guarantee loan program of the SBA. These are small businesses not physically damaged or destroyed or in the vicinity of such businesses, but affected because they are a supplier, service provider or complementary industry to any affected industry, especially the financial, hospitality, travel and tourism industries, or are dependent upon the business of a closed or suspended business or sector. These businesses would be eligible for 7(a) Guaranteed Business Loans, under more unfavorable terms, including a reduced interest rate, elimination of the upfront borrower fee, a reduction of the lender's annual guarantee fee by half, and an increase in the government's guarantee percentage to 90 percent. This temporary change to the 7(a) program would sunset one year after enactment. In the third category of assistance, this bill contains a general economic stimulus for those small businesses in need of capital and investment financing, procurement assistance, or management counseling in the economic aftermath of September 11. There are incentives for small businesses and lenders to use the 7(a) program, the 504 Certified Development Company guarantee loan program, which is used for plant construction and expansion and equipment acquisition, and the Small Business Investment Company (SBIC) program. As an economic stimulus, the bill reduces by half the upfront 7(a) guarantee fee paid by the borrower; reduces the lender's annual guarantee fee from 0.5 to 0.25 percent for the life of the loan; establishes a government guarantee percentage of 85 percent on all such loans (regardless of size); and gives the SBA Administrator the authority to waive or increase a size standard. In addition, the bill eliminates the upfront 504 loan program guarantee fee of 0.5 percent paid by the borrower and reduces by half the borrower's annual guarantee fee for the life of the loan. These changes to the 7(a) and the 504 program would expire one year after enactment. The bill also raises the authorized program level of the SBIC program, the SBA's venture capital initiative, by $900 million to meet anticipated demand as other private sector sources for venture capital dry up. The legislation also establishes an expedited procedure whereby federal small business contractors can apply for an equitable adjustment to their contracts if costs have been incurred due to security or other measures resulting from the September 11 terrorist attacks. An adversely affected small business owner would first apply to the contracting officer for monetary relief. The contracting officer would work with the agency's Office of Small and Disadvantaged Business Utilization and the SBA to determine the amount of any monetary adjustment. A decision is required within 30 days. The provision establishes a $100 million fund at the SBA to pay for these contract adjustments. The program would sunset, permitting small businesses 11 months after enactment to apply for the adjustment. The bill also authorizes additional funds for various SBA management assistance programs to help small business successfully utilize the temporary changes to the SBA loan guarantee programs as outlined above. It increases funding for Small Business Development Centers (SBDCs) by $25 million, of which $2.5 million will be available for businesses in New York's disaster area and $1.5 million for businesses in Virginia's disaster area. The funds would be used to provide free individualized assistance for small businesses adversely affected by the terrorist attacks. No matching state funds would be required. The bill increase funding for the Women's Business Centers Program by $2 million and also waives the non-Federal matching requirement. Funding for Microloan Technical Assistance is also increased by $5 million for similar purposes. Lastly, the legislation increases funding for the Service Corps of Retired Executives (SCORE) by $2 million to provide free advice from experienced businesspersons to struggling small business owners dealing with the aftermath of the events of September 11. Finally, the SBA's Office of Advocacy is authorized in this bill to expend $500,000 to study and report on small businesses adversely impacted by the attacks of September 11, and measure the effect of this legislation on small businesses. This bipartisan bicameral legislation is endorsed and strongly supported by small business groups, including the U.S. Chamber of Commerce, National Small Business United, the Small Business Legislative Council, the National Association of Government Guaranteed Lenders (NAGGL), the National Association of Development Companies (NADCO), the Association of Women's Business Centers, the National Community Reinvestment Coalition, and the National Limousine Association. Mr. Speaker, I invite my colleagues to join me in passing this emergency legislation so that we can get assistance to needy small business owners as soon as possible.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, this last Wednesday, on rollcall vote No. 375, I want it to be in the Record that I was present on the House floor, and I did vote in favor of that bill. Unfortunately, there was a malfunction with the House voting machine, and it did not record my vote.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, I yield such time as he may consume. Mr. Speaker, the purpose of H.R. 2666 is to provide entrepreneurial assistance to persons with vocational and technical skills to help them own and operate their own businesses, rather than being employees of companies in which they have no direct ownership interest. A further and equally important purpose of the Act is to stimulate economic activity to create new job opportunities, and to help tradesmen and tradeswomen realize the full potential of the free enterprise system. Many persons within the United States have technical or vocational skills, but do not have business experience or training to help them succeed in the small business community. Currently, small businesses employ mechanics, technicians, carpenters, plumbers, machinists, and draftsmen. However, the Act is needed to provide the essential training in business constantly necessary for these skilled workers to start their own businesses, to survive in the business world, and to grow. In providing these needed services, the Act relies upon the present infrastructure of the Small Business Development Centers, which are proven by past performance to deliver services that greatly enhance the chances of a small business surviving as compared with those who do not receive such assistance. The present global economy requires that this Nation remain as a competitor. Fostering the growth of small business, as it is anticipated this Act will do, is another building block in strengthening our international competitiveness. The Act establishes a 3-year pilot program providing Small Business Administration grants to Small Business Development Centers for technical assistance to secondary schools and postsecondary vocational and technical schools. It also aims to develop and implement curricula to promote vocational and technical entrepreneurship. The grant applicant must outline its goals and objectives for assistance to be provided in the educational curricula to be implemented with grant funds. It is the desire of the Committee that States' Small Business Development Centers pay particular focus to helping underserved subcenters in the area of vocational and technical entrepreneurship training. Those small business development centers receiving grants under the pilot program must report to the Small Business Administration within 18 months. The 18 months starting from the date they receive the grant monies and detailing how the grant funds were used. In addition, not later than March 31, 2004, the SBA must conduct an evaluation of the program and report the results of this evaluation to Congress. The Act designates the Association of Small Business Development Centers as a clearinghouse for the collection of information and expertise regarding vocational and technical or entrepreneurship programs. The minimum amount of a grant under the pilot program is $200,000. The bill authorizes $7 million annually for each year of the 3-year pilot program. Lastly, I want to commend my fellow member of the Committee on Small Business, the gentleman from Pennsylvania (Mr. Brady), for the hard work he has put in as the author of this legislation. I urge my colleagues to support H.R. 2666. Mr. Speaker, I reserve the balance of my time.

Mr. MANZULLO. Mr. Speaker, I continue to reserve the balance of my time.

Mr. MANZULLO. Mr. Speaker, I have no more speakers. I reserve the balance of my time.

Mr. MANZULLO. Mr. Speaker, I reserve the balance of my time.

Mr. MANZULLO. Mr. Speaker, I have no further requests for time, and I yield back the balance of my time.

Mr. MANZULLO. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2666) to amend the Small Business Act to direct the administrator of the Small Business Administration to establish a vocational annual technical entrepreneurship development program, as amended.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 203) to amend the Small Business Act to direct the Administrator of the Small Business Administration to establish a pilot program to provide regulatory compliance assistance to small business concerns, and for other purposes, as amended.