New Orleans Pies Can't Wait for SBA
Thursday, January 5, 2006
Drew Ramsey started baking pies again yesterday for the first time since Hurricane Katrina hit New Orleans and damaged Hubig's Pies, the family bakery that has long been a household name in the city. Hubig's fried, glazed snack pies were a staple in convenience stores in the area, and the plant on Dauphine Street also turned out pecan, sweet potato and fruit pies daily for local grocery stores and restaurants.
Katrina cracked open a wall of the bakery and damaged the roof and ventilation system. The storm scattered his employees, suppliers and customers. In the four months since, Ramsey, 37, has struggled with repairs, utilities, insurers and trying to get a loan from the federal government.
Hubig's did get a $25,000 bridge loan from the state and recently "turned the corner" in negotiating claims with its insurance company, Ramsey said. But Ramsey has not heard from the Small Business Administration.
Until recently, the plant's neighborhood had only intermittent electricity. There wasn't enough gas pressure to fire up the bakery ovens. And the city would certify only that the water supply was good for flushing toilets, not mixing into pies. After giving workers four weekly paychecks from an emergency fund, Ramsey said, the company cash flow has been limited to the sale of a couple of hundred T-shirts on a new Web site.
Ramsey's family, which owns Simon Hubig Co. with a partner, is one of more than 23,000 businesses in Louisiana that have applied to the SBA for low-interest-rate disaster-assistance loans. "I'm not holding my breath waiting for the SBA," he said.
The agency has been heavily criticized for its slow processing of loan applications from businesses and homeowners hurt by the storm. Trying to fill the vacuum, Sens. Olympia J. Snowe (R-Maine) and John F. Kerry (D-Mass.), the chair and senior Democrat on the Senate Small Business Committee, tried without success to press the Bush administration into setting aside $450 million so the affected states could give out more "bridge" loans or grants to small businesses. Rep. Nydia Velazquez (D-N.Y.), top Democrat on the agency's House oversight committee, is calling for SBA Administrator Hector Barreto to resign.
Barreto said in an interview that his agency is working hard to respond to the unparalleled size of the problem. "The thing that is so different is the scope of this disaster," he said. "That is surely something that we've never experienced before." His office announced Tuesday that the agency has approved $2 billion in loans and continues to make approvals at a record pace.
Like the Federal Emergency Management Agency, the SBA doesn't have a large permanent staff. It has hired hundreds of loan processors and inspectors, Barreto said, increasing its staff to about 4,000 workers from 880, to handle the fallout from Katrina and the hurricanes that followed. The agency also has simplified the documentation requirements because so many applicants lost needed financial information in the storms.
The SBA's task has been complicated by the law governing its response. Though its usual mandate is helping small businesses, it is charged with helping homeowners and renters as well as all businesses damaged in disasters. That is because a New Deal program coupled the two loan programs during the Great Depression of the 1930s, and both were transferred to the SBA when it was created in 1953.
Usually applications from homeowners, who can borrow up to $200,000, outnumber by about 4 to 1 those from business owners, who can borrow up to $1.5 million, the agency said. Because of the widespread damage from last fall's hurricanes, though, the number of homeowner applications outnumber those from business owners 7 to 1.
The SBA has had nearly 337,000 applications for aid-- 87 percent of them from homeowners. As of last Friday, the SBA still had to process 60 percent of the applications and was turning down about 70 percent of the requested loans, above the normal rejection rate of 40 to 50 percent.
Another quirk makes it necessary for homeowners with low incomes, who wouldn't qualify for a loan, to go through the process at SBA anyway. That's because FEMA, which give out grants in disasters, can consider only those who have been turned down for a loan.