WASHINGTON – United States Senate Committee on Small Business and Entrepreneurship Chair Mary Landrieu, D-La., and Ranking Member Olympia J. Snowe, R-Maine, today commented on a new Government Accountability Office (GAO) report of the Federal disaster assistance provided to small businesses impacted by Hurricanes Katrina and Rita in 2005. The report comes in response to a June 2009 letter from Senators Landrieu and Snowe written to Gene Dodaro, Acting Comptroller General of the U.S. Government Accountability Office, requesting a progress report on Gulf Coast small business recovery efforts.
“Natural disasters wrought havoc on the Gulf Coast community nearly five years ago,” Senator Landrieu said. “Our government reached out to assist Main Street businesses struggling to pick up the pieces. This report shows that the work to rebuilding the Gulf Coast is still miles long. St. Bernard and Orleans Parishes in Louisiana are still fighting to bring back members of their communities while small businesses are struggling to pay back the loans they received. This month may mark the fifth anniversary of Hurricane Katrina, but it is just another step in the road to recovery.”
“Our Gulf Coast small businesses are facing new challenges with the recent Deepwater Horizon oil spill and the Administration’s deepwater drilling moratorium. Because of these new challenges, it is even more important to ensure that small businesses received their fair share of Federal recovery contracts and the disaster assistance approved by Congress after the 2005 storms.”
"As we approach the five-year anniversary of the heart-wrenching tragedy afflicted by Hurricanes Katrina and Rita, it is critical that we assess the efficacy of Federal programs in promoting a revitalization of the Gulf Coast economy," said Ranking Member Snowe. "The GAO report released today highlights the crucial role that SBA disaster loans, among other initiatives, have played in the ongoing recovery, and I am pleased that disaster reforms I helped to spearhead have placed Federal aid into the hands of the victims of these catastrophes more quickly and efficiently. Moving forward, we must be mindful of the unfortunate impact the Deepwater Horizon oil spill could have in stunting the region's continued recovery, and I pledge to continue working with Chair Landrieu to ensure that the small businesses of the Gulf Coast have the resources they require to rebound and succeed."The review covered the impacted states of Texas, Alabama, Mississippi, and Louisiana. It specifically targeted four Federal initiatives:
• U.S. Small Business Administration (SBA) disaster business loans, which included physical damage disaster loans; economic injury disaster loans; and pilot Gulf Opportunity (GO) Loans. Over 10,700 SBA disaster loans were identified as assisting small businesses, and more than 1,500 GO Loans were approved for Main Street businesses.
• U.S. Department of Housing & Urban Development (HUD) Community Development Block Grants (CDBG) provided flexible grants to States or localities to carry out a variety of housing, infrastructure and economic development projects. Following Katrina and Rita, a total of $19.5 billion was made available to AL, LA, MS, and TX. The State of Louisiana implemented three small business disaster assistance programs. In total, the state had used about $179 million in CDBG relief funds as of December 31, 2009 for these programs and assisted almost 9,000 businesses.
• U.S. Department of Commerce Economic Development Administration (EDA) grants were part of existing programs, including the Revolving Loan Fund Program, to assist with small business recovery.
• Small business should account for 23 percent of Federal contracting opportunities. As of January 2010, Gulf Coast small businesses received $2.9 billion (13.9 percent) of the total $20.5 billion in total Federal contract funds awarded for hurricane related recovery projects. Small businesses in Louisiana directly received about $1.5 billion in Federal contract funds; Mississippi small businesses $644 million; Texas over $401 million; and Alabama over $325 million. 30 percent (or about $839.5 million) in contracting dollars that went to small businesses in the Gulf Coast was awarded to small disadvantaged businesses. 13 percent (or about $382 million) in Federal contracting dollars were directly awarded to women-owned small businesses in the Gulf Coast.
The assessment showed the percentage of loans in default/ delinquency. Each program ranged between 10 to 20 percent loans in default/delinquency.
This report also covered the current state of/improvement in the Gulf Coast economy, with a focus on the small business economy. The performance audit was conducted from September 2009 to July 2010.
To view the complete report from GAO, please click here.