House Democrats criticize SBA for slow disbursal of disaster loans

House Democrats on Thursday said the Small Business Administration has been too sluggish in approving and disbursing loans for businesses devastated by the Gulf Coast hurricanes.

Owners of small firms in the Gulf region have been told it can take up to 100 days to process disaster loan applications, according to a report published by the minority side of the House Small Business Committee. Fewer than 2,000 business loans have been approved to date, the Democrats stated in their "109th Congress - Small Business Record" report.

Only 11,000 of 39,000 business loan applications received by SBA have been processed, the lawmakers said.

But SBA Administrator Hector Barreto said on Thursday that federally mandated requirements for loan applicant background checks and visits to damaged properties can slow the process. The lack of infrastructure, and general uncertainties in New Orleans that have an impact on loan eligibility, also present difficulties, he said.

The Democrats' report also highlighted failures to open hurricane reconstruction contracts to smaller firms, and criticized the government for a drop in the percentage of small companies winning subcontracts. Over the last seven years, there has been a 10 percent decrease in the share of federal subcontracts won by small businesses, the report stated.

The Democrats also noted that a women's business advocacy group sued SBA last year alleging a failure to achieve governmentwide participation goals for women-owned businesses. That case is before the U.S. District Court for the District of Columbia.

The bundling of federal business opportunities into large contracts in which small firms are less competitive creates barriers as well, the report stated. The Democrats also cited a failure to extend small business set-asides to work performed overseas, a lack of guarantees for timely payment to small business subcontractors, and a failure of Congress to increase the federally mandated set-aside for small business participation in government spending.

"The 109th Congress started out with a great deal of promise for small businesses; however, it is clear that those promises have been left unkept," said Nydia Velázquez, D-N.Y, the ranking Democrat on the committee.

Velázquez separately called for Barreto's resignation. "The bottom line here is that America's small businesses deserve better than the leadership Mr. Barreto has to offer this agency," she said.

Barreto defended his performance, noting that "the SBA can't disburse loans faster than people are ready to rebuild."