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STATEMENT OF

JAMES L. KING

STATE DIRECTOR, NEW YORK STATE

SMALL BUSINESS DEVELOPMENT CENTER

CHAIR,

ASSOCIATION OF

SMALL BUSINESS DEVELOPMENT CENTERS

BEFORE THE

COMMITTEE ON SMALL BUSINESS & ENTREPRENEURSHIP

UNITED STATES SENATE

DECEMBER 13, 2012

Madame Chair, Ranking Member Snowe, and members of the Committee, thank you for inviting me here today to discuss “Hurricane Sandy: Assessing the Federal Response and Small Business Recovery Efforts”. Since the storm hit New York City and Long Island particularly hard October 29th, very little else has occupied our efforts.

The vital role that New York’s and America’s small businesses play in our daily lives was underscored when so many were disrupted in the communities which rely upon their services. Every disaster seems to have its own signature that recognizes the community in which they are located and the unique character of each community. That said, we can see many similarities to the experiences of others as well as the special circumstances that must be addressed. We look forward to a successful economic recovery process and returning the small businesses that play a leading role in creating the jobs and opportunities we need to stability.

It is important to explain the unique position of the SBDC program within the impact area. The SBDC in the Downstate District of New York (one of three SBA district offices in NY) has been continuously providing small business services with the Small Business Administration (SBA), New York State and our partners since 1985. We’ve worked with 181,890 entrepreneurs and small business owners through one-to-one business advisement and offered 6,436 training events attended by 174,968 persons. I mention this primarily to underscore that the business community is used to working with the SBDC during all times, good and bad.

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Our previous experience with disasters provided us with some insights into what to expect in the initial days following the disaster. Our team at the SBDC in New York had many staff who were the initial small business responders to the 9-11 attack and recovery process, so we were probably better equipped than many to deal with the aftermath. I was also privileged to have the opportunity to work with the SBDC in Louisiana following Hurricane Katrina in 2005 and visited New Orleans as one of five State Directors invited to share thoughts with my counterpart there, Mary Lynn Wilkerson, to evolve a strategy for recovery. I should add that Mary Lynn has returned the favor many times over since Hurricane Sandy devastated our area, with materials, information and support, which has been greatly appreciated. Finally, Mary Lynn has agreed to Chair our ASBDC Committee on Disaster Recovery and will be working to institutionalize the processes and best practices we have collectively developed to ensure the effectiveness of future disaster response efforts.

One of the things that can be overwhelming to the small business owners as well as the responders is dealing with the sheer magnitude of the destruction and the questioning of why this happened and knowing what needs to be done. Individually, it is difficult to organize where to begin, to determine what will be the most productive activities and to deal with a general feeling of isolation. For SBDCs, being part of the community creates a special linkage to the business owners and lets those business owners know that people care and are there to help. A similar situation exists for our SBDC team. Starting almost immediately after the disaster, staff in other states and programs began reaching out with offers of assistance and words or experiences of support. I’ve received numerous offers of staff from states across the nation willing to volunteer to serve in the recovery efforts. This has meant a great deal to our front line Business Advisors. The experiences gained from disasters in Florida, Texas, Colorado, Louisiana and many other places reinforce the value of the SBDC network in meeting the needs of small business in times of disaster.

Our New York plan is to get through the holiday period relying upon our statewide staff to meet the staffing needs and then to seek experienced staff from other states. Hopefully, this will cause the least disruption to others and help reduce the requirements on our own staff, making sure they do not get overwhelmed. I’d add that many of our staff, residing in the impact area, continued to work while postponing their own personal recovery efforts. We value and intend to recognize that commitment to small business.

With this background, I’d like to comment on the federal response and small business recovery efforts. Although we’d had several lesser disasters since 9-11, the more localized nature had not underscored the differences in the federal response since September, 2001. From my perspective, I would summarize the change in the past decade as being substantial and for the better. In 2001, there was an attitude that the disaster teams had all the answers and did not seek or accept input. That led to limited information getting to the victims and locations being selected for recovery assistance centers that simply did not make sense.

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In contrast, following Hurricane Sandy, the SBA Disaster Office reached out to local service providers and requested input on good locations for Disaster Recovery Offices, given the levels of destruction, travel capabilities and support potential. They invited our SBDCs to co-locate staff who could work with small business owners who needed added assistance in re-creating lost or destroyed records, assessments of total damages and taking steps that could be taken to remediate locations to prevent future problems.

Prior to the disaster, we had eight (8) primary service locations and two (2) Outreach locations for the SBDC in the declared disaster areas, housing almost 70 staff. Today, we have 25 assistance locations because we have reached out to partners and more isolated high impact communities to place assistance locations in closer proximity to those in need. Just like with SBDC regular services, proximity counts. The small business owners are struggling to recover, often working with employees to clean up the location and deal with the work of re-establishing their business. They simply cannot take prolonged periods out of their day to travel distances to meet with assistance providers. In some cases, it is necessary to bring the assistance to the business, going portable and visiting the business site. We have deployed five staff with laptops and communication networks donated by Verizon, along with cell phones, to be mobile within the business areas where site visits are needed.

In New York, the SBDC has a mutual aid agreement in which every SBDC Center, statewide, commits to support affected locations during a disaster. The day after the Hurricane, we had 30 volunteers from upstate locations respond to the call for assistance, and we have been deploying those volunteers to high need areas for the past month to augment staff in the high impact areas.

In this disaster, the disruption of power has been a significant factor. We had hundreds of thousands of locations without power for five weeks and still have areas without reliable power. This is not a criticism of the efforts made by the utilities or the crews; I have grown to appreciate how destructive salt water is to electrical systems and the distribution network. But the absence of power made communication with many extremely difficult. Usual modern techniques of getting emails and electronic messaging or web site information simply did not exist. Since the Hurricane, we have cooperated with SBA, NYS, NYC and numerous other community partners to host 72 informational events, often relying upon printed posters and word of mouth or public announcements to get the word out.

In assessing the federal response, I’m most familiar with the SBA Disaster Team and to a lesser degree, FEMA. For SBA, as I had mentioned, the leader of the Office of Disaster Assistance James Rivera reached out to me shortly after the storm and shared my contact information with several staff to make sure that we were in regular contact and involved in many decisions about the siting of Business Recovery Offices, forwarding updates to staff on current procedures and sharing contact information when questions arose.

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We were very pleased to note that many of the documents and procedures deployed by the Disaster Team were online and readily accessible. We had recently dealt with Disaster Team members following the floods in the Southern Tier and Adirondacks of New York, just last year. There have been numerous changes since then that encourage greater involvement of the SBDC and the release by SBA of the online process has made the Hurricane Sandy effort significantly better.

On of the best examples, and there are many, relates to the joint deployment of staff in Staten Island, which was hit especially hard by the storm surge. We were able to connect the Office of Disaster Assistance with our host institution, the College of Staten Island, a City University of New York campus. It is centrally located on Staten Island and on high ground, so it was not flooded and retained power. This proved to be an excellent site for a Business Recovery Center. Similar relationships developed on Long Island and within New York City. In each case, our higher educational institutional partners immediately recognized the value of the recovery effort for their community and arranged for space and support.

In other areas, we weren’t so lucky. SBDC Advisors have foot canvassed areas in the Rockaways that still do not have power (including Internet access) to provide information on services and loans available. The SBDC and SBA has been given space, Internet access, phone use, and use of equipment (copiers, fax machine) at the Rockaway Development & Revitalization Corporation to provide services in the main commercial area. Informational events are being offered to individuals in this heavily impacted area, where one recent event in Howard Beach generated 45 businesses that registered for assistance on the spot and received advisement services immediately following the event program. However, the Rockaways had a business population of over 1,100 prior to the storm and many may not return.

One of the things this facilitates is the longer term recovery effort, and we anticipate a longer term effort. The SBDC staffs are able to work with Disaster Office staff to leverage the effort and deliver better, more timely and knowledgeable services to the small businesses. The deployment of Disaster Office staff is recognized as being strategic but not permanent. The Disaster Office staff working with SBDC staff promotes the opportunity to maintain disaster recovery services after the assignment of Disaster Office personnel is over, thereby extending the service availability.

This positioning became clearer when I was preparing my comments and I received notification that the physical damage deadline was extended from December 28th until January 28th. If this extension had not taken place, it would have created a very difficult situation during the holiday period where people would have had to rush to submit applications at the end of the eligibility period.

The entire declared disaster area and contiguous counties in New York includes over 600,000 businesses. Our primary disaster area, where we anticipate the greatest demand for services and the greatest damage includes over 100,000 businesses. We will probably assist at least 40,000 of these businesses and we have a very real concern that many we will not see simply will not reopen for a myriad of reasons such as magnitude of losses, age of owners and loss of markets. As part of that longer term strategy, we anticipate working with new businesses, start-ups and expansions, potentially over an extended period.

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Services SBDCs have been providing include:

? Completing SBA disaster loan applications

? Retrieving information about available financial assistance, claim filing and walking small businesses through the process

? Helping fill out requests for loans, claims, and assistance forms

? Helping businesses re-create lost financial records, if necessary, to document losses

? Locating and setting up short-term and permanent replacement facilities

? Assessing environmental cleanup options for busnesses

? Developing an emergency response plan for the business

? Strategic planning for rebuilding the business and marketing to new potential customers

? Identifying and addressing other issues of concern to affected businesses

? Developing a business continuity plan for response to potential future disasters

I took a few minutes and reviewed my correspondence with many of the Disaster Team assigned to New York as well as the general SBA Team, and found over 100 emails (and I can’t tell you how many calls) from my District Director for NYC, Pravina Raghavan, to my project team in Washington (Erika Fisher, Ann Bradbury, Carroll Thomas and Michael Chodos in Entrepreneurial Development) and the Administrator, Karen Mills. We toured the Brooklyn Navy Yard with Administrator, Karen Mills and saw national assets that needed assistance.

Our Congressional delegation was equally helpful and I just don’t have space to mention all of them and their help (we have a large and active delegation) I will however, specifically thank Senators Schumer and Gillibrand for their help and dedication. I have been overwhelmed by the efforts to coordinate the response for the benefit of the small businesses affected.

The President's supplemental request for $60 billion has definitely captured the attention of many in the disaster stricken areas. That request includes $50 million allocated among the Small Business Administration’s programs including $20 million to support SBA partners, like Small Business Development Centers, as providers of technical assistance to disaster victims to help access capital, re-start, and succeed in the post-Sandy business climate. The funds will help provide resources to enable us to carry out the long-term recovery effort that New York, and New Jersey, in particular, will need. We hope Congress will be able to act quickly to provide the authority and funding to enable SBA and its partners to carry on with the recovery effort.

The final point I would offer is that the assessment of the federal response goes well beyond the actual Disaster Team and involves many regular partners that we deal with daily when we are not in recovery mode. In our case, the State and New York City have provided rapid access to small amounts of interim financing to fund clean-up and short term cash needs of impacted businesses.

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Both programs are run through one of the largest SBA participating lenders in New York, the New York Business Development Corporation (NYBDC).

Following 9-11, the SBDC partnered with NYBDC to establish a loan fund to fund smaller, quick turnaround loans to small businesses in distress. Following Hurricane Sandy, NYBDC stepped up and administers two funds for micro loans (up to $25,000) at no administrative cost, for small businesses. These loans have been used as bridge financing, pending disaster loan applications through the SBA, and have been very well received. In many cases, underwriting has been cut to less than 5 days and has helped cash strapped business owners to continue clean up and early recovery efforts.

This has created a relatively smooth transition for many businesses that might otherwise have been seriously delayed in their efforts. Businesses have gained access to immediate funds while applying for larger amounts through SBA that take more detailed information and significant underwriting. Due to the involvement of NYBDC, this has created an almost linked application development, where staffs have the opportunity to review special offerings from other providers such as taxation grace periods, legal options under leases, energy updates and others.

In summary, I feel the disaster recovery effort has come a long ways. There are better processes and coordination and a lot of improvement since Katrina. While there’s probably always room for improvement, it seems that the oversight efforts of the Committees have been fruitful and supported a more transparent and effective process.

Thank you, I look forward to answering any questions you may have.