Early GAO Findings Suggest SBA's Systems Overwhelmed by Volume of Hurricane Disaster Loan Apps

WASHINGTON – In another matter, preliminary data from the Government Accountability Office found that SBA followed "appropriate policies and procedures" after last year's hurricanes and the agency's loan processing system may have been "overwhelmed" by the volume of disaster loan applications. But a backlog has slowed down the process of getting funds to disaster victims the GAO said. As of March 25, SBA had a backlog of about 55,000 applications in loan processing pending a final decision and the average age of these loan applications was about 88 days, said William Shear, GAO director of financial markets and community investment. SBA also has more than 43,000 loan applications that have been approved but have not been closed or fully disbursed, he added. Shear said GAO is currently looking at how effectively SBA's Disaster Credit Management System, implemented in January 2005, affected the agency's response to the hurricane aftermath. GAO also found that the volume of loan applications SBA mailed out and received "has far exceeded any previous disaster," which affected timely processing. SBA's planning efforts for the hurricanes "appear to have been inadequate," Shear said. "Although SBA's disaster planning efforts focused primarily on responding to a disaster the size of the Northridge earthquake, SBA officials said that it initially lacked the critical resources such as office space, staff, phones, computers, and other resources to process loans for this disaster," Shear said. -