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Hearing of the House Small Business Committee - "Disaster Assistance: Is SBA Meeting the Recovery Needs of Disaster Victims?"


Location: Unknown

With so much of the national attention focused today on the holiday season, it is easy for Americans to lose sight of the risks posed by Mother Nature. But the reality is that natural disasters can occur in times and places where they are least expected. From fires in Texas, to an earthquake in Virginia, and a hurricane in the Northeast, the events of the past summer have shown the need for disaster readiness in every part of the country. Today, we will examine whether the SBA's Disaster Assistance program is prepared to meet this challenge and whether reforms enacted in the 110th Congress have been fully implemented by the agency.

Since the agency's creation in 1953, the SBA has performed its disaster assistance mission. Today, the SBA's disaster loans are the primary form of federal assistance for the repair and rebuilding of private sector losses, and are not limited to small businesses. SBA loans also help homeowners rebuild their homes and can help every disaster victim replace damaged personal possessions. SBA loans can even help businesses cover the economic losses they experience as the result of a disaster.

But those of us who have been on the Committee for some time know that SBA also has a history of struggles with its Disaster program. Nowhere was this been more apparent than under the Disaster Loan Program, which faced significant challenges following Hurricane Katrina. At the time, we asked GAO to take a look at the program, and evaluate the agency's response to the hurricane. The resulting reports led to the passage of the Disaster Response and Loan Improvements Act. That law laid the foundation for important reforms to the Disaster Assistance Program. It fixed the shortcomings uncovered by Katrina and gave the agency new tools to better leverage its resources and coordinate with the private sector.

In 2009, a full year after the passage of the Disaster Response and Loan Improvements Act, the Committee held hearings to evaluate the agency's progress in making reforms. At that time, the SBA had yet to fully implement 13 out of 26 provisions contained in the act. In the two years since then, some progress has been made toward full compliance with the law, but as we will hear today, a great deal of work remains to be done.

In addition to obstacles in effective disaster planning, SBA has struggled to meet deadlines on critical reports. Additionally, the agency has chosen to implement new bridge loan initiatives on a trial basis, even pilot programs were not called for. And perhaps most notably, the agency has made very little progress in implementing a Private Disaster Assistance Program. It is important that these issues be resolved. Should another major disaster strike, it will be critical that the agency have a framework in place to deliver bridge assistance and private loans to victims.

In examining the current state of Disaster Assistance program, it is clear that there is still significant work to be done. And the stakes could not be higher. It is estimated that between 40 and 60 percent of businesses fail to recover from a natural disaster. This is why it is so important that the agency get it right. Our economy is counting on small firms to drive growth and create jobs. We simply cannot afford to lose these engines of growth. In making sure they are able to do that, we need an SBA that can step up to the plate and meet its mission to delivering disaster assistance where it is needed most.

I'd like to thank both Mr. Rivera and Mr. Shear for being here for this discussion. I know we all look forward to hearing what they have to say.

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