WASHINGTON, May 20, 2013 /PRNewswire-USNewswire/ -- In the wake of Superstorm Sandy, the Small Business Administration (SBA) is approving fewer than 25 percent of loan applications for New York's small businesses, leaving many without the resources they need to rebuild. More than six months after the storm, applicants are also facing significant delays related to loan processing, while those that have been approved are unable to fully draw on the funding they have been promised. These findings are contained in a new report released today by Democrats on the House Small Business Committee, showing that thousands of New York's businesses and residents are facing significant challenges securing disaster relief loans through the SBA, the federal agency charged with providing such assistance after disasters. As a result, Rep. Nydia M. Velazquez (D-NY) has requested that the Government Accountability Office (GAO) assess the SBA's response and performance related to Superstorm Sandy.
"Following Katrina, the SBA did take steps to improve its emergency response, but we're nowhere near where we need to be," said Rep. Nydia M. Velazquez (D-NY), the Committee's top Democrat. "After natural disasters, local economies are often decimated and it is vital that the small business sector be revitalized quickly."
Data from SBA shows loan approvals at just 24 percent for all businesses affected by Sandy, including those in New York, Connecticut, New Jersey, Rhode Island, and Maryland. In New York alone, the numbers were equally troubling. SBA had approved just 22% of small business loans. Nearly 4,400 local New York businesses had seen their disaster loans declined or withdrawn. The pace at which the agency is processing loans also lags. On average, the SBA is taking 46 days to process physical business loans, while processing times following Hurricanes Ike and Irene were closer to two weeks. Even among loans approved, disbursement of proceeds remains slow. Only 359 businesses have received their full funding.
"For a business struggling after a Hurricane, getting an immediate infusion of emergency capital can make the difference between staying in business or going under," Velazquez noted. "We need a better understanding of why the SBA is still taking so long to approve this assistance."
The report also suggests that the agency is not employing all the resources at its disposal when responding to Hurricanes. The pace at which personnel have been added to process loan requests has been slow and several private-public partnership initiatives that would help lessen the backlog of loan applications remain unused.
"When disasters hit, it is critical that SBA operate at maximum efficiency," Velazquez noted. "If there are things SBA has not done that would have helped more businesses weather these catastrophes, I intend to find out why SBA has not taken these steps and ensure similar mistakes don't happen in the future."
The full text of the letter to GAO and the Committee's report is online at www.house.gov/velazquez
CONTACT: Alex Haurek
SOURCE House Committee on Small Business Democrats