News from U.S. Senator Olympia J. Snowe
Chair, Senate Committee on Small Business and Entrepreneurship
For Immediate Release: May 10, 2006
Contact: Chris Chichester, 202-228-5843

Snowe Concerned SBA May Temporarily Run Out of Disaster Loan Funding
Cites Only 19 Days Of Lending Left and Requests Contingency Plan From Agency

In a letter to Small Business Administration Administrator Hector V. Barreto, U.S. Sen. Olympia J. Snowe (R-Maine), chair of the Senate Committee on Small Business and Entrepreneurship, expressed concern that the Small Business Administration's disaster loan subsidy account has only 19 more days of lending left due to SBA's pace in processing loans and requested an analysis for how the agency plans to deal with the unfolding situation. As of May 8, 2006, Senator Snowe cautioned that there is approximately $127.9 million remaining in the loan subsidy account, which would support approximately $873.9 million in loan authority for the program. The SBA may need additional funding by May 28, 2006 in order to meet its obligations to disaster victims.

Senator Snowe noted that it is vital that Congress complete the supplemental appropriations bill before this date so that disaster loans can be provided uninterrupted to small businesses and individuals.

The text of Sen. Snowe's letter:

“As Chair of the Senate Committee on Small Business and Entrepreneurship, I am writing to express my deep concern regarding the available funds remaining in the Small Business Administration’s (SBA) disaster loan subsidy account.

“As of May 8, 2006, SBA estimates that there is approximately $127.9 million remaining in the loan subsidy account, which would support approximately $873.9 million in loan authority for the program. This will provide approximately 19 more days of lending. At the current rate of loan processing, it seems that the SBA will need additional funding by May 28, 2006.

“While the Senate has approved $1.25 billion in supplemental funds, I am concerned that the SBA may run out of funding before supplemental appropriations are provided. Given that small businesses play a vital role in the effort to rebuild the Gulf Coast after Hurricanes Katrina and Rita, it is critical that disaster loan funding continues to flow to small businesses.

“I am committed to working with the Agency to come up with a solution to this situation and I encourage the Administration to develop a contingency plan to head off any potential problems that may result from a possible funding shortage.

“Please provide me with an analysis of how the Administration is dealing with this situation. Thank you for your continued efforts to assist disaster victims during this challenging recovery process.”

The letter is attached.

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