What: All Issues : Aid to Less Advantaged People, at Home & Abroad : Victims of Natural Disasters : Reforming federal disaster loans to small business (H.R. 1361)/On passage (2007 house Roll Call 225)
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Reforming federal disaster loans to small business (H.R. 1361)/On passage
house Roll Call 225     Apr 18, 2007
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This was the final vote on legislation to reform the way the Small Business Administration handles disaster assistance loans. The agency was widely critiqued for ineffectiveness and delays following the 2005 hurricanes to hit the Gulf Coast. The SBA loans represent the federal government's primary disaster-recovery assistance.

The bill would increase the limit for disaster loans from $1.5 million to $3 million. Supporters of the bill lauded it as much-needed reform in time for the 2007 hurricane season. Republicans as well as President Bush complained that the legislation would expose taxpayers to unacceptably high costs.

Chief sponsor Rep. Nydia Velazquez (D-N.Y.) said the SBA was so ineffective following the 2005 storms that many entrepreneurs believed the agency was more hindrance than help. At one point, 204,000 applications for aid were unprocessed. Velazquez said her bill provided for disaster planning for the agency in order to "ensure they are prepared for a wide range of disasters."

"This legislation will streamline SBA's loan processing and disbursement, as well as establish a bridge financing program," Velazquez said. "After the Gulf Coast storms, we saw entrepreneurs not only getting declined for loans but having to wait far too long for relief. This bill requires that within 36 hours of a disaster, qualified small businesses are provided with emergency small dollar financing, allowing them to stay in business and spur economic growth."

Many Republicans supported the bulk of the legislation but found "fatal flaws" with two provisions they tried unsuccessfully to have removed from the bill, including language that would allow the SBA to provide $100,000 grants to small businesses affected by the 2005 hurricanes that were denied other assistance and another section that would allow 2005 hurricane victims to receive duplicate benefits as a way to compensate for an unforeseen interaction between federal and state programs that left many individuals without assistance.

Rep. Steve Chabot (R-Ohio) tried to have both sections removed but his efforts failed (see Roll Calls 222-223). Many Republicans maintained that those portions of the legislation were wasteful and undermined their support for the bill.

"Unfortunately, the legislation has two critical provisions that, in my view, seriously undercut the otherwise excellent work of the committee in creating a structure that will ensure the SBA is prepared to respond irrespective of the scope of the disaster," Chabot said.

Some Republicans also balked at the overall price tag of the bill, which the Congressional Budget Office said would cost $347 million in from 2008 to 2012, not including the cost of the duplicate-benefits waiver.

In the end, however, 40 Republicans broke ranks with their party and voted for the legislation. Democratic support was unanimous. Thus, on a vote of 267 to 158, the House passed a bill that would overhaul the federal government's disaster-loan program for small businesses, create a disaster-preparedness task force within the agency and double the limits for individual disaster loans to $3 million.

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