With nearly one thousand New Yorkers facing delays on securing Sandy-related federal loans and hundreds more still waiting on a final decision on their disaster loan applications, U.S. Senator Kirsten Gillibrand today urged the U.S. Small Business Administration (SBA) to expedite and streamline the disaster loan application process for New York businesses and homeowners devastated by Superstorm Sandy. Senator Gillibrand is also urging the agency to ensure that disaster loans are in fact low-interest, since the SBA has discretion to set the interest rate for each individual applicant, with rates set as high as eight percent.
Currently, more than 380 New York businesses hit by Sandy have received loan approvals but are still waiting to receive the funds to begin repairs and rebuilding, according to estimates from the SBA. The agency estimates approximately 140 businesses are in application limbo, waiting on the status of their eligibility. On average, the SBA takes 42 days to approve or deny a loan application, which is double the agency's target approval time.
"Our New York businesses and homeowners who suffered damages from the storm should not wait any longer for money to make critical repairs," said Senator Gillibrand. "With many businesses still unable to open their doors or reopening with bare essentials, these delayed loans have been held up for too long. We must cut through the red tape so affordable disaster loans can finally reach those who desperately need it."
Senator Gillibrand wrote in a letter to SBA Administrator Karen Mills, "As businesses fight to reopen and homeowners struggle to rebuild, it is unacceptable for applicants to languish without an answer and without approved funding for weeks, even months on end At this critical juncture in the recovery effort, I ask you to work toward expediting all outstanding SBA claims, in addition to streamlining the overall loan application process, so that New Yorkers can rebuild their communities it is critical to ensure that the SBA's low-interest disaster loans are indeed low-interest."
In the aftermath of Superstorm Sandy, thousands of New York's businesses and homeowners applied for federal loans through SBA's Disaster Loan Program. Eligible businesses can receive up to $2 million in federal loans. The Sandy federal relief aid that Senator Gillibrand helped pass in January 2013 included $161 million for SBA to provide low-interest financing for the repair and rebuilding of disaster-damaged private property for homeowners, renters, and businesses.
Full text of Senator Gillibrand's letter is below:
Dear Administrator Mills,
I am writing with concern regarding the delays in the processing of Small Business Administration (SBA) Disaster Loans for New York businesses and homeowners impacted by Superstorm Sandy.
Over seven months ago, Superstorm Sandy tore an unprecedented path of destruction across the region, causing tens of billions of dollars in damage to New York. As you know, in New York alone, the SBA has received over 51,000 applications for business and home disaster loans. Under your leadership, the SBA has worked diligently to approve $1.4 billion in business and home disaster loans for New Yorkers in need. At the same time, however, many businesses and homeowners are still awaiting loan decisions and loan disbursement.
In fact, there are currently more than 200 New Yorkers still waiting for an initial decision on their application, and nearly 1,000 New Yorkers face continued delays in closing on an approved loan. It has taken the SBA an average of 42 days to approve or deny a loan application, which is twice the SBA's performance goal of 21 days. As businesses fight to reopen and homeowners struggle to rebuild, it is unacceptable for applicants to languish without an answer and without approved funding for weeks, even months on end.
Based on several cases brought to my attention by small businesses in New York City and Long Island, the complexities of the SBA disaster loan application process are contributing to these delays. Some financially strapped small business owners have even been forced to hire legal counsel to navigate the complicated process. I understand that each loan application is unique and appreciate the SBA's commitment to rigorous underwriting that ensures taxpayer dollars are well spent. Nonetheless, the SBA must work to simplify the disaster loan application process.
In addition, it is critical to ensure that the SBA's low-interest disaster loans are indeed low-interest. If the SBA determines that an applicant can obtain credit elsewhere, the agency can issue a disaster loan with an interest rate as high as 8 percent for Business Physical Disaster Loans, and no higher than 4 percent if the business does not have credit elsewhere. For Economic Injury Disaster Loans for businesses, the interest rate is 4 percent or less. Small businesses and homeowners impacted by Superstorm Sandy should be able to take advantage of the historically low rates currently available to corporations and to the government. The SBA should use its authority to offer as low of interest rates as possible to ensure that hard-hit businesses are not saddled with burdensome debt.
Superstorm Sandy's economic impacts have proven to be both extensive and complex. I commend your leadership and the professionalism and compassion of your staff on the ground in the weeks and months after the storm. At this critical juncture in the recovery effort, I ask you to work toward expediting all outstanding SBA claims, streamlining the overall loan application process, and ensuring access to affordable loans so that New Yorkers can rebuild their communities.
I thank you for your commitment to the people of New York and appreciate your consideration of this urgent request.