In addition to the low approval rate, which included employers who submitted but eventually withdrew their applications, the agency has been slower to process applications and disburse funds than in the aftermath of hurricanes Ike in 2008 and Irene in 2011. Rep. Nydia M. Velázquez (D-N.Y.) noted the comparison in a letter sent to the U.S. Government Accountability Office asking for further examination of the disaster loan program.
“After natural disasters, local economies are often decimated and it is vital that the small business sector be revitalized quickly,” Velázquez said in a statement. “For a business struggling after a hurricane, getting an immediate infusion of emergency capital can make the difference between staying in business or going under.”
Disaster recovery funding became an issue this year when Congress approved a deal to avoid the “fiscal cliff” without approving an aid package for states hit hard by Sandy. Facing backlash from governors in the Northeast, lawmakers passed the $50 billion package a few weeks later.
SBA officials said they are working as quickly as possible to deliver that aid.
SBA spokeswoman Emily Cain said some business owners have gotten tangled up in the online application process, which has prolonged the wait for some loans.
Moreover, when withdrawn applications are not counted, she said, the agency’s approval rate for disaster recovery loans jumps to 40 percent.
That still doesn’t cut it, said Brenda Hopper, the state director for New Jersey’s network of Small Business Development Centers, which are funded by the SBA. The centers have helped scores of business owners seeking disaster loans.
“That’s not high enough, not after a disaster,” Hopper said. “There are still a lot of small-business owners who are still waiting or who did not get a loan, and they need this assistance.”
It has taken the SBA an average of 43 days to review applications from companies hit by Sandy, compared with the roughly two-week turnaround the agency reported after hurricanes Ike and Irene, Velázquez said.
Of the loan money approved since October, only about 15 percent has been issued, down from about 40 percent delivered in the first five months after Irene, the data show.
Some fear what such delays might mean for disaster aid in Oklahoma, where a series of storms culminated in a deadly twister in Oklahoma City suburbs on Monday. President Obama has signed a disaster declaration for the state, paving the way for federal assistance.
Bill Carter, director of the Oklahoma SBDC network, said his organization is preparing for a flood of requests from business owners who need help re-creating lost documents and applying for disaster recovery loans.
“This is going to be pretty massive,” Carter said. “It hit a major urban area, going right through residential and commercial strips.”
This will be the first time he will apply for additional federal funding for his organization to assist small businesses. After previous disasters, including a series of wildfires last year, he reallocated resources from other parts of the state to help entrepreneurs.
Carter said the situation in states struck by Sandy makes him nervous.
“I’m concerned, because that was a special appropriation up there,” Carter said. “Although there are some regular disaster funds available out there, I’m concerned that Oklahoma will struggle to get the resources we need.”
Velázquez said she hopes that the agency will have an easier time responding to the disasters in the Midwest because the damage was spread over a far smaller area.
“One would hope that given the concentration and the number of businesses affected, the agency’s response will be better,” she said. “Still, the report makes clear the need for overall improvement in how SBA’s emergency lending programs operate.”
Agency officials said they have nearly finished processing the applications for victims of Sandy and are equipped to deliver aid in the immediate future.
“We have adequate funds to cover our loan authority and staffing needs through the end of the fiscal year,” Cain said.