FORT LAUDERDALE, Fla. – The Small Business Administration failed to give timely assistance in loans to Gulf Coast hurricane victims because of poor planning and faulty computer equipment, according to a new federal report. The nation’s small-business agency, which processes disaster loans to businesses and homeowners, lacked staff, resources and the correct equipment, the report says.

The analysis, by the Governmental Accountability Office, also gives some insight into the slow pace getting loans to Florida businesses after last year’s Hurricane Wilma.

“The same process was used for Florida,” said Mike Stamler, spokesman for the SBA. Since Wilma hit South Florida last October, the SBA has approved 16,858 loans totaling $801.2 million. The agency has rejected 18,218 loan applications and 164 loans were still in process as of Friday, he said.

A major factor in the SBA’s slow response was the overwhelming volume of disaster loan applications – more than any previous single disaster. The SBA administers the disaster loan program – low-interest, 30-year loans available to businesses and homeowners affected by natural disasters.

The SBA’s model for handling the loan applications was the 1994 Northridge earthquake. The report says the SBA did not consider more updated catastrophe risk modeling and disaster simulations that might have indicated a need for more resources, the GAO report says.

The backlog in processing loan applications peaked at more than 204,000 applications four months after Hurricane Katrina. As of May 27, the SBA processed applications on average in about 74 days compared with its goal of within 21 days.

The SBA tried to speed up the process with a pilot program in December 2005 that gave automatic approvals to applicants with higher credit scores, indicating they were less likely to default on a loan. The agency actually took longer than average loan approval time to process the expedited approvals, the GAO report says.

The GAO recommends a reassessment of resource needs, improvement of management controls and identification of new ways to more efficiently process loan applications, including a secure Internet-based application.

The Gulf Coast hurricanes caused $118 billion in property damage compared with the 2004 Florida hurricanes (Charley, Frances, Ivan and Jeanne), which caused $46.2 billion and 1992’s Hurricane Andrew with $35 billion, according to the report.

“Here’s confirmation that in spite of all the promises made after Katrina, nothing much has changed in Washington,” Sen. John Kerry D-Mass., top-ranking Democrat on the Senate’s small business committee, said in a statement. “Tens of thousands of hurricane victims are still waiting for assistance. Two and a half months to process a disaster loan application is beyond unacceptable. People’s livelihoods are on the line.”

In its response to the report, the SBA generally agreed with the GAO’s recommendations, but said more credit should have been given to the agency’s improvement efforts. “We will be reviewing it in detail to determine how to proceed from here,” Stamler said.

Hector Barreto, the Small Business Administration director during Katrina, resigned in April. The SBA now is head by Steven Preston, former executive vice president at The ServiceMaster Co., an international franchise.



(c) 2006 South Florida Sun-Sentinel.

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Distributed by McClatchy-Tribune Information Services.

AP-NY-07-31-06 1836EDT


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