WASHINGTON – Lawmakers will investigate loan delays to hurricane-ravaged small companies along the Gulf Coast, the head of a Senate committee that oversees the Small Business Administration said Tuesday.
The situation is “indefensible and inexcusable,” said Republican Sen. Olympia Snowe of Maine.
“Unfortunately, there appears to be no sense of urgency in providing the assistance hurricane victims so desperately need,” she said. “I intend to find out why.”
The SBA, which did not cut its first check to Hurricane Katrina until more than a month after the storm made landfall, also has yet to distribute any money for economic victims of Hurricane Rita within a month of its blow to the Louisiana-Texas border, according to documents obtained by The Associated Press.
The agency’s figures show it has received more than 9,500 Katrina-related applications for home and business loans in Texas and Louisiana. Six loans have been approved.
The federal response has been “simply unacceptable,” said Rep. Nydia Velazquez of New York, top Democrat on the House Small Business Committee.
“It has been a month with no approvals or loans made for those firms impacted by Hurricane Rita – now what will it be for the small businesses that were hit by Wilma?” she said.
Agency officials say Rita has posed almost as many logistical problems for them as Katrina, which barreled ashore near New Orleans on Aug. 29 as a Category 4 storm.
Rita, a Category 3 hurricane as it came ashore on Sept. 24, was briefly measured as the most intense storm ever to pass through the Gulf of Mexico. Estimates put the total insured losses between $2.5 billion and $7 billion.
The agency promised a swift response. But the hurricane-flooded roads, downed power lines, and shattered buildings are making it difficult for federal officials to assess damage and begin the process of making loans, an SBA official said.
“A lot depends on the situation on the ground,” spokesman Michael Stamler said.
Agency officials came under criticism at a congressional hearing this month when lawmakers pressed for an investigation into the SBA’s slow response in making loans after Katrina and the agency’s high rejection rates for applicants. Within a month of the hurricane’s landfall, more than 95 percent of all applicants had been rejected.
The rejection rate is described by officials as the result of a new computer system that takes all applications into account, not just loans that are seriously considered for approval. SBA officials acknowledged that the rejection rate for Rita-related loans probably would top 70 percent – much higher than the traditional 50 percent to 55 percent for most disaster recovery efforts.
Early figures tend to exaggerate the rejection rate, said Herb Mitchell, head of the SBA’s disaster assistance office.
Typically, he said, people have to be rejected for government loans before they can apply for grants, which don’t have to be paid back.
“We’re dealing with areas where there’s a lot of low-income people,” he said.
Last week, SBA officials announced they would relax some filing requirements to expedite loans by not requiring a three-year monthly sales analysis, three years of tax returns, and title or record searches for loans under $50,000. The agency also has given a one-year deferral of principal payments to existing borrowers in the disaster area.