WASHINGTON -- Describing a recent New York Times article as "inaccurate" and "unnecessarily alarmist," Small Business Administrator Steven Preston wrote a letter to the publication expressing his dismay on coverage of the agency's disaster assistance loan program.
At issue is a Jan. 18 article that reported the SBA's disaster relief loan program is on the verge of running out of money and could shut down if Congress does not intervene to cover the administrative costs to keep it operating.
In a Jan. 19 letter to the publication, which was also sent to Credit Union Times by the agency, Preston wrote, "The funding issue in question has nothing to do with 'budgeting problems' at the SBA. To report otherwise shows a fundamental misunderstanding of the matter." Of 160,000 applicants with approved loans in the Gulf states, 98% have now either received all their loan money or some of their money, or have chosen not to proceed with their loans, generally because they secured funds elsewhere, Preston wrote. More than $8 billion in disaster assistance loans have been approved.
The New York Times reported that the "current money shortage is related to what agency officials concede was an unusual decision in early 2005 not to ask Congress for any money to pay for running the disaster program in the 2006 fiscal year, relying instead on money left over from previous disasters." Preston wrote that since Congress has not passed a budget for 2007 yet, most of the federal government is working under a Continuing Resolution, which does not include SBA's disaster loan program. "We know from our customers that we still have a ways to go, but the results are clear," Preston wrote. In addition, our response times to customers and backlogs are a fraction of where they were this summer. It is important to understand the facts, because this program is important for Americans and is better prepared than ever before. Rep. Nydia Vel?zquez (D-N.Y.), newly appointed chairwoman of the House Small Business Committee, has long criticized the SBA for mismanagement. She told the New York Times "We need to look at a comprehensive overhaul of the agency as well as the disaster loan program. Something has to change in the management of this agency." Sen. John Kerry (D-Mass.), chairman of the Committee on Small Business and Entrepreneurship, has also criticized the agency for its handling of disaster assistance loans following Hurricane Katrina.
Preston said he is confident Congress will resolve the financial issues surrounding SBA's disaster loan program soon.
"The article's timing is especially ironic as the SBA's Disaster Assistance Program has shown dramatic improvement in recent months," Preston wrote. "SBA has re-engineered its Disaster Loan process into a focused, streamlined, customer-driven operation that has achieved significant improvements in the agency's ability to respond to extraordinary disaster events."
CUNA had previously sought clarification on how credit unions could participate in SBA's "GO Loan" program, which allowed financial institutions that are Preferred and Express lenders to use their own forms and underwriting to get working capital into the hands of small businesses in the hurricane-affected Gulf region. The loans, which were modeled after SBAExpress loans, were available up to $150,000 and had an 85% guarantee, were available until Sept. 30, 2006.
NCUA had also previously encouraged credit unions to participate in SBA's "Give a Lending Hand" program, which sought out SBA experienced loan officers to be hired as Special Government Employees to assist in processing disaster loans for business owners impacted by hurricanes in the Gulf region. --email@example.com