News From the
Committee on Small Business
Nydia M. Velázquez, Ranking Democratic Member

For Immediate Release
August 21, 2006

CONTACT: Kate Davis (202) 225-4038

Gulf Coast Small Businesses Still Struggle One Year Later;
80 Percent Yet to Receive Promised Aid
Report details administration's failure to ensure adequate response for future disasters

WASHINGTON - Nearly an entire year after Katrina first touched down in the Gulf Coast, small business owners continue to struggle. A report released today by Democrats on the House Small Business Committee found that 80 percent of the loans that were approved have still not been put in the hands of Gulf Coast small business owners. In addition, the evaluation also reported that a year later the Bush administration has failed to take adequate steps to address the myriad of issues which ultimately led to a failed response last year - raising serious concern for hurricane victims this year.

"It is extremely disappointing that it is now a year later, and the administration is no more prepared than they were before Katrina," Congresswoman Nydia M. Velázquez, Ranking Democrat on the House Small Business Committee said. "This report only shows that the majority of Gulf Coast small businesses are still struggling. Just as hurricane season is again underway, the Bush administration is no better prepared today than they were last year at this time to provide an adequate response to disasters."

While SBA touted over $10 billion in approved loans for the Gulf Coast, the report released today found that a mere $2 billion has actually reached the intended recipients - leaving small business owners that were negatively impacted by the hurricane still waiting for assistance. In addition, rather than turning loans around in their goal of 21 days, the Small Business Administration (SBA) was facing a backlog which translated into nearly 75 days. These delays ultimately impaired firms - a number of small businesses had to close completely due to their inability to secure immediate financial assistance. The report also reiterated the fact that the approval rates of disaster loans under the current administration has been significantly less. On average only 38 percent of loans have been approved by the agency - this is a 35 percent decline from the 59 percent average approval rate under the two previous administrations.

Also highlighted is the disturbing fact that the Bush administration is still not prepared to adequately respond to disasters. Numerous investigations and hearings have been held on the response and a number of recommendations have been made; yet the agency has not fully addressed any of the problems. A recent GAO study suggested that the agency engage in training exercises such as disaster simulations - a measure the administration did not do prior to Katrina - as well as have a sound back-up plan in place. Today, nearly 3 months into hurricane season, the SBA has yet to implement these suggested solutions or to fix these problems - raising concern for future small businesses owners that are hit by a disaster.

"The truth of the matter is that until this administration starts to take disaster preparedness more seriously and implement policies that will truly address their shortcomings - nothing is going to change," Congresswoman Velázquez said. "I want to know what the plan is for getting the outstanding 80 percent of loans into the hands of these Gulf Coast small businesses. In order for entrepreneurs to fully rebuild and recover after disasters, corrective actions must be taken to ensure an adequate and efficient response in the future. Unfortunately - that has yet to happen."

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