SBA says its ready for next disaster

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Published: August 24,2010

Tags: disaster, disaster recovery, small businesses, Weather

WASHINGTON — The Small Business Administration says it has taken major steps since the devastating hurricanes of 2005 to improve the way it helps disaster victims rebuild their lives. But questions linger about whether the agency is prepared to handle storms on the scale of Katrina and Rita, which battered the Gulf Coast and caused nearly $118 billion in property damage.

James Rivera, deputy associate administrator of SBA’s office of disaster assistance, bristles at suggestions that the agency isn’t prepared for another major disaster. He says the SBA has dramatically improved technology and streamlined the entire loan process to make it faster.

“It bothers me when I hear comments that we made it painful and chaotic because we’ve really gone to extreme efforts to set up focus groups and to re-engineer our whole process to make it more customer friendly,” he said.

Over the last five years, the agency has been repeatedly criticized for its failures by Congress and government regulators.

In July 2007, for example, Congress held hearings after several SBA loan officers complained that the agency’s policies had resulted in thousands of loans being rejected or withdrawn. Former loan officer Gale Martin and others told lawmakers how they were pressured to process loan applications without helping people.

Martin and a group calling itself Second Wind — a coalition of business owners who had trouble landing SBA disaster loans after the hurricanes — urged Congress to force SBA to reconsider loans that were originally rejected or withdrawn.

After the hearings, Congress enacted the Small Business Disaster Response and Loan Improvement Act, which included 26 requirements to improve the agency, featuring three key goals: Establish a program that would authorize private lenders to process disaster loans; create an expedited disaster assistance business program and increase public awareness of SBA loans.

But a report issued just three months ago by the Government Accountability Office, which investigates for Congress, said the agency has fully implemented only 15 of the provisions. While the report said SBA has made progress, it noted that the agency stumbled in 2008 with flooding in the Midwest and in dealing with Hurricane Ike in Texas. Loan applicants complained about “burdensome” amounts of paperwork and how long it took to get money — some of the same complaints raised repeatedly by Gulf Coast residents after the hurricanes of 2005.

And other problems remain.

“We found that while SBA conducts an annual customer satisfaction survey, the agency does not appear to incorporate this feedback mechanism into its formal efforts to continually improve the application process. Furthermore, SBA does not appear to have a formal process for addressing identified problem areas and using information gained to improve the experience of future applicants,” the GAO report said.

SBA, however, claims it is better prepared, noting that it now has a reserve staff — workers who join the agency’s ranks in the wake of disasters.

Today, there are between 100 and 150 full-time employees who process loans, Rivera said. Before the hurricanes, though, SBA employed 190 loan officers.

In a Katrina-scale disaster, SBA would need hundreds more loan officers. But many on the reserve list have other jobs, and they would have to report to SBA within 48 hours of being called.

SBA spokeswoman Carol Chastang said the agency contacts people on its list once a year and asks if they still would be willing to work in an emergency.

Several former workers who said they were on the list told AP they probably would never return to work for SBA.

“Many of those people have moved on,” said Brad Durtschi, a former loan officer who now works for the Federal Emergency Management Agency. “They have full-time jobs. Do you really think that 2,000 will drop everything they’re doing to work for the SBA?”

Rivera said he was comfortable that everyone called would show up. “The true test is when we have the catastrophic disaster, we’ll see if they are available,” he said. “God willing, we won’t have another catastrophic disaster.”

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