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We need to make capital directly accessible to needy small businesses this winter, and we need to do it rapidly. This summer, record oil prices are walloping consumers at the gas pump and making this one tough driving season in Massachusetts, but they’re also an early warning for the winter to come and the 6 million households that rely on home heating oil when the weather gets cold. Last winter, many families in Massachusetts spent up to $3,900 to heat their homes, an increase of 30 percent, from the previous year. Experts who track heating oil prices predict that Northeastern homeowners could spend up to 36 percent more this winter than last winter, which could mean up to $1,400 more per family. As people across Massachusetts begin to fill up their fuel tanks and sign heating oil contracts for the winter, heating oil distributors warn that the price shock has yet to set in for consumers. Many have been sheltered from the price spikes by contracts that will expire soon, and many are unaware that their set price may double soon, said Howard Peterson, of Peterson Oil. Fuel distributors already are bearing the brunt of these tough economic conditions. For the most part, fuel distributors are small family owned-businesses, many of whom have been in business for generations. In our state, there are about 800 heating oil distributors, with an average of 17 employees and 1,800 customers. These distributors consider their customers and employees like extended family, but worry about what will happen when they have to watch as people make the tough choices between food, fuel and medicine. Traditionally, fuel distributors extend a line of credit to their consumers. But as prices have risen, customers are taking longer to pay their bills. Distributors already play a delicate game of balancing their customers’ bills with their own — they usually have to pay suppliers within 10 days, but customers have 30 days to pay their bills. Many small distributors rely on bank loans to close the gap and keep their businesses going, but with skyrocketing prices, many fuel distributors need to take out loans that far exceed the worth of their business. Fuel distributors aren’t the only small businesses who feel the sting from rising heating oil prices. Small day-cares for children and nursing homes for elderly, as well as mom-and-pop stores, local restaurants and corner cafes that need to keep a warm place for folks to enjoy are looking at a grim winter. The self-employed, many of whom work out of their homes and can’t turn down the thermostat while they are at the office, represent more than 7 percent of the nation’s work force, and need our help staying in business. Commercial lenders typically won’t make loans to small businesses in dire need because they rarely have the increased cash flow to demonstrate the ability to repay the loan. It takes an added incentive — like a federal loan guarantee — for private banks to give these loan applications a second glance. Affordable, low-interest, government guaranteed loans can be the lifeline small businesses need to stay afloat. We need to make capital directly accessible to needy small businesses this winter, and we need to do it rapidly. One of the answers is to expand the Small Business Administration’s Economic Injury Disaster Loans to include small businesses adversely affected by increases in the prices of heating oil, propane, kerosene and natural gas. Economic-injury disaster loans give financially strapped small businesses sufficient working capital until normal operations resume or until they can restructure or change the business to address market fluctuations. These are direct loans at subsidized interest rates of 4 percent or less, precisely the helping hand our companies need to ride out tough economic times. I’ll be introducing legislation this week to make sure that small businesses who are affected by surging energy costs qualify for these economic injury disaster loans. And in Washington, I am taking other steps to make sure that high energy costs don’t have deadly consequences for Massachusetts. We must fully fund the Low Income Home Energy Assistance Program, so I recently cosponsored an amendment to provide an additional $2.53 billion in funding. I have also introduced legislation that will help keep prices steady for consumers by releasing heating oil reserves on a staggered schedule. Winter is months away — and we New Englanders know the cold times it will bring with it — but we need to act now to make sure that this winter no one has to choose between food or fuel. Small businesses are the engine of our economy, and we need to make sure that rising energy prices don’t put our economy in the deep freeze once summer is over. Sen. John F. Kerry is chairman of the Committee on Small Business and Entrepreneurship.
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