From the Office of Senator Kerry

Thursday, February 8, 2001

WASHINGTON, D.C. - Senator John F. Kerry (D-MA), the lead Democrat on the Senate Small Business Committee, today introduced the bi-partisan Small Business Energy Emergency Relief Act of 2001. This legislation would provide emergency relief, through affordable, low-interest Small Business Administration Disaster loans, to small businesses adversely affected by significant increases in the prices of four heating fuels -- heating oil, propane, kerosene, and natural gas.

In Massachusetts costs of these fuels have jumped as much as 100 percent, strapping cash flows and threatening the financial viability of many small businesses. Nationwide, the cost of heating oil nationally climbed 72 percent from February 1999 to February 2000. The cost of natural gas nationally climbed 27 percent from September 1999 to September 2000. And the cost of propane climbed 54 percent from January 2000 to January 2001.

Kerry said, "Sky high heating fuel bills are making it tough for small businesses to survive across Massachusetts and around the country. Soaring heating prices have the potential to hurt job markets and unravel our economic stability. This legislation is a lifeline for small business owners who might be a heating fuel payment away from going out of business or laying off an employee."

To mitigate or avoid serious losses caused by price jumps, small businesses need access to capital -- but commercial lenders typically won't make loans to such small businesses because they often don't have the increased cash flow to demonstrate the ability to repay the loan. Economic injury disaster loans give affected small businesses necessary working capital until normal operations resume, or until they can restructure or change the business to address the market changes.

To be eligible for an economic injury loan, the applicant must be a small business, have used all reasonably available funds, and must be unable to obtain credit elsewhere. Small businesses will have six 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 Feb5th, 10 ¾ percent). Further, SBA tailors the repayment of each economic injury disaster loan to each borrower's financial capability to repay the loan.

Senators Joe Lieberman (D-CT), Olympia Snowe (R-ME), Jeff Bingaman (D-NM) , Mary Landrieu (D-LA), Tim Johnson (D-SD), Pete Domenici (R-NM), Carl Levin (D-MI), Paul Wellstone (D-MN), Jim Jeffords (R-VT) and Tom Harkin (D-IA) and Charles Schumer (D-NY)are co-sponsors of the legislation.