Despite attempts to streamline its disaster loan program after failures in the wake of Hurricane Katrina, the federal government has again been slow to respond to businesses damaged by Superstorm Sandy. (Spencer Platt/GETTY IMAGES)

More than two months after their businesses were battered by Superstorm Sandy, thousands of small employers are still waiting for word on disaster loans due to a backlog of applications and inaction in Congress.

More than 200,000 businesses were damaged by the storm, and more than 8,000 have applied for low-interest disaster loans from the U.S. Small Business Administration. Thus far, the SBA has approved only 514 applications, and while the agency’s goal to review applications is less than one month, some firms that applied immediately after the storm in early November are just now beginning to close on their loans.

Those companies are among the lucky, says one business owner in Long Island.

“I filed a disaster loan application within days after the storm and didn’t get a letter back from the SBA until the middle of December requesting more financial documents,” Sumit Kumar, who owns a prepaid phone card wholesale company in Hicksville, New York, said in an interview. “I sent them all of those documents immediately and I still haven’t heard back. There is no phone number, no one to contact. I have no idea whether my loan is pending, approved, denied — at this point, I don’t know anything.”

Kumar applied for a $250,000 economic injury disaster loan to help his business stay afloat after customer demand plunged following the storm. On solid ground previously, he says his company has fallen behind on rent payments, fired four of its six employees and now teeters “on the verge of bankruptcy” because it cannot find affordable disaster loans.

“If there is help, the process should be expedited,” he said. “Or if there is no help, they shouldn’t be giving us false hope. Personally, I’ve almost lost all hope.”

This isn’t the first time the federal government has been slow to respond to businesses after a disaster. Back in 2005, lawmakers and business owners criticized the SBA for high application decline rates and slow processing times in response to Hurricanes Katrina and Rita, which slammed the Gulf Coast less than a month apart.

The agency has responded by taking a number of steps to streamline the disaster loan application process both on paper and online. But in the past two months, there have been few signs of improvement, as the SBA has approved only 7 percent of the total number of applications it has received from businesses ($54 million in loans), compared to 22 percent of applications from homeowners ($643 million in loans).

“The SBA is there to support the long-term recovery of the disaster areas, and we will make sure that as many people as possible get the help they need to become whole again,” SBA Administrator Karen Mills said in a statement about a month into recovery efforts. The agency offers loans of up to $200,000 to replace damaged real estate and equipment and loans of up to $2 million to cover daily operating expenses for disaster-hit businesses, but a backlog of applications is slowing the process.

Meanwhile, Congress has left the SBA in a holding pattern of its own by delaying votes on additional aid. While the agency already has the authority to make disaster loans, the Senate two weeks ago approved a $60 billion aid package including more than $800 million in additional funding for the SBA, most of which was designated for additional disaster loans (in anticipation of soaring demand). But the bill was pushed back amid disputes over the fiscal cliff and later split into two parts, the first of which – a $9 billion slice of the total package – was approved late last week but did not include the SBA funds.

House leaders have promised to take up the larger $51 billion portion that includes the SBA supplement on Jan. 15, but it will likely be another week after that before the Senate can grant final approval.

“Democracy is something that takes a while to come together and to get the results,” New York City Mayor Michael Bloomberg told reporters after the initial vote was delayed in the House. “As long as it turns out that we get the monies that we think are appropriate for the federal government to send to a part of the country that’s had a major natural disaster, all’s well that ends well.”

Others have been less patient with Congress, including New Jersey Gov. Chris Christie, who said during a press conference earlier this month that representatives acted “with callous indifference” by canceling the inital vote on New Year’s Day. Three of four small businesses in the state were damaged by the storm, according to the governor’s office, and roughly 19,000 of them suffered damages in excess of a quarter of a million dollars.

The SBA’s filing deadline for property damage loan requests is Jan. 15 in Rhode Island, Jan. 28 in New York and Jan. 30 in New Jersey. Business owners can apply online using the agency’s electionic loan applications.

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