With the Small Business Administration’s disaster loan program on the verge of shutting down, Senator John Kerry, Ranking Member on the Senate Committee on Small Business and Entrepreneurship, called on President Bush today to request full funding to adequately respond to Gulf area disaster needs.

“The Bush Administration’s short-sightedness in short funding the SBA and its Disaster Loan Program has caught up with them again, this time at the expense of Gulf area victims,” said Kerry, noting the President sought to eliminate all disaster loan funding requested in his Fiscal Year 2006 budget. “Last year the President didn’t view disaster loan funding as a priority, and now today, he has waited until just days before the disaster loan program would have been bankrupt to ask Congress for critical funding.”

In a letter sent to the President today, Kerry urged the White House to act immediately on the mismanagement of the SBA, noting that when Committee staff met with the agency’s Chief Financial Officer earlier this week there was absolutely no mention of the funding crisis. This letter comes on the heels of the Administration’s request to Congress for an additional $1 billion in resources to be reallocated from the Federal Emergency Management Agency to the Disaster Loan Program. Unfortunately, this request is still not enough, as it would only fund the program through July. In order to fully fund the Disaster Loan Program through the end of the September, the SBA needs $1.3 billion.

According to the SBA’s own data, almost six months since Hurricane Katrina hit, 50 percent of homeowners are in bureaucratic red tape waiting for their disaster loan requests even to be processed. Similarly, more than 35 percent of business owners are still waiting.

“Time and time again, the Bush Administration has not requested enough funding for small business or disaster loan assistance, leaving Congress to bail them out,” said Kerry. “Since taking office, President Bush has slashed the SBA’s budget by more than 40 percent, depriving small businesses around the country of the resources that would help them contribute to our country’s economic growth. This has resulted in poor oversight and ultimately the inability for the agency to respond to the needs of homeowners and businesses devastated by Hurricanes Katrina, Rita and Wilma. The White House has ignored the deficient and disastrous response of the SBA for too long.”

Following is the text of the letter:

February 10, 2006

The President

The White House

Washington, D.C. 20500

Re: Averting Shutdown of SBA’s Disaster Loan Program

Dear Mr. President:

We have just received word that the Small Business Administration’s (SBA) disaster loan program was on the brink of running out of money next week, on February 13, 2006. Our Committee was not notified until this week that the SBA needed more funding, and according to documents I have just received, not even the appropriators were notified until recently. Instead of waiting until the last minute to try and avoid a shutdown, further exacerbating the disaster loan program’s failure to meet the urgent needs of hurricane victims in the Gulf, the Administration should have notified Congress of this problem sooner. This is reminiscent of the way in which the Administration handled the shutdown of its largest small business lending program two years ago and the way it handled the shortage of funds to pay SBA’s disaster loan staff during the 2004 Florida hurricanes.

Mr. President, your FY2007 budget was released on Monday, and you deployed your staff out to the various oversight Committees this week to promote your priorities for the various agencies and departments and to justify the requests. Among other key SBA employees, Committee staff met with the SBA’s Chief Financial Officer. No one should be in a better position to know the Agency’s fiscal standing in its accounts. Yet, not once did the CFO or anyone from the SBA mention a need for additional disaster loan funding.

For too long, you have ignored the mismanagement of the SBA. The draconian cuts to the SBA by this Administration have proven deleterious to the delivery of resources important to small businesses across the nation. The near-shutdown of the disaster loan program demonstrates the short-sightedness of these budget cuts.

It is time to get the SBA’s disaster loan program running smoothly and remove the red tape that is keeping so many homeowners and business owners from getting much-needed disaster assistance. As of yesterday, SBA’s data showed that almost six months after Hurricane Katrina hit, 50 percent of the loans requested by homeowners are waiting to be processed, and 35 percent of the business owners are waiting for their loan applications to be processed.

I understand that the Administration’s reprogramming request of $100 million approved yesterday by Congress will only provide enough funding to keep the program running for about 14 more days. To avoid a shutdown during Fiscal Year 2006, the SBA disaster loan program needs an estimated $1.3 billion. Currently, your Administration is planning to request $1 billion to be reallocated from the billions sitting idle at FEMA. Unfortunately this will only fund the disaster loan program through July, requiring an additional request for the remaining $300 million in supplemental appropriations to make it through the end of the fiscal year in September. Rather than continue this piecemeal approach to budgeting, I urge you to request the full amount to operate the program properly now and make sure the needs of the Gulf and future disaster victims are met.


John F. Kerry