WASHINGTON Senator Mary L. Landrieu, D-La., Chair of the U.S. Committee on Small Business and Entrepreneurship, today outlined several ways in which the United States Small Business Administration (SBA) could improve its disaster programs to assist small businesses affected by Hurricane Sandy. In a letter to SBA administrator Karen Mills, Sen. Landrieu addressed issues such as current disaster funding, assistance to aquaculture business and regional marketing/outreach by the agency as areas of continued focus during the ongoing recovery from the storm.
Sen. Landrieu was joined on the letter by seven other senators from states impacted by Hurricane Sandy: Sens. Richard Blumenthtal, D-Conn.; Kay Hagan, D-N.C.; Frank Lautenberg, D-N.J.; Charles Schumer, D-N.Y.; Kirsten Gillibrand, D-N.Y.; Joseph Lieberman, D-Conn.; and Robert Menendez, D-N.J.
“By all accounts, the SBA was better prepared and deployed staff quickly following Sandy – a marked difference than its sluggish and ineffective response following Hurricanes Katrina and Rita of 2005,” the letter stated. “As of November 30th, your agency had already deployed over 369 staff to the impacted states. The SBA has also begun opening 31 Business Recovery Centers (BRCs) run by the local Small Business Development Centers (SBDCs) and State/local officials. These centers provide a wide range of services to assist businesses impacted by the hurricane. While there have been major improvements to the SBA’s disaster programs since the 2005 hurricanes, we believe there are key areas that still require attention. These areas are critical to ensuring SBA’s disaster programs are efficient and responsive to the victims of Hurricane Sandy.”
The letter specifically highlighted the following issues:
- Disaster Funding: As of November 26th, the SBA had approximately $100 million in administrative funding and $330 million in subsidy for the disaster loan program. The senators encouraged the SBA to work closely with the Congress to ensure there is appropriate funding for these disaster accounts as well as for Small Business Development Centers in the disaster area.
- Coastal Barrier Resources Act Prohibition: The Coastal Barrier Resources Act prohibits Federal financial assistance, including SBA disaster loans, to applicants located in the Coastal Barrier System. The senators noted that they appreciate the SBA’s ongoing coordination with relevant Federal agencies, such as the U.S. Fish and Wildlife Service, to establish clear guidance and maps for distribution. This coordination and aggressive outreach needs to continue as the vast majority of disaster loan applicants resulting from Sandy do not live in Coastal Barrier areas.
- Aquaculture Business Assistance: The Small Business Jobs Act of 2010 (P.L. 111-240) included a provision that allowed aquaculture businesses to apply for SBA Economic Injury Disaster Loans (EIDLs), so long as disaster assistance is not provided by other Federal agencies. The senators encouraged the SBA to review its ability to provide disaster assistance to small aquaculture businesses impacted by Sandy.
- Duplication of Benefits: After Hurricane Katrina, the SBA deducted Louisiana Road Home recovery grant proceeds (funded via U.S. Department of Housing & Urban Development Community Development Block Grants) before they were awarded to borrowers. According to the SBA, these actions were taken to address “duplication of benefits (DOB)” between Road Home grants and SBA disaster home loans made to the borrowers. Deducted grant proceeds were used to pay down balances on SBA disaster home loans. In many instances, this left disaster victims without sufficient funds to rebuild their homes or to address needs that arose subsequent to the disaster (such as contractor fraud, increases in building costs, or additional damage to partially repaired homes). The senators noted that late last year HUD and the SBA signed an agreement that improves agency coordination on this issue. The letter requested an update on this agreement and how it includes provisions ensuring assistance after disasters such as Sandy for borrowers with unmet needs.
- Regional Outreach and Marketing of SBA Disaster Programs: The Small Business Disaster Response and Loan Improvements Act of 2008 (P.L. 110-246) required the creation of a marketing and outreach plan, including regional marketing ahead of disasters likely to occur in each area of the country. The senators noted that while SBA disaster loans are universal for every disaster, each disaster impacts regions/businesses differently. Just as disaster victims must prepare differently for each disaster, the SBA must tailor its outreach for different disasters that may impact certain parts of the country – including targeted outreach before annual disaster seasons. The letter requested that the SBA provide an update on regional disaster outreach in the East Coast this year and prominently feature hurricane-related information in future agency disaster outreach in this region.
- Guaranteed Disaster Loan Pilot Programs: The Small Business Disaster Response and Loan Improvements Act of 2008 (P.L. 110-246) also created two Guaranteed Disaster Loan Pilot Programs (a $25,000 Immediate Disaster Assistance Program and a $150,000 Business Expedited Disaster Loan Program). In subsequent Appropriations cycles, Congress has provided the SBA with the necessary funds to test these programs with local lenders. In the event that these programs may be activated for Hurricane Sandy, the senators requested an update on the SBA’s piloting of these programs, its review of lessons learned, and the promulgating of final regulations.
Click here to read the full letter.