Business Owners Tell SBA Disaster Loan Program Is Cumbersome
Many Vermont businesses that suffered damage in Tropical Storm Irene had to rely on loans to reopen.
Once source of money was the Small Business Administration. But many owners were frustrated by the process.
On Monday SBA representatives were in Waterbury and Wilmington to listen to suggestions about how to improve how the agency responds to disasters.
At the Waterbury meeting it took Albert Caron about 12 minutes to get through a bare bones description of his experience applying for SBA loan to help cover the damage to his Waterbury auto service center.
Caron’s tale involved a one step forward; two steps back process that required him to provide voluminous documentation to an SBA office in Texas only to have his loan application rejected twice. At one point he was told he had defaulted on the loan he hadn’t received.
Caron did eventually receive an SBA loan.
“There were too many people working on the case,” says Caron. “There’s too much nonsense paperwork that they needed to get. Going through the process and going through all these forms over and over again was a lot of wasted time. To be honest with you, if it happens again I would never call the SBA.”
One SBA official at the meeting called Caron’s experience ‘staggering’.
It may be an extreme example, but Vermont Congressman Peter Welch, who organized the meetings, says he’s heard from many businesses that had difficulty securing SBA disaster assistance loans.
According to Welch, “The critical challenge for small businesses is the immediate time after the event. If they can’t get back into business very, very quickly the cash flow dries up, customers go away. One of the challenges we had with the SBA loans was the need to get a quick turnaround.”
SBA associate administrator Jeanne Hulit, who came from Washington, D.C. to attend the meetings, says fixing problems with the disaster loan program is a procedural matter that the SBA can address. She says businesses also need to be better informed about the SBA programs.
Hulit says lessons from Irene have already been incorporated into the response to Hurricane Sandy which hit the Northeast last fall.
Even with improvements, though, it is unlikely that the federal government can move more quickly to help businesses.
Hulit says immediate disaster help for businesses is best provided on the state level.
The Vermont Economic Development Authority moved quickly to approve loans to small businesses in the wake of Irene.
VEDA approved 300 emergency loans totaling $16.7 million.
The SBA ultimately approved loans to 80 Vermont businesses damaged by Irene.