Senate Committee Approves Small Business Y2K Loan Bill

(February 5, 1999) The Senate Small Business Committee approved with amendments the "Small Business Year 2000 Readiness Act" this morning. The bill provides for SBA guaranteed loans to small businesses to correct, and recover from, Y2K problems.

S 314 requires the Small Business Administration to establish a limited-term loan guarantee program under which the SBA would guarantee loans made by private lenders to assist small businesses in  correcting problems related to the Y2K technology problem.

The loan program covers both correction of Y2K problems and relief from economic injuries sustained as a result of the borrower's, or others', Y2K problems.

The provisions of the bill would remain in effect until December 31, 2000.

This was not a controversial issue, and there was little discussion or debate. The Committee, and then the full Senate, passed a nearly identical bill in the just ended 105th Congress. The House did not pass it.

The Committee did adopt two changes in principle.  First, in response to a point raised by Sen. Carl Levin (D-MI), the Committee decided not to make the program available to pay off existing Y2K loans.  

Sen. Carl Levin inquired, "will this bill permit loan proceeds, to pay off loans that were previously taken out for Y2K repair?"  Committee staff indicated that the bill was not clear on this point. Sen. Levin. "Either way, we ought to clarify that. I guess that that is my point," said Levin. "Clear it up, one way or the other."

Sen. Kit Bond (R-MO), the Chairman of the Small Business Committee, and lead sponsor of the bill then stated: "All right. Any thoughts from the Committee on this?" No one spoke. Sen. Bond continued: "My view is that if they have already -- I think that it ought to be only for new activities."

Second, the Committee agreed to change the effective date of the bill. "You don't want for people to wait for a bill to be enacted to see whether they are going to take out a loan. So, I would make the effective date some date last last year," argued Sen. Levin. The committee agreed. However, they did not set the date!

Both amendments were agreed to informally, without writing out the language. They agreed to let committee staff make technical and conforming amendments.

The bill was reported out without objection.  That is, it was passed without either a voice or roll call vote.

Dan Danner, of the National Federal of Independent Business, wrote to Sen. Bond on February 2 to announce support for S 314. He wrote:

"While the small business community has made some progress towards inoculating itself against the "millenium bug," a recent NFIB study shows that more than half of small firms have not yet taken steps to address their Y2k problems. S 314 would help make the self-assessment and problem mitigation process an easier one."

The members of the Committee who were present included Senators Kit Bond, Spencer Abraham (R-MI), Conrad Burns (R-MT), Michael Crapo (R-ID), John Edwards (D-NC), Peter Fitzgerald (R-IL), John Kerry (D-MA), Carl Levin (D-MI), Olympia Snowe (R-ME), Paul Wellstone (D-MN)

Senators Crapo, Edwards, and Fitzgerald were all just elected to the Senate in November 1998, and were participating in their first official meeting of the Committee. Sen. Abraham was elected in 1994, but was just assigned to the Committee.

The Committee also welcomed its new members, approved committee rules for the 106th Congress, approved the nomination of Phyllis Fong to be Inspector General of the Small Business Administration, and passed by unanimous consent S 364, the "Small Business Investment Improvement Act of 1999."