S. Rept. 113-84 - 113th Congress (2013-2014)

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Senate Report 113-84 - SMALL BUSINESS DISASTER REFORM ACT OF 2013

[Senate Report 113-84]
[From the U.S. Government Publishing Office]


                                                       Calendar No. 161
113th Congress  }                                            {   Report
  1st Session   }             SENATE                         {   113-84

=======================================================================
 
               SMALL BUSINESS DISASTER REFORM ACT OF 2013 

                                _______
                                

                 July 31, 2013.--Ordered to be printed

                                _______
                                

        Ms. Landrieu, from the Committee on Small Business and 
               Entrepreneurship, submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                         [To accompany S. 415]

    The Committee on Small Business and Entrepreneurship, to 
which was referred the bill (S. 415) to clarify the collateral 
requirement for certain loans under section 7(d) of the Small 
Business Act, to address assistance to out-of-state small 
business concerns, and for other purposes, having considered 
the same, reports favorably thereon and recommends that the 
bill do pass.

                            I. INTRODUCTION

    The Small Business Disaster Reform Act of 2013 (S. 415) was 
introduced by the Committee's Chair, Senator Mary L. Landrieu, 
and Senators Thad Cochran, Kirsten Gillibrand, and Mark Pryor, 
on February 18, 2013. Senators Benjamin Cardin, Heidi Heitkamp, 
John Hoeven, and Roger Wicker have also cosponsored the 
legislation.
    The bill clarifies, for SBA disaster business loans of less 
than $200,000, that the SBA is required to utilize business 
assets other than the borrower's primary residence if those 
assets are available to use as collateral towards the loan. 
Additionally, the bill authorizes the SBA Administrator to 
allow out-of-state SBDCs to provide assistance to small 
businesses located in Presidentially declared disaster areas.
    During markup of the bill, the Committee approved the 
legislation by a roll call vote of 11-6.

                  II. PURPOSE AND NEED FOR LEGISLATION

    The U.S. Small Business Administration (SBA) is the primary 
Federal disaster-assistance loan program for private sector, 
non-agricultural businesses. SBA's Disaster Loan Program 
actually pre-dates the SBA itself. The program was originally 
created in 1932 under the Herbert Hoover Administration at the 
Reconstruction Finance Corporation (RFC)--the precursor to the 
SBA. The program was gradually expanded until, when the SBA was 
created in 1953, Congress transferred disaster loan making 
authority from RFC to the SBA.
    Disaster loans are direct loans from SBA and eligibility is 
based on financial criteria. Interest rates fluctuate according 
to statutory formulas (recent disaster loans were at 4 
percent). Eligible recipients are small businesses, homeowners, 
and nonprofits. There are two kinds of business disaster loans: 
Physical Disaster Loans and Economic Injury Disaster Loans. The 
SBA also funds a nationwide network of nearly 1,000 Small 
Business Development Centers with over 4,500 business advisors. 
These advisors provide business counseling to entrepreneurs, 
both in disaster and non-disaster situations.
    The purpose of the Small Business Disaster Reform Act of 
2013 is to ensure that the Federal government is better 
prepared and has the tools necessary to respond quickly and 
effectively following a disaster. The first provision in the 
Small Business Disaster Reform Act of 2013 builds off of SBA 
disaster reforms enacted in 2008 and intends to ensure that SBA 
is responsive to the needs of small businesses seeking smaller 
amounts of disaster assistance. The majority of Committee 
members are concerned that these businesses are burdened the 
most by liens on their primary personal residential homes when 
they could conceivably provide sufficient business assets (i.e. 
commercial real estate, equipment, inventory) as collateral for 
the loan. Business owners, in many cases who have just lost 
everything due to natural disasters, are applying to the SBA 
for disaster loans of $200,000 or less for their business. The 
SBA has responded by requiring these disaster victims to put up 
their personal home, sometimes in excess of $300,000 to 
$400,000, as collateral even though the business may have 
acceptable business assets available to collateralize the loan.
    The second provision in the bill authorizes the SBA 
Administrator to allow out-of-state Small Business Development 
Centers (SBDCs) to provide assistance in to small businesses 
located in Presidentially-declared disaster areas. There is 
currently a limitation on SBDCs from assisting businesses 
outside of their geographic areas. The Committee is concerned 
that this hurts recovery in disaster areas experiencing a large 
scale disaster as SBDCs are often impacted right along with 
their local small businesses. For example, following Hurricanes 
Katrina and Rita, Louisiana SBDCs were severely limited in what 
they could do right after the storm and seasoned disaster 
experts with Florida SBDCs could not assist in Louisiana while 
the local SBDCs were stood back up. A similar situation 
occurred following Hurricane Sandy last year--SBDCs in other 
states were prohibited from helping with recovery in New York 
or New Jersey.
    The third provision ensures that out-of-state SBDCs are not 
left paying out of pocket for assisting in these disaster 
areas. This section encourages the SBA to ensure it reimburses 
SBDCs for these disaster-related expenses, provided they were 
legitimate and there are funds available to do so. The Small 
Business Disaster Reform Act of 2013 makes these commonsense 
disaster reforms and will greatly benefit businesses impacted 
by future disasters.
    The Committee is also concerned with borrowers of Economic 
Injury Disaster Loans (EIDLs) complying with loan requirements 
and therefore provides, within the fourth provision, increased 
oversight of EIDLs. A sense of Congress is included to 
reiterate that the SBA should utilize existing funds to 
implement this section.
    The fifth provision requires the SBA to take reasonable 
steps to reduce paperwork burdens on individuals and businesses 
applying for SBA disaster assistance. This provision also 
encourages that the application for disaster assistance 
facilitates deterring and detecting potential incidents of 
waste, fraud, and abuse.
    Finally, the last provision requires the SBA to report to 
Congress, in 90 days, on establishing an online web portal, 
within SBA's existing disaster website, to track the status of 
their disaster loan applications. The Committee has become 
aware of concerns surrounding disaster loans from Hurricane 
Sandy where sufficient follow-up communications are not being 
provided from SBA staff to disaster victims. These 
communications are both timely and necessary to applicants as 
their disaster loan application proceeds through the critical 
stages of origination, approval, and disbursement. To improve 
the quality of service and provide greater transparency for 
disaster loan applicants, this provision would require SBA to 
report on establishing a secure web portal for disaster loan 
applicants. This web portal, which would be within the existing 
disaster web portal, would allow disaster applicants to better 
track the status of their applications and receive relevant 
contact information for the specific SBA staff handling their 
loans.

                      III. HISTORY OF LEGISLATION

    S. 415 draws its Section 2 provisions from: H.R. 3854, the 
Small Business Financing and Investment Act of 2009, introduced 
by Representative Kurt Schrader and cosponsored by 
Representatives Yvette Clarke, Deborah L. Halvorson, Ann 
Kirkpatrick, Ike Skelton, and Nydia M. Velazquez on October 20, 
2009, H.R. 3743, the Small Business Disaster Readiness and 
Reform Act of 2009, introduced by Representative Parker 
Griffith on October 7, 2009, and H.R. 1, the Disaster Relief 
Appropriations Act of 2013, introduced by Representative Harold 
Rogers on February 11, 2011.
    During the 111th Congress, H.R. 3854, the Small Business 
Financing and Investment Act of 2009, received a final vote of 
389-32. H.R. 3743, the Small Business Disaster Readiness and 
Reform Act of 2009, received final passage by voice vote and 
H.R. 1 passed the Senate with a final vote of 62-32. Section 2 
of S. 415, which builds upon these portions of legislation 
introduced and passed in previous Congresses, clarifies that, 
for SBA disaster business loans less than $200,000 that the SBA 
is required to utilize assets other than the primary residence 
if those assets are available to use as collateral towards the 
loan. The section specifies that these assets should be of 
equal or greater value than the amount of the loan and that, in 
implementing this section, the SBA is not required to reduce 
the amount or quality of collateral it seeks on these types of 
loans.
    Section 3 of S. 415, which authorizes assistance to out-of-
state small businesses during disasters, also builds upon 
sections of legislation introduced and passed in previous 
Congresses. During the 109th Congress, S. 3778, the Small 
Business Reauthorization and Improvements Act of 2006, was 
introduced by then Chair Olympia Snowe and included a similar 
provision. Despite being reported out of Committee favorably by 
a vote of 18-0 on August 2, 2006, the bill did not make it out 
of the full Senate before the close of the 109th Congress.
    In the 110th Congress, then Chairman John Kerry introduced 
S. 163, the Small Business Disaster Response and Loan 
Improvements Act of 2007, co-sponsored by then Ranking Member 
Snowe and Senators Landrieu, Isakson, Nelson, and Vitter. This 
legislation contained provisions noting that during a disaster 
small business development centers can become authorized to 
provide assistance to small business centers located outside of 
the State, without regard to geographic proximity, if the small 
business is located in a declared disaster area. The 
legislation also provided for small business development 
centers that provide counselors, to presidentially declared 
disaster areas, continuity of services in any State in which 
such small business development center otherwise provides 
services. The provision also permitted small business 
development center personnel to use any site or facility 
designated by the Administrator for use to provide disaster 
recovery assistance. The bill was reported favorably out of 
Committee by a unanimous vote on March 29, 2007 and later 
passed the full Senate, by unanimous consent, on August 3, 
2007.
    During the 111th Congress, Senator Landrieu introduced S. 
1229, the Entrepreneurial Development Act of 2009, cosponsored 
by then Ranking Member Snowe, then Chairman Kerry and Senator 
Shaheen. S. 1229 contained similar provisions, as it relates to 
small business development centers, to those included in S. 
3778 and S. 163. Specifically--the legislation, at the 
discretion of the Administrator, authorized a small business 
development center to provide assistance to small businesses 
located outside of the State without regard to geographic 
proximity, if the small business concerns are located in a 
declared Presidential disaster area, as defined in section 102 
of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act (42 U.S.C. 5122), during the period of the 
declaration. Despite being reported out of Committee favorably 
by a unanimous vote on July 2, 2009, the bill did not make it 
out of the full Senate before the close of the 111th Congress.
    During the 112th Congress, Senator Landrieu introduced 
Senate Amendment 2521, an amendment to the Small Business Jobs 
and Tax Relief Act, cosponsored by Senators Christopher Coons 
and Jeff Merkley on July 11, 2012. This amendment contained 
provisions to permit the personnel of a small business 
development center to use any site or facility designated by 
the Administrator for use to provide disaster recovery 
assistance. The amendment was voted favorably, with a 57-42 
vote, by the full Senate on July 12, 2012.

                      IV. HEARINGS AND ROUNDTABLES

    During the 113th Congress, under Chair Landrieu:
    On March 14, 2013, The Committee on Small Business and 
Entrepreneurship held a roundtable titled, ``Helping Small 
Businesses Weather Economic Challenges and Natural Disasters: 
Review of Legislative Proposals on Access to Capital and 
Disaster Recovery.'' Disaster Recovery issues were addressed in 
a portion of the roundtable and representatives from the SBA, 
Inspector General for Auditing at the Small Business 
Administration, New York State Small Business Development 
Center, the Greater Beaumont Chamber of Commerce, the Heritage 
Foundation, and the Wharton School Risk Management and Decision 
Processes Center.
    During the 112th Congress, under Chair Landrieu:
    On December 13, 2012, the Committee held a hearing titled, 
``Hurricane Sandy: Assessing the Federal Response and Small 
Business Recovery Efforts.'' The purpose of this hearing was to 
review Hurricane Sandy recovery and relative legislative 
proposals that may assist (including Supplemental 
Appropriations and the collateral proposal). During the 
hearing, Senator Landrieu raised her collateral proposal in her 
opening remarks; there was also a line of questioning between 
Senators and the SBA.

                         V. DESCRIPTION OF BILL


Section 1. Short title

    This section specifies the short title of the legislation 
as the ``Small Business Disaster Reform Act of 2013.''

Section 2. Clarification of collateral requirements

    This section would clarify that, for SBA disaster business 
loans less than $200,000 that SBA is required to utilize assets 
other than the primary residence if those assets are available 
to use as collateral towards the loan. Section 2 ensures that 
these assets should be of equal or greater value than the 
amount of the loan. Also, to guarantee that this is a targeted 
improvement, the bill also includes additional language that 
this bill in no way requires SBA to reduce the amount or 
quality of collateral it seeks on these types of loans. It is 
not the intent of the committee to prohibit the use of personal 
homes as collateral for these loans nor to require that 
business assets, including inventory and equipment, be used as 
collateral. Instead, the section is intended to require the SBA 
to first review if sufficient business assets exist to 
collateralize such loans before requiring a personal home as 
collateral.
    The majority of Committee members believe that safeguards 
in the provision ensure that Section 2 will not reduce the 
quality of collateral required by SBA for these disaster loans 
nor will it reduce the quality of the SBA's general collateral 
requirements. These changes will assist the SBA in cutting down 
on waste, fraud and abuse of these legislative reforms. In 
order to further assist the SBA, it is important to clarify 
what types of business assets they should review. For example, 
it is the Committee's understanding that SBA's current lending 
practices consider the following business assets as suitable 
collateral: commercial real estate; machinery and equipment; 
business inventory; and furniture and fixtures. For the 7(a) 
loan program, the SBA considers such factors as depreciation 
and the ability to liquidate assets when initially reviewing 
collateral. For example, the agency values business equipment 
or inventory significantly less than commercial or residential 
real estate due to depreciation. If these assets are deemed 
risky or as not having sufficient value to collateralize the 
loan, the SBA will not make the loan. In light of the 
collateral changes made by Section 2, of S. 415, the Committee 
expects the SBA to adopt these practices for the disaster loan 
program to further minimize the risk to taxpayers.
    The Committee believes that it is essential for SBA to 
secure the loans, make the program cost effective, and minimize 
risk to the taxpayer, but at the same time, SBA has at its 
disposal multiple ways to secure loans.

Section 3. Assistance to out-of-state small businesses

    Section 3 of this bill removes an unnecessary prohibition 
in the Small Business Act that currently prohibits SBDCs from 
other states to help out in areas impacted by disasters. In 
particular, this provision authorizes the SBA Administrator to 
allow out-of-state SBDCs to provide assistance in to small 
businesses located in Presidentially-declared disaster areas. 
This is because SBDCs are considered to be the backbone of the 
SBA's Office of Entrepreneurial Development (OED) efforts, and 
are the largest of the agency's OED programs. SBDCs are the 
university based resource partners that provide counseling and 
training needs for more than 600,000 business clients annually. 
According to the Chrisman Study commissioned by America's Small 
Business Development Center association, from 2010 to 2011, the 
counseling and technical assistance services they offered lead 
to the creation of 75,166 new jobs, at a cost of $3,156 per 
job. Additionally the study estimates that SBDC counseling 
services helped to save 83,268 jobs. These centers are even 
more critical following natural or manmade disasters. That is 
because SBDCs help impacted businesses in navigating Federal 
disaster programs, insurance programs, and in creating new 
business plans following a disaster. For that reason, the 
Committee believes that it is essential that there is 
continuity to have SBDC counselors on the ground in disaster 
areas.
    For example, following Hurricane Katrina, SBDCs in 
Louisiana were severely limited in what they could do because 
of the widespread damage to homes and facilities utilized by 
their counselors. On the other hand, their counterparts at the 
Florida SBDCs had a wealth of disaster expertise and were 
willing to assist but were prohibited from providing assistance 
to small businesses outside their geographic area. In 2012, 
similar challenges occurred following Hurricane Sandy but SBDCs 
in Louisiana, Florida or elsewhere were prohibited from helping 
their counterparts in the Northeast even if they wanted to help 
recovery in New York or New Jersey and doing so would not 
impact their operations back home. For smaller scale disasters, 
local SBDCs will respond to disasters in their own areas. 
However, for large scale, catastrophic disasters, this 
provision could make a significant difference for impacted 
small businesses.
    In fact, on December 13, 2012, the committee received 
testimony from Jim King, Chair of the Association of Small 
Business Development Centers (ASBDCs) and State Director of New 
York State Small Business Development Center. Mr. King outlined 
the symbiotic relationship between different SBDC state 
chapters and how they currently assist each other after 
disasters. He specifically noted that, ``I was also privileged 
to have the opportunity to work with the SBDC in Louisiana 
following Hurricane Katrina in 2005 and visited New Orleans as 
one of five State Directors invited to share thoughts with my 
counterpart there, Mary Lynn Wilkerson, to evolve a strategy 
for recovery. It should be noted that Mary Lynn has returned 
the favor many times over since Hurricane Sandy devastated our 
area, with materials, information and support, which has been 
greatly appreciated.'' He also later noted that, ``Starting 
almost immediately after the disaster, staff in other states 
and programs began reaching out with offers of assistance and 
words or experiences of support. The experiences gained from 
disasters in Florida, Texas, Colorado, Louisiana and many other 
places reinforce the value of the SBDC network in meeting the 
needs of small business in times of disaster.'' The Committee 
believes that these current relationships will be further 
strengthened by enacting this legislation. C.E. ``Tee'' Rowe, 
President/CEO of ASBDC noted this in a February 10, 2013 letter 
to Chair Landrieu when he wrote, ``Allowing SBDCs to share 
resources across state lines or other boundaries for the 
purposes of disaster recovery is a common sense proposal, 
little different from utilities sharing linemen.'' At the same 
time, however, the committee encourages SBDC chapters across 
the country to establish more of these partnerships pre-
disaster so that their SBDC counterparts can be there post-
disaster. SBDC chapters that are, unfortunately, battle 
hardened from multiple disasters should not be the only 
chapters that bear fruit from these partnerships with their 
counterparts.

Section 4. Sense of Congress

    This section states that it is the Sense of Congress that 
the SBA, subject to the availability of funding and to the 
extent that it is practicable, ensure that SBDCs are 
appropriately reimbursed for legitimate expenses incurred as a 
result of carrying out activities authorized by Section 3 of 
the bill. This section addresses past instances where SBDCs 
were not sufficiently reimbursed post-disaster by the SBA for 
disaster-related expenses. Section 3 provides clear 
Congressional intent that, in authorizing the SBA to allow out-
of-state SBDCs to assist in disaster areas outside their 
geographic location, the agency must also ensure that out-of-
state SBDCs are not left paying out of pocket for assisting in 
these disaster areas. If the SBA approves for these SBDCs to 
deploy staff or resources to a disaster area, the agency must 
in turn ensure that it reimburses SBDCs for these expenses 
provided they were legitimate and there are funds available to 
do so.

Section 5. Increased oversight of Economic Injury Disaster Loans

    This section requires the SBA to conduct random site visits 
to ensure borrowers of Economic Injury Disaster Loans (EIDLs) 
are in operation and complying with loan requirements; and 
conduct random reviews of loan proceeds to ensure that 
borrowers are using funds in accordance with SBA loan 
approvals. A sense of Congress is included to reiterate that 
the SBA should utilize existing funds to implement this 
section.
    These changes are being made in response to recommendations 
from the SBA Office of Inspector General (OIG). As a result of 
previous as well as ongoing reviews of the SBA EIDL program, 
the OIG noted that the SBA needed to step up its onsite reviews 
to verify that businesses less than a year old or being planned 
are actually in existence and has a bona fide business plan. 
The OIG also recommended the SBA institute random reviews of 
loan proceeds to verify borrowers are complying with SBA 
authorized uses for the loans.

Section 6. Reduction of paperwork burden

    This section requires the SBA to take steps to reduce 
paperwork burdens on individuals and businesses applying for 
SBA disaster assistance. Since 2005, SBA has made progress in 
streamlining its paper applications and coming into the 21st 
century by instituting an online electronic disaster loan 
application. SBA applications are now four pages for home loans 
and three pages for business loans. This is down from 10 to 20 
pages of required information after Katrina. This section would 
codify these administrative reforms and ensure that disaster 
victims are never again required to fill out mountains of 
paperwork.

Section 7. Report on web portal for disaster loan applicants

    This section requires the SBA to report to Congress, in 90 
days, on establishing an online web portal, within SBA's 
existing disaster website, to track the status of their 
disaster loan applications. Since 2005, the SBA has 
transitioned from a paper-based system to a digital records 
system for disaster loan applications. In particular, the SBA 
has created an electronic disaster loan application and has 
established a one-stop disaster web portal with other Federal 
agencies at DisasterAssistance.gov. These improvements, 
required by Congress as part of Section 12067 from PL 110-234, 
directed the SBA to develop, implement, and maintain a 
centralized information system to track all communications 
(written, e-mail, and phone) between disaster victims and SBA 
personnel concerning the status of their application.
    However, it has become clear to the Committee that 
deficiencies still exist in the program as it relates to 
transparency and customer service for disaster loan applicants. 
In particular, the Committee has become aware of concerns 
surrounding disaster loans from Hurricane Sandy where 
sufficient follow-up communications are not being provided from 
SBA staff to disaster victims. These communications are both 
timely and necessary to applicants as their disaster loan 
application proceeds through the critical stages of 
origination, approval, and disbursement.
    The Committee notes that similar systems have been used by 
such private sector companies as Federal Express and United 
Parcel Service to improve efficiencies, quality control, and 
customer service. The Committee believes that implementing such 
a system for disaster loan applications would help the SBA 
remedy these ongoing deficiencies in effectively tracking and 
providing accurate information to disaster loan applicants.

                  VI. MINORITY VIEWS OF SENATOR RISCH

    While the Ranking Member acknowledges that disaster 
programs need special consideration, there are specific 
concerns regarding Section 2 of S. 415 that the Ranking Member 
believes compromise the SBA's ability to secure loans in a 
responsible way to the taxpayer. The SBA has asserted that when 
they are able to take real property as collateral, other than 
the small business owner's home, they do so. Furthermore, in 
the event of default and liquidation, the SBA works through a 
very long process with the borrower to restructure that loan so 
as not to have to pursue foreclosure, an event that has only 
occurred 4 times in the last decade. The concern with 
restructuring the collateral standards is not that the SBA will 
fail to collect collateral of the same quality or of a 1:1 
value ratio at the time the loan is issued; it is that the 
federal government is not able to easily liquidate inventory 
and equipment in the event of foreclosure. It is not the 
initial value, but the type of collateral secured that is most 
important, especially when it is being liquidated by the 
federal government, which has little or no experience with 
specialized equipment or inventory. The Ranking Member's 
perspective is that the federal government should obtain 
collateral with the least amount of risk associated with 
recouping the government's losses in the event the borrower 
cannot pay back the government-backed loan. The Fischer-Johnson 
Amendment to the underlying legislation, which would have 
simply struck the collateral provision, was not agreed to, and 
therefore, all but one member of the minority voted against 
passage of S. 415.

                          VII. COMMITTEE VOTE

    In compliance with rule XXVI(7)(b) of the Standing Rules of 
the Senate, the following votes were recorded on June 17, 2013.
    Chair Landrieu moved to adopt the following three 
amendments, which were agreed to by voice vote:
    (1)  Senator Shaheen's amendment, as modified, to increase 
oversight of economic injury disaster loans.
    (2)  Chair Landrieu's amendment to reduce the burden of 
paperwork on individuals and businesses applying for SBA 
disaster assistance.
    (3)  Chair Landrieu and Senator Hagan's amendment to 
require the SBA to report to Congress, in 90 days, on 
establishing an online web portal, within SBA's existing 
disaster website, for businesses, home owners and renters to 
track the status of their disaster loan applications.
    Following debate, Senator Landrieu called for a recorded 
vote on the question of whether to adopt an amendment filed by 
Senators Fischer and Johnson:
    (1)  Senators Fischer and Johnson's amendment set out to 
strike Sec. 2 of the disaster bill on modified requirements 
relating to the use of business assets instead of personal 
homes as collateral for business disaster loans of $200,000 or 
less.
    The amendment was not agreed to by a 7-10 recorded vote. 
Senators Landrieu, Levin, Harkin, Pryor, Cardin, Shaheen, 
Hagan, Heitkamp, and Cowan voted to oppose the amendment. 
Senators Risch, Vitter, Rubio, Scott, Fischer, Enzi, and 
Johnson voted in favor of the amendment.
    Chair Landrieu then moved to report out the Small Business 
Disaster Reform Act of 2013, as amended by recorded vote. The 
measure was reported favorably by an 11-6 recorded vote with 
the following Senators voting in the affirmative: Landrieu, 
Levin, Harkin, Cantwell, Pryor, Cardin, Shaheen, Hagan, 
Heitkamp, Cowan and Vitter. Senators Risch, Rubio, Scott, 
Fischer, Enzi, and Johnson voted against reporting out the 
measure.

                          VIII. COST ESTIMATE

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 11, 2013.
Hon. Mary L. Landrieu,
Chair, Committee on Small Business and Entrepreneurship,
U.S. Senate, Washington, DC.
    Dear Madam Chair: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 415, the Small 
Business Disaster Reform Act of 2013.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Daniel 
Hoople.
            Sincerely,
                                         Robert A. Sunshine
                              (For Douglas W. Elmendorf, Director).
    Enclosure.

S. 415--Small Business Disaster Reform Act of 2013

    S. 415 would make changes to Small Business Administration 
(SBA) programs that serve areas affected by disasters. CBO 
estimates that implementing this legislation would not have a 
significant cost. Enacting S. 415 would not affect direct 
spending or revenues; therefore, pay-as-you-go procedures do 
not apply.
    The bill would direct the SBA to:
      Allow certain applicants for physical disaster 
and economic injury disaster loans to use assets other than 
their primary residence as collateral for the loan;
      Provide technical assistance through small 
business development centers to small businesses located in a 
disaster-declared area regardless of proximity to the center;
      Increase oversight on entities receiving economic 
injury disaster loans; and
      Report to the Congress on the creation of a web 
portal to track the status of disaster loan applications 
submitted to the agency.
    CBO estimates that conducting those activities would not 
have a significant cost. Allowing for similar collateral to be 
used in place of an applicant's primary residence should not 
affect the net cost to the federal government of SBA disaster 
loans. CBO also expects that the additional oversight and 
technical assistance authorized in the bill would be minimal 
relative to current law.
    S. 415 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    The CBO staff contact for this estimate is Daniel Hoople. 
The estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                  IX. EVALUATION OF REGULATORY IMPACT

    In compliance with rule XXVI(11)(b) of the Standing Rules 
of the Senate, it is the opinion of the Committee that no 
significant additional regulatory impact will be incurred in 
carrying out the provisions of this legislation. There will be 
no additional impact on the personal privacy of companies or 
individuals who utilize the services provided.