October 23, 2014
GAO Finds Hurricane Sandy Caught SBA Off-Guard; Businesses Wait Nearly 4 Months to Receive Assistance
Velázquez Calls on Congress to Reopen Disaster Program for Small Businesses Affected Sandy
New York, NY – Today, the GAO released a report requested by Congresswoman Nydia M. Velázquez (D-NY) on the Small Business Administration’s (SBA) response to Hurricane Sandy. The GAO found that SBA was unprepared for the significant number of applications it received after Sandy and as a result, many small businesses faced substantial delays for assistance.
“We all remember what it was like right after Sandy and businesses required immediate help,” Velázquez stated. “They needed financial assistance in days, not months.”
From loan processing through closing, small businesses had to wait on average 111 days for a physical disaster loan and 81 days for an economic injury loan (EIDL). The report found that the agency took an average of 45 days to approve or decline physical business disaster loans and 38 days for EIDLs, both of which exceed SBA’s 21-day application goal. At its peak, the processing average was 60 days and one year after Sandy, the average still exceeded the SBA’s goal. When combined with the time needed for closing, businesses faced up to a four month wait to receive actual funding.
“The agency was caught flat-footed,” Velázquez remarked. “Missteps, a lack of planning, and an inability to right the ship quickly left businesses frustrated and unable to secure the financing they needed.”
GAO found that these delays were caused by poor planning by SBA. The agency underestimated the amount of applications it would receive in the immediate period after Sandy, while overestimating the number of applications it could process. When combined with technology-related failures, the agency quickly fell behind and was unable to promptly adjust its resources.
“Given GAO findings, New York’s small businesses deserve another opportunity to secure assistance from SBA,” Velázquez stated. “This is the least we can do to help these businesses recover.”
In order to provide relief to businesses still in need of resources, Velázquez will call on Congress to reopen the SBA’s Disaster Program to those affected by Hurricane Sandy. Such a move was made after Hurricane Katrina and will provide New York City’s small businesses with another opportunity to secure low-cost financial assistance.
The GAO report in its entirety can be found at: http://www.gao.gov/products/GAO-14-760
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