SBA launches program to expedite loans for small Gulf Coast firms

The Small Business Administration on Tuesday announced a program aimed at giving small companies expedited loans to help recover and rebuild Gulf Coast communities devastated by hurricanes Katrina and Rita.

Under the Gulf Opportunity Pilot Loan Program, SBA will guarantee loans up to $150,000 for small businesses that are located in or moving to areas that have been declared major disaster zones as a result of the hurricanes, agency Administrator Hector Barreto told the Senate Small Business and Entrepreneurship Committee during a hearing.

"Through my visits with small business owners in the Gulf Coast, it has become clear that the unprecedented scope and magnitude of these twin disasters requires a more creative response beyond our traditional disaster loan program," Barreto said in a prepared statement. "We are going to get financing to small businesses as quickly as we can so that they can continue with the urgent reconstruction of their local economies."

Under the program, loans will be made by commercial lenders and SBA will back them by as much as 85 percent. The agency will decide within 24 hours whether to grant requests to guarantee loans, Barreto said.

The new program comes on the heels of mounting criticism that SBA, the Federal Emergency Management Agency and the Army Corps of Engineers are not doing enough to involve small and disadvantaged businesses in rebuilding Gulf Coast communities.

"It is clear to me that the federal government, especially FEMA and the Small Business Administration, must make a major shift in both policy and implementation if the lives of the people of the Gulf Coast are to be effectively rebuilt and restored," said Rep. Bennie Thompson, D-Miss., who also testified before the committee.

Thompson said he intends to introduce legislation this week that will require the Homeland Security Department to create a database of small, disadvantaged businesses that can become prime contractors during the response and recovery phase of any disaster. He said the database will help the government quickly identify and contact those small firms.

Thompson also said SBA should be required to verify that small businesses that receive contracts are authentic, rather than fronts used by large or foreign corporations to win work.

"Senators, let me say, I am from Mississippi and I know sharecropping when I see it," Thompson said in written testimony. "Steps must be taken to ensure that federal agencies responsible for rebuilding the Gulf meet the governmentwide procurement goal of assuring that 23 percent of federal procurement awards are given to small, disadvantaged and minority owned businesses."