Washington, D.C. – The following is the opening statement of U.S. Rep. Sam Graves (R-MO), Economic Development, Public Buildings and Emergency Management Subcommittee Ranking Member, from today’s hearing on the federal role in helping small businesses recover from disasters.
“Thank you, Chairwoman Norton, for holding this hearing on the role of the federal government in small business disaster recovery.
“I want to thank Congressmen Steve King and Bruce Braley of Iowa for their work on this important issue. I would also like to thank our other witnesses for being here today.
“Similar to Iowa, small businesses are an essential part of towns in my home state of Missouri; and Missouri has had to recover from its share of natural disasters.
“Small businesses are the backbone of our local economies, and they need to be able to recover after a disaster. According to the Small Business Administration, small businesses make up over 99% of all employer firms in the U.S. and employ about half of all private sector employees. And over the past decade, small businesses created up to 80 percent of the net new jobs.
“When a disaster strikes a community, it is crucially important for the state and local communities to ensure that small businesses are able to recover in order to provide jobs and ensure residents have access to supplies, goods, and services.
“The SBA is the primary lender to victims of disasters, including small businesses. Through its Physical Disaster Loan Program and its Economic Injury Disaster Loan Program, the SBA plays the leading role in making available financial resources for small business recovery.
“Following Hurricane Katrina, there were questions raised about the efficient administration of these SBA disaster programs. The large backlog of applications and slow processing times impacted the ability of small businesses to get back up and running in the affected communities.
“In 2006, the Government Accountability Office found that a key problem was related to the design and functioning of SBA’s Disaster Credit Management System (DCMS). The GAO found that this system was not designed to handle the caseload of such a large disaster as Katrina.
“Instead of using catastrophic modeling information and disaster simulations as insurance companies and some other government agencies use, SBA designed the system to standards based upon one specific disaster: the 1994 Northridge earthquake.
“The SBA, however, has examined ways in which the process can be improved and streamlined. For example, in response to Katrina, it created the Gulf Opportunity Pilot Loan (or GO Loan) program which was specifically targeted to small businesses and promised a short approval process. However, because of the potentially high interest rates, small businesses were reluctant to take full advantage of this program.
“Some have proposed that the SBA programs should be supplemented with disaster assistance through the Federal Emergency Management Agency. Congressmen King and Braley introduced H.R. 6641 to allow small businesses to be eligible for grants under the Stafford Disaster Relief and Emergency Assistance Act.
“However, the expansion of government disaster grants to for-profit companies has been a controversial issue. In the past, Congress has considered, but never approved, Stafford Act grants for for-profit companies such as hospitals and power companies.
“Addressing this problem may be complicated, but improving and streamlining the existing SBA and Department of Agriculture loan programs may help to address many of the concerns raised regarding assistance to small businesses following a disaster. Either way, we ought to examine this issue closely.
“The bottom line is that we must ensure that our small businesses are able to quickly recover following a disaster. The people in those communities count on small businesses for jobs and resources.
“Ensuring small businesses understand what resources are available to them and that federal assistance programs are well-run and functioning efficiently are crucial steps in the recovery of any community following a disaster.”
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