GAO Report Confirms Bipartisan Call for Accountability in Disaster Loan Program

GAO Report Confirms Bipartisan Call for Accountability in Disaster Loan Program

A Government Accountability Office (GAO) report to be released today reveals the need for legislation introduced today by Senators John Kerry (D-Mass.), Olympia J. Snowe (R-Maine), Mary Landrieu (D-La.), and David Vitter (R-La.) to require the federal government to provide a detailed plan for implementing the Disaster Loan Program and regular reports on the solvency of the program to Congress. The GAO report recommends the Small Business Administration (SBA) establish timeframes for completing key elements of its disaster plan and assess whether the use of disaster simulations could improve future responses to disasters. Both recommendations are incorporated in the bipartisan legislation.

"This GAO report makes clear that more information and better planning is needed to ensure adequate services and funding will always be available for those in need after a disaster, and that's what our bipartisan legislation does," said Kerry, Chairman of the Committee on Small Business and Entrepreneurship. "We're working to prevent a 'sky is falling' scenario that results in multiple last-minute funding requests. The uncertainty that inherently comes with a disaster shouldn't translate into uncertainty over money for loans, or even whether there's a staffer to process your application or return your phone call."

Over the last year, the program has been close to shutting down three times due to insufficient funds - most recently this week, though Congress is expected to address the shortfall by the 15th. Twice last February the program needed emergency funding to ensure that victims of Hurricanes Katrina and Rita would receive critical disaster aid.

"With the SBA at the forefront of disaster relief efforts, it is essential that we find ways to ensure that this country's 25 million small businesses have a resource they can depend on when disaster strikes," Snowe said. "We learned all too well after the 2005 Gulf Coast hurricanes, it is critical for government programs to run smoothly and efficiently when called upon to aide disaster victims. We can all agree that that there were significant deficiencies with the SBA's disaster response effort, and I believe that we can all agree that this vital legislation will support the SBA in its continuing efforts to ensure those deficiencies are eliminated."

"An important lesson of hurricanes Katrina and Rita is that we must reform, streamline and strengthen the SBA with better tools to prepare for the next disaster," Sen. Landrieu said. "This bill will provide vital Congressional oversight and ensure that the SBA has a flexible, fast-acting disaster response plan for any disaster, be it natural or manmade. I look forward to working with my colleagues to secure quick passage of this important legislation."

"If we are going to meet our local contracting goals, we need the proper information and authority to prevent backlog and delayed funding," said Vitter. "This legislation reflects the GAO report and will provide greater stability and peace of mind to our small businesses recovering from natural disasters like hurricanes Katrina and Rita."

The Small Business Disaster Loan Reporting Act of 2007 requires the Small Business Administration (SBA) to:
# Update its Hurricane Response Plan by May 1, 2007, detailing how the Administration will respond to major disasters in the future, including the use and training of staff, coordination with other agencies, and models for response based on the scale of the disaster;

# Submit monthly accounting reports to Congress outlining disaster loan activity for all major disasters during the previous month, including loan volumes, amount spent on loans and administrative costs, and an estimate of how long funding will be available;

# Report daily to Congress on the loan activity for each individual disaster declared by the President, including the number of applications received and their status as well as the dollar amount of the applications approved and disbursed.

# Provide Congress with a notice of the need for supplemental funding;

# Compile a report on how the processing of disaster loans can be improved; and

# Submit a report on federal contracts awarded as a result of a major disaster every six months from the date it was declared, including the total number of contracts awarded and the number of contracts awarded to small businesses, women and minority-owned businesses and local businesses.

http://sbc.senate.gov/record.cfm?id=269279