SBA chief updates progress on disaster loan program

Small Business Administration Administrator Steven Preston Thursday touted the progress that SBA has made in streamlining a disaster loan program since coming under scathing criticism for its response to Hurricane Katrina.

"SBA was simply overwhelmed by the sheer magnitude of Katrina," Preston acknowledged during a briefing for reporters at the National Press Club. In a July 2006 report, the Government Accountability Office accused SBA of being woefully unprepared for Katrina and concluded that the agency's recently installed system for processing claims had failed the "stress test."

Preston, who took over SBA in June of last year, said the program's processing system had been completely revamped under a plan hammered out during a three-day "lockdown" conference of top managers in August at the agency's Fort Worth, Texas, disaster loan center.

The plan called for assigning 1,300 loan staffers into teams of 15 to 18, he said. In addition, agency officials contacted 90,000 hurricane victims as a part of a drive to update and improve SBA's data base for handling claims, Preston said.

As evidence of the overhaul effort's success, he cited figures showing that in the last seven months, the agency had cut its backlog of claims from almost 120,000 to about 25,000 and reduced the amount of its undisbursed loan commitments from more than $8 million to about $2 million.

As of the end of last month, SBA had approved about 160,000 Gulf Coast applications for loans and fully disbursed almost 60 percent of them, Preston said. "Do we still have issues? Of course," he said. But he added that the reaction that the agency had been getting on its recent performance initiatives from lawmakers and victims had been positive. Preston conceded that his agency was likely to be faulted anew for its Katina record in another GAO report due to be released later this year.

Preston also announced that SBA is poised to launch a rulemaking proceeding in the next several months for the creation of the long-delayed set-aside program for women-owned firms in federal contract awards. He said the program would be based on a soon-to-be released Rand Corporation study commissioned by SBA to determine which industries had the greatest "under-representation of women's firms.

The program was mandated by the 2000 Equity in Contracting Equity Act requiring five percent of all federal purchasing to female-owned companies. In a November 2005 ruling on a lawsuit brought by the U.S. Women's Chamber of Commerce, a judge accused SBA of "sabotaging" efforts to implement the law.