Oct. 17, 2005--The U.S. Small Business Administration is relaxing certain requirements to speed up the application process for emergency disaster loans, the agency announced Thursday.
The move comes a week after a congressional hearing in which small business owners complained of costly delays more than a month after Hurricane Katrina tore through the Gulf Coast region.
Last week, the agency responded by waiving the need for businesses to submit three years' worth of tax returns when applying for the loans. The SBA said it would henceforth access income tax transcripts from the IRS to verify a business owners' income.
"Relaxing some of the loan processing criteria will ease the approval process, allowing business owners to rebuild more quickly and lay the foundation for the revival of the region's economy," said SBA Administrator Hector Barreto.
Business owners will also no longer have to provide a monthly sales analysis from the past three years.
In addition, title and record searches, which were required for all loan disbursements over $25,000, will now only be required for those exceeding $50,000, the SBA said.
Last Friday in Washington, Barreto defended the agency's efforts amid complaints by local business owners, senators and members of Congress that the process marred in bureaucracy.
Some five weeks after the Bush Administration declared much of the Gulf Coast region an official disaster zone, government records showed, just 661 of 66,819 loan applications had been approved. Of these, accounting for about 1% of all applications, the agency had cut only a few dozen checks worth some $207,000 for homes and small businesses alike.
Congresswoman Nydia Velazquez called that unacceptable.
"One month after Hurricane Katrina hit, virtually no small business that had been promised a loan actually received one," Velazquez, the ranking Democrat on the House Small Business Committee, said last week. "There is no excuse for such an inadequate response."
Barreto blamed delays on difficult working conditions caused by the devastating storm, saying the "disaster environment itself poses several challenges."
"In many cases our staff is unable to reach homes and businesses to verify losses, or they are unable to contact the applicant to schedule the site visit with them," Barreto said.
He also dismissed reports of glitches in the agency's new $23 million computer system, calling its former Automated Loan Control System cumbersome, unreliable and outdated. The new system, centralized in Forth Worth, Texas, with a back up processing office in Sacramento, California, is a "quicker, better process," he said.