Feb. 16, 2006--Facing an unprecedented level of uninsured losses in the Gulf Coast, the Small Business Administration received an extra $712 million from Congress on Wednesday to boost its disaster-loan program, agency officials said.
But according to House and Senate Democrats, who have attacked the Bush administration's slow response in the region, the move comes as the program teeters on the brink of collapse and amounts to nothing short of a bailout.
"Congress can't keep handing the agency money without expecting a greater level of accountability," Rep. Nydia Velasquez (D-N.Y.), the ranking member on the House Small Business Committee, said in a statement Thursday.
The funds allocated this week will allow the agency to increase its lending authority for disaster loans by $4.8 billion, according to Raul Cisneros, an SBA spokesman.
"We're asking for money as the needs arise, Cisneros said. "It's an evolving process." The program was never in danger of "running out of cash," he added.
Cisneros said to date, the agency has approved $4.4 billion in emergency loans for individuals and small businesses in the Gulf Coast region since Hurricane Katrina struck ground on Aug. 29, followed by Hurricane Rita just weeks later.
That includes $996 million for physical damage to small businesses, and an additional $132 million in economic losses, Cisneros said.
Of those approvals about $380 million has been dispersed, he added.
"It's been a record response," Cisneros said.
To achieve it, Democrats said, the agency was recently forced to reshuffle up to $100 million in its existing budget to keep the disaster-loan program going.
In a letter sent to President Bush on Feb. 10, Sen. John Kerry (D-Mass.) said the reprogrammed funds would only last a few weeks. To avoid a shutdown later this year, he said, the disaster-loan program needs an estimated $1.3 billion, nearly double the amount allocated by Congress.
Instead of following a "piecemeal approach to budgeting," Kerry, the ranking Democrat on the Senate Committee on Small Business and Entrepreneurship, urged the administration to fully fund the program now and "make sure the needs of the Gulf and future disaster victims are met."