Over the past few years, federal auditors have issued a pile of scathing reports that raise serious concerns about the way the federal government responds to major disasters like hurricanes and floods.
The reports usually target the Federal Emergency Management Agency for the flawed way it administers disaster relief. Auditors are still finding improper payments doled out to the wrong people during Hurricane Katrina nearly a decade ago.
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Now, the Government Accountability Office is taking the Small Business Administration to task for its botched response in the wake of Hurricane Sandy-the massive storm that rocked the East Coast in 2012.
In a new report released this week, the GAO said that the SBA failed to meet its deadline to process small business loan applications for small companies that were left destroyed in the Hurricane’s wake.
The SBA is responsible for helping small businesses get back on their feet after major disasters by offering loans that could help repair any damages. It’s supposed to process applications within 21 days. However, after Hurricane Sandy, SBA took an average of 45 days to process physical business disaster loans and 38 days to process economic injury loans, the GAO said.
The SBA told auditors that they were overwhelmed by the high volume of loan applicants and didn't have enough staff to handle them. They also blamed technical problems for slowing down the process.
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“The agency was caught flat-footed,” “Rep. Nydia Velázquez (D-NY) the top Democrat on the House Small Business Committee said at a press conference, reported The New York Daily News. “Missteps, a lack of planning, and an inability to right the ship quickly left businesses frustrated and unable to secure the financing they needed.”
The auditors also found that the SBA never implemented three separate disaster loan programs mandated by Congress in 2008, which they say could have benefited Sandy victims who were caught waiting for these loans.
In the report, the GAO recommends that the SBA revise its disaster planning process and conduct a formal “documented evaluation of lenders’ feedback and report to Congress on challenges implementing the program.
The SBA, for its part, agreed with the auditors’ recommendations and said it was already taking steps to fix the problem.
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