Small Business Administration officials were horrified yesterday to discover four paragraphs in the catchall government spending bill that they think could cost the government more than $100 million in disaster assistance over the next few months.
The amendment, sponsored by Rep. Neal Smith (D-Iowa), strips a requirement that a certain number of businesses in an area must be hurt financially before the area can qualify for SBA disaster assistance. Under current law, the SBA generally has required a governor to certify that at least 25 businesses in a locality have been injured before disaster aid can begin to flow.
SBA Administrator James C. Sanders yesterday wrote David A. Stockman, director of the Office of Management and Budget, expressing dismay about the "administrative nightmare" the legislation is going to cause.
"To make such drastic changes to the SBA's disaster loan program in such a hasty and ill-conceived manner," he wrote, "can only threaten to permanently demoralize the SBA's disaster loan division and greatly reduce the usefulness of the program to all disaster victims."
SBA official Win Allred said the new provision would apply only to loans made in three kinds of economic disasters:
* Loans made in reponse to federal actions that hurt businesses, such as the payment-in-kind program to farmers.
* Loans made to fishermen affected by the El Nino tropical wave.
* Loans made to border-state businesses hurt by the devaluation of the Mexican peso in 1982-83.