Small Business Administration Slow to Act After Sandy, Watchdog Says
In the weeks and months after Hurricane Sandy, the federal Small Business Administration missed its own goals for processing loan applications from New York and other areas ravaged by the storm, a congressional watchdog agency found.
The Government Accountability Office report was released Thursday by Rep. Nydia Velázquez (D-Brooklyn), the top Democrat on the House Small Business Committee.
The agency, which is charged with helping small businesses after disasters, had a goal of processing applications in 21 days. But after the storm hit in late October 2012, the SBA took an average of 45 days to process loan requests to cover storm damages, and 38 days to process loan applications to cover economic losses, the study found.
The agency told GAO the slowdown resulted from receiving more loan applications than anticipated immediately after the storm. The agency, which expected requests to peak seven to nine weeks after the storm, simply wasn’t ready, it said.
The report found that SBA approved 42% of business loan applications it received after the storm. That is a lower approval rate than after three other major hurricanes -- Katrina, Rita and Wilma – but similar to the response to Hurricane Irene in 2011.
The audit found that the SBA has not implemented three disaster loan programs Congress mandated in 2008, which could have sped up help for Sandy victims. Those include a bridge loan program through private lenders intended to dispense loans within 36 hours. SBA said lenders’ concerns about program requirements slowed implementation.
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