SBA Touts Loan System Overhaul Five Years After Katrina
The SBA looked to the owners of a New Orleans seafood processor as an example of how the agency said it was not prepared to handle the deluge of relief requests after Hurricane Katrina.
Tommy's Seafood suffered major damage to its two facilities including equipment and inventory loss after the catastrophic storm in August 2005 caused destruction on the Gulf Coast, the SBA said. Tommy and Maria DeLaune, the business' owners, had applied for an SBA disaster loan in October 2005 but didn't get approved until May 2006 and the loan wasn't fully disbursed until October 2006, a year later, the SBA said.
The seafood processor and wholesaler suffered another setback when the BP oil spill closed fishing waters where its suppliers worked. The DeLaunes had to seek seafood 500 miles away resulting in higher expenses and lower profit margins, according to the SBA. However, unlike Katrina, the couple said their SBA experience this time around was "amazing," the agency said. Their disaster loan was approved in 16 days and it was fully disbursed just a month later. The SBA said it also deferred their existing Katrina loan for 12 months so they can use more of their resources to deal with the financial strain caused by the oil spill.
"SBA was not prepared, nor fully equipped to effectively provide assistance in the wake of [the Katrina] disaster. But we've learned from our mistakes and, today, we have a much better disaster assistance program in place with increased staff, improved technology and training, and a streamlined loan process," the agency said.
In an Aug. 24 Associated Press article, former SBA loan officers who processed loans after Katrina, gave accounts of the bungled system including alleged claims of loan distribution discrimination based on income, race and location. Others said backlogged applications were canceled for no reason. Supervisors held contests with cash prizes to reward loan officers who cleared the most applications, often through outright rejections. Thousands of frustrated business owners gave up on receiving a disaster loan.
Today, the SBA said the agency's reaction to the oil spill is a result of its efforts to clean and speed up its disaster loan processing system. The agency said it reduced its average processing time from more than 70 days to 10. Applicants can now apply online. Loan processing centers workstations have increased from 366 to 1,750 and SBA disaster staff went from 800 to 1,200.