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Chairman Torkildsen. In the case where a banking entity is 

 lending money under a guarantee program, normally you need 

 some ability to repay that loan under whatever terms are there. In 

 the case we are facing right now, many families are faced with 

 enormous debt, sometimes debt they incurred under encourage- 

 ment from the Federal Government to buy larger boats and better 

 technology and the like, and now they are told that the means that 

 they originally had to repay that loan, some assurance of being 

 able to fish, is now being either totally removed or greatly, greatly 

 reduced. 



Normally, you can't lend someone money on normal terms if they 

 don't have the ability to pay it back. That is the reason we have 

 disaster loans, because we know a lot of individuals in that situa- 

 tion could not walk into a bank and qualify for a loan, even under 

 the guarantee provisions that the SBA has. 



So what can we do for these families that are clearly in a crisis 

 and will be for several years? Is there nothing the SBA can do at 

 all for the small businesses? 



Mr. Kulek. Let me say specifically disaster loans are also loans, 

 and we must find a reasonable assurance of repayment before we 

 can make a disaster loan. We do not require the same type of col- 

 lateral or same type of loan-to-value ratio as normal banking loans 

 would, but they are loans, and we have to determine that there is 

 a reasonable chance of repayment. 



If you will recall, Mr. Chairman, from the hearing you held last 

 year in Massachusetts, most of the witnesses at that time talked 

 about not wanting loans. In fact, they were up to their limit in debt 

 and didn't see how even an SBA disaster loan, long-term, low inter- 

 est, could help them. They were more concerned about the possibil- 

 ity of grants. 



Chairman Torkildsen. Does the SBA have any grants? 



Mr. Kulek. No, sir, we have no statutory authority for grants nor 

 any money for grants. 



We also have assistance in the form of SCORE, our Service Core 

 Of Retired Executives, for business counseling, and, as you know, 

 the Small Business Development Center in Massachusetts has 

 been very active in trying to help the fishermen involved and to 

 point out any possibility of affirmative action that they could take. 



Chairman Torkildsen. Rather than monopolize the time right 

 now — there are some further points I would like to go into — I 

 would like to give the gentleman, the Ranking Minority Member of 

 the Subcommittee, Mr. Poshard, a chance to either submit or give 

 testimony or make a statement, rather, or ask questions. 



Mr. Poshard. 



Mr. Poshard. Mr. Chairman, for now let me ask unanimous con- 

 sent to submit an opening statement for the record and defer to my 

 friend from Illinois, Mr. Jackson, who has been here all along. I 

 need to hear more testimony and so on before I can adequately ask 

 the questions that I need to. 



Chairman Torkildsen. Without objection, so ordered. 



[Mr. Poshard's statement may be found in the appendix.] 



Chairman Torkildsen. Congressman Jackson, did you have any 

 further questions? 



