Summary
After the Small Business Administration (SBA) was widely criticized for its performance following the 2005 Gulf Coast hurricanes, the agency took steps to reform the Disaster Loan Program and Congress enacted the Small Business Disaster Response and Loan Improvements Act of 2008 (Act). GAO was asked to determine (1) the extent to which SBA addressed the Act's requirements, and (2) how SBA's response to major disasters in 2008 aligned with key components of its June 2007 Disaster Recovery Plan (DRP). GAO reviewed the Act, as well as SBA information on requirements addressed and steps taken, including the DRP, various reports to Congress, and policy memoranda. GAO also conducted site visits to areas affected by major 2008 disasters, reviewed SBA's customer satisfaction survey, and obtained the opinions of relevant stakeholders.
As of June 2009, SBA met 13 of 26 requirements of the Act, partially addressed 8, and did not take action on 5 which are not applicable at this time. SBA officials told GAO the agency has not yet completely addressed some provisions that require new regulations because to do so, the agency must make extensive changes to current programs or implement new programs. For two requirements that will involve private lenders, SBA plans to implement pilots before finalizing regulations. SBA has not yet addressed the Act's requirements for region-specific marketing and outreach and ensured that Disaster Loan Program information is readily available to regional entities, such as Small Business Development Centers (SBDC). By doing so, SBA could leverage the efforts and capacity of local resources and emergency management groups, and ensure that it and they will be better prepared for future disasters. Also, as of June 2009, SBA had not met deadlines to issue an annual report to Congress or an updated DRP. Failure to do so can lead to a lack of transparency on the agency's progress in reforming the program and limit its ability to adequately prepare for and respond to disasters. Furthermore, SBA did not have an implementation plan for addressing the remaining requirements. SBA's initial response after the 2008 Midwest floods and Hurricane Ike aligned with certain components of its initial DRP, such as using technology and outreach efforts to ensure timely assistance. The individuals GAO interviewed and results from SBA's 2008 Disaster Loan Program Customer Satisfaction Survey provided some positive feedback about SBA's performance following recent disasters. However, interviewees and survey results indicated areas for improvement; in particular, both indicated that application paperwork was burdensome and that the application process needed improvement. SBA officials told GAO that they have been taking steps to improve the application process, but did not provide documentation of such efforts. As a result, it did not appear to have any formal process for identifying problems in the application process and making needed improvements.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director:
Team:
Phone:
William B. Shear
Government Accountability Office: Financial Markets and Community Investment
(202) 512-4325
Recommendations for Executive Action
Recommendation: To facilitate SBA's progress in meeting and complying with requirements of the Act and improve the Disaster Loan Program, the Administrator of SBA should develop procedures for regional entities that would enable SBA to meet all region-specific requirements of the Act. Specifically, building on the lessons learned from previous disasters, SBA should include likely scenarios for certain regions prone to disasters and regional marketing information for SBDCs, other local resources, and local emergency management groups. In addition, SBA should make this information and other Disaster Loan Program information readily available to these regional entities prior to the likely occurrence of a disaster.
Agency Affected: Small Business Administration
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To facilitate SBA's progress in meeting and complying with requirements of the Act and improve the Disaster Loan Program, the Administrator of SBA should complete the first annual report to Congress on disaster assistance, and adhere to the required time frames for subsequent annual reports.
Agency Affected: Small Business Administration
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To facilitate SBA's progress in meeting and complying with requirements of the Act and improve the Disaster Loan Program, the Administrator of SBA should expeditiously issue an updated DRP that reflects recent changes resulting from the Act's requirements, as well as SBA's own disaster reform efforts.
Agency Affected: Small Business Administration
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To facilitate SBA's progress in meeting and complying with requirements of the Act and improve the Disaster Loan Program, the Administrator of SBA should develop an implementation plan and report to Congress on the agency's progress in addressing all requirements within the Act--including creating and implementing new programs, such as the Immediate and Expedited Disaster Assistance Programs--and include milestone dates for completing implementation and any major program, resource, or other challenges the agency faces as its continues efforts to address requirements and meet deadlines in the Act.
Agency Affected: Small Business Administration
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To facilitate SBA's progress in meeting and complying with requirements of the Act and improve the Disaster Loan Program, the Administrator of SBA should develop and implement a process to address identified problems in the disaster loan application process for future applicants.
Agency Affected: Small Business Administration
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
