03.27.01

Senate Passes Small Business And Farm Emergency Relief Act

WASHINGTON, D.C. — A bill authorizing emergency loans to small businesses, farms and fruit growers adversely affected by sharp increases in energy prices passed the Senate late yesterday evening. If signed into law, the Small Business and Farm Emergency Relief Act will make low-interest loans available to farms and small businesses affected by significant increases in the prices of heating oil, propane, kerosene, natural gas and electricity.

Sen. Maria Cantwell (D-WA), an original co-sponsor of the bill and a member of the Senate Small Business Committee, was instrumental in two important improvements to the legislation: expanding the bill to include cost increases for electricity along with other forms of energy; and extending eligibility to farms and fruit growers along with other small businesses. As passed by the Senate, the bill would make small-business loans available through the U.S. Small Business Administration (SBA) while farm loans would be available through the U.S. Department of Agriculture (USDA).

The bill allows loan recipients to use the funds to mitigate the effects of rising fuel prices and to convert their fuel-based heating systems to use renewable or alternative energy sources. According to Senator Cantwell: "These loans will be critical for the survival of many small businesses and family farms in Washington state. Rising energy prices are hurting many businesses and farms, from Aberdeen to the Tri-Cities, but we cannot allow energy price spikes to destroy the hard work of entrepreneurs and farmers in our communities. These programs will give small-business owners and farmers critical assistance as they struggle to pay their bills in the face of dramatically rising energy costs."

To be eligible for an economic injury loan, the applicant must be a small-business owner or agriculture producer, must have used all reasonably available funds, and must be unable to obtain credit elsewhere. Small businesses and farms will have nine months to apply for these loans, from November 1, 2000 or, for future disasters, from the day a disaster is declared.

These are direct loans, made through the SBA, at subsidized interest rates of 4 percent or less, versus the current federally guaranteed lending rate of Prime + 2 ¼ percent (as of Feb 5th, 10 ¾ percent). Further, the SBA and USDA tailor the repayment of each economic injury disaster loan to each borrower’s financial ability to repay the loan.

The bill now goes to the House for consideration and approval. Senator Cantwell said she would continue to work with both Republican and Democratic colleagues in Congress to urge swift passage of this important legislation.

"It is vital that we act quickly to provide relief for small-business owners, farmers and fruit growers who are suffering from sudden increases in energy costs," she said. "Small businesses and family farms are the backbone of our communities and important contributors to our economy. We need to make sure they get the help they need to overcome this challenge."