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Today, Small Business Committee Ranking Member Rep. Nydia M. Velázquez (D-NY) unveiled a new initiative to encourage private lenders to assist small business disaster recovery. After Hurricanes Irma, Harvey and Maria devastated local economies, Velázquez’s bill, the Small Business Emergency Disaster Bridge Loan Act of 2017, would offer small companies a new avenue to fund their recovery process. Under the bill, while these firms wait for their Small Business Administration disaster loan applications to be processed, they could receive a “bridge loan,” a public-private immediate low-interest loan of up to $50,000 to help replace damaged property.

“After catastrophes, time is of the essence when it comes to getting small businesses back up and running,” said Velázquez. “Time and again, we’ve heard of small firms waiting months to receive an SBA disaster loan, and tragically, in that period many are forced to shut their doors permanently.” 

In Puerto Rico alone, estimates say nearly 5,000 of the Island’s small businesses will be forced to close due to damage from Hurricane Maria. Similarly, in Aransas County, Texas, Hurricane Harvey damaged one-fourth of the county's 9,228 structures, causing around $420 million in property losses. 

Velázquez’s bill would establish a disaster related bridge loan to help small firms replace and repair damaged property and would be managed under the Small Business Administration (SBA). Under the Act, SBA would approve qualified private lenders, such as Community Development Financial Institutions (CDFIs) to provide the bridge loans. The bridge loans would be guaranteed by SBA.  CDFIs are approved regulated institutions, such as banks and credit unions that help provide credit to economically disadvantaged individuals and groups. Velázquez’s bill would encourage CDFIs to branch out and provide disaster loans for small firms. 

The proposed bridge loan would be up to $50,000 and for no longer than a ten-year period. For the first six months, recipients would not be required to make any payments and the interest rate would be zero. After six months, the Act grants SBA the authority to determine an appropriate interest rate. 

“These bridge loans could serve as a lifeline, allowing local businesses to repair damages and remain open while they wait for greater long-term disaster assistance,” said Velázquez. “In addition to securing more funding for disaster recovery, passing this bill is a step that Congress should take to ensure communities affected by disaster can quickly get back on their feet.” 

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