WASHINGTON — The Small Business Administration said it is ready to assist businesses impacted by the flooding that soaked Iowa and other Midwestern states.

Jovita Carranza, SBA acting administrator, joined FEMA Administrator David Paulison during a recent tour of disaster-declared areas in Iowa and Indiana to assess areas affected by the storms and ensure SBA's coordination with federal, state and local governments in providing critical services. The agency said it currently has disaster staff working to meet the needs of residents flooded in Iowa, Indiana, Wisconsin and other states.

SBA said it also has the capability to provide disaster loans to homeowners, businesses, and renters and working capital loans. The agency also offers counseling and entrepreneurial development for small business owners and assistance to those seeking federal contracting opportunities.

The tour came a few days before SBA again defended its Office of Disaster Assistance, which has faced scrutiny on its efforts following Hurricane Katrina. A June 12 New York Times article interviewed several sources who said the disaster assistance program is not where it needs to be as Steven Preston, the former SBA administrator, recently started his new job as secretary of the Housing and Urban Department.

“Our progress has been praised by bankers, community lenders, and credit unions,” wrote Carranza in a letter to the Times. “Lenders are coming back into our programs for the first time in years. Why? It used to take nine months for SBA to honor a guarantee in its flagship program. Now it takes three weeks. We have designed more relevant products for the market. Our interactions with banks are increasingly automated, and we are providing better support to them throughout our network.”

Since implementing several changes to its disaster assistance program, SBA said the Gulf Coast hurricane loan backlog dropped from almost 120,000 to 28,687 by the end of December and down to nearly zero a few months later. Turnaround times in key processes were cut by up to 90%, the agency said. SBA said it has disbursed more than $6 billion to more than 100,000 Gulf Coast families and businesses.

Last June, the agency said it submitted a disaster recovery plan to Congress that includes procedures to better handle future catastrophic disasters, operationalize surge plans and establish a comprehensive approach to coordinate with other disaster assistance groups.

An electronic loan application was also introduced with the aim of facilitating immediate transfer of disaster victim data into SBA's Office of Disaster Assistance loan processing system. The new application is supposed to prevent most applicant entry errors and reduce application completion time and effort by the disaster victim. ODA said it will continue to offer disaster victims the option of a paper-based application with and customer service representative assistance.

In its response to The New York Times, SBA offered several rebuttals to information presented in the newspaper's article. In a myth versus fact format, the agency provided updates and details on criticisms that it has not done enough to increase loan volume and help small businesses during the current credit crunch. Reduced volume has come as a result of less demand from small business, less creditworthy borrowers and the tightening of credit standards by lenders, the agency said. Seventy percent of the loan program's decline in 2008 can be attributed to cutbacks by just five major lenders, SBA noted.

SBA also disputed reports that Congress initiated its own overhaul of the disaster loan program.

“SBA strongly supported the private disaster loan provision of the farm bill and helped shape much of the legislation. In addition, this loan does not supplant SBA's disaster loan,” the agency wrote. “Rather, it provides a safeguard should a major catastrophic disaster require the private sector to join government in expediting funds to survivors.”

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