WASHINGTON – Senators Mary Landrieu (D-La.) and John Kerry (D-Mass.) are seeking to hold the Bush Administration accountable for failing to fully meet a congressional request for a daily report on the financial status of the Small Business Administration’s (SBA) Disaster Loan Program. As members of the Senate Committee on Small Business and Entrepreneurship, they have repeatedly asked for the information after the program faced a near shutdown twice in February. More than 400,000 Gulf Coast residents whose homes and businesses were damaged or destroyed by Hurricanes Katrina, Rita and Wilma have applied for disaster loans. As of today, fewer than 12,000 of those loans had been approved and fully disbursed.

“The SBA Disaster Loan Program is a crucial lifeline to recovery for many of our Louisiana businesses and homeowners,” Sen. Landrieu said. “While I appreciate the recently improved responsiveness of the SBA, the Administration still must fully comply and provide Congress with all the information needed to ensure this important lifeline can continue.”

Last week, the Senate Appropriations Committee took action on a supplemental funding bill that would provide $1.3 billion for the Disaster Loan Program; however, it is unlikely the full Senate will approve the measure before May 1st. Current estimates indicate the program will only be solvent through the first week of May. With today marking the deadline for disaster loan applications, there will likely be an upswing in applications, making it imperative to ensure the stability and continuity of the Disaster Loan Program. So far, Congress has stepped in three times to keep the program running.

“When is the Bush Administration going to stop dragging their feet and start putting Gulf Coast residents first?” Kerry asked. “This Administration’s failure to oversee the program could result in Gulf Coast residents being out of luck when they seek government help. Here we are at the deadline for victims to apply for disaster loans, yet we’re left wondering how long the money will be there for them. Two weeks? Three weeks? That is unacceptable. Without transparency and accountability we have no assurances to offer the Gulf Coast residents who desperately want to rebuild their lives.”

To avoid any unnecessary discontinuation of the program or the capping of loans, Landrieu and Kerry requested the following information from the Administration:

  • An estimate for how long the program’s current level of funding will last;
  • A contingency plan, should funding for the program run out before receiving supplemental funds; and
  • A daily, complete accounting with all information originally requested by the Senators on February 28th, including administrative cost estimates.

  • To read the letter Landrieu and Kerry sent to the Administration on February 28th, please click here. Following is the text of the letter Landrieu and Kerry sent to SBA Administrator Hector Barreto on Friday:

    April 7, 2006

    The Honorable Hector V. Barreto
    U.S. Small Business Administration
    409 Third Street, SW
    Washington, DC 20416

    Re: Current Funding, Reporting Status of SBA’s Disaster Loan Program

    Dear Administrator Barreto:

    In a letter dated February 28th, 2006, we expressed to you our concerns regarding the Small Business Administration’s ongoing funding requirements for the Disaster Loan Program. Twice in the month of February, the SBA was in danger of running out of funding for this program. In response to the SBA’s failure to notify the Committee on Small Business and Entrepreneurship of its need for emergency funding during its budget briefings on February 6th and 7th, we requested that the SBA provide the Committee with daily reports detailing the funding status of the program.

    While the SBA has provided some information, and we appreciate that effort, the agency seems reluctant to fully comply. The reports have been incomplete and only provided on a sporadic basis. Most significantly, the Administration has neglected to include an estimated date for how long the funding for loans will last given the current lending rate.

    We have asked your staff several times to address these problems, but the reports remain incomplete. The Administration’s lack of responsiveness and disregard for transparency in its management of the Disaster Loan program only reinforces the need for compliance with our request. Without daily full disclosure of all the requested information, we are not able to evaluate whether the SBA is effectively managing its available funding for this program.

    Based on our interpretation of the data in the reports we have received, as well as on information from SBA staff, it is our impression that funding for the SBA Disaster Loan program will again run out during the first week of May. This is a serious concern, given that supplemental funding needed for the program is not likely to be available until after May 1st. Adding to our concern is the fact that the April 11th application deadline for the Disaster Loan Program is rapidly approaching and will likely result in an increase in applications to be processed.

    As of April 7th, more than 54,000 homeowners and businesses were waiting for their disaster loan applications to be processed by the Administration, while more than 100,000 waited for approved loans to be disbursed. At such a critical juncture in the Gulf

    Coast rebuilding process, and with so many lives dependent on funding from this program, it is imperative that we ensure the stability and continuity of the Disaster Loan Program.

    To avoid any unnecessary discontinuation of the program and to prevent hurricane victims from receiving less than what they require as a result of unnecessary capping of loans, we request of the Administration the following information:

  • An estimate for how long the Program’s current level of funding will last;
  • The Administration’s contingency plan should funding for the program run out prior to receiving supplemental funds; and,
  • Complete accounting reports on a daily basis, including all information as requested in our letter of February 28th as well as two-week administrative cost estimates updated as new figures are released.

  • Rebuilding the homes, the businesses, and the lives devastated by Hurricanes Katrina, Rita and Wilma continues to be our goal and our responsibility. Through continued cooperation and transparency between the Small Business Administration and the Committee on Small Business and Entrepreneurship, we can ensure that the victims of the Gulf Coast hurricanes, for many of whom the Disaster Loan Program is their only lifeline, will receive the resources they require to rebuild their lives.

    We respectfully request written responses to our February 28, 2006 letter as well as to this letter by May 5, 2006.


    Mary L. Landrieu

    John F. Kerry