WASHINGTON –United States Senator Mary L. Landrieu, D-La., Chair of the Senate Committee on Small Business and Entrepreneurship, on Monday sent a letter to Small Business Administration (SBA) Administrator Karen Mills requesting that SBA review its internal policies from previous disasters, especially the Exxon Valdez disaster, to improve its response to the Deepwater Horizon disaster. As of June 25, 2010, SBA had denied almost 70 percent – 243 of 352 disaster loan applications – from Gulf Coast small businesses. According to SBA, a majority of these businesses were declined over concerns on the credit and repayment ability of the companies.

“While I recognize that it is still early in the disaster loan process and that many businesses are taking a ‘wait and see’ approach, these decline numbers are troubling and could discourage other impacted businesses from seeking SBA assistance,” Sen. Landrieu wrote. “This is because, many local businesses are still having trouble navigating the BP claims process and are generally hesitant to take on additional debt with the difficult economic conditions in the area right now.”

An example cited by Sen. Landrieu that may benefit Gulf Coast businesses regards collateral required for SBA disaster loans. SBA could examine different types of collateral, including BP claims, which could be used to not further burden businesses that are now, in some cases, facing their second or third disaster since 2005.

The letter also requests that SBA provide a written response to a set of frequently asked questions received from Gulf Coast businesses. These questions range from those over eligibility for SBA disaster loans, inquiries on the types of collateral needed for loans, and options available for businesses declined for SBA disaster loans.

On May 27, 2010, the Small Business Committee held a hearing on the impact of the Deepwater Horizon disaster on Gulf Coast small businesses. In that hearing, the Committee heard from members of the U.S. Coast Guard and Federal agencies on the claims process and assistance available to small businesses. BP indicated at that hearing, they had received over 26,000 claims, of which 12,000 claims had been paid, totaling $36 million. As of June 25, 2010, SBA has approved 109 Economic Injury Disaster Loans. To view complete coverage of the May 27th hearing, please click here.

To view a copy of the letter, please click here.