Leahy Is Concerned About SBA’s Handling Of Disaster Loans To VT Businesses In Irene’s Aftermath
Is SBA’s Loan Rate Too Low And Too Slow?
WASHINGTON (WEDNESDAY, Oct. 12) -- Concerned about what seems to be a slow and low approval rate for U.S. Small Business Administration (SBA) emergency loans to Vermont businesses slammed by Tropical Storm Irene, Senator Patrick Leahy Wednesday asked the agency to promptly review its process and report back the findings.
The exchange on Wednesday took place in a rare multi-agency hearing by the Senate Appropriations Committee, called to assess rapidly evolving local needs and rapidly diminishing federal capabilities for dealing with the costly aftermath of Hurricane/Tropical Storm Irene and other recent natural disasters. Leahy is a senior member of the Appropriations Committee and of its Homeland Security Subcommittee, which held the hearing.
Leahy told SBA Associate Administrator James Rivera that initial reporting shows that SBA has received requests for nearly 1700 business-disaster applications from Vermonters, has received back more than 140 completed applications, and yet has approved only 24 business loans, totaling just $3 million. “That seems like a very low success rate to me,” Leahy told Rivera.
To put that in perspective, Leahy noted that the Vermont Economic Development Authority – the state’s lending agency – created a disaster loan program within 48 hours of Irene, made its first loan five days later, and has since obligated nearly $10 million in loans to more than 150 businesses, including some businesses subsequently denied loans from the SBA.
“I understand that SBA needs reasonable assurances that a business can repay a loan,” Leahy said. “But following a disaster – when offices, facilities, computers, and equipment are destroyed – no business appears credit worthy. That is why we have the disaster loan program and why there should be an appropriate standard for these applications.”
Leahy continued, “I appreciate that SBA finally opened a recovery center in Brattleboro yesterday, but loan decisions ultimately seem to be made out of a centralized loan processing center in Texas. I worry that this does not enable a loan officer to take an adequate look into the history and importance of a business severely impacted by the disaster.”
Rivera pledged a prompt response to Leahy’s questions.
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