SBA in spotlight as frustrations with small business assistance programs rise
WASHINGTON – Since launching nearly two months ago, the government’s small business rescue effort has been strewn with complaints on the terms of loan programs and on how the programs were implemented.
In Congress, lawmakers have yet another beef: They can’t get answers from the Small Business Administration, which is leading the effort.
Senate Minority Leader Chuck Schumer (D., NY) has sent eight letters to SBA Administrator Jovita Carranza since March and has received no response, according to staff. In a statement, Mr Schumer criticized the SBA for what he called its “lack of transparency and lack of reaction”.
It is not unusual for Mr Schumer to criticize agencies run by people appointed by Republican President Trump, but frustration with the SBA’s handling of its small business bailout programs extends to small business advocates. businesses – and across the aisle.
Senator Marco Rubio (R., Florida) recently told reporters that he has sought to get senior SBA officials to appear before the Senate Small Business Committee he chairs. “At some point we have to have an audience, and we’ve tried to find the right people,” Rubio said. “We are going to be patient, but not forever.”
A spokesperson for the SBA said that Ms. Carranza, along with Treasury Secretary Steven Mnuchin, participated in conference calls with small business groups in Congress, and that “agencies at the front line of the economic response to the pandemic have focused on these efforts throughout May ”.
Critics and advocates for the SBA acknowledge that the relatively small bureaucracy, with around 4,000 employees, has faced a monumental challenge in trying to keep small businesses and their employees afloat amid forced shutdowns by companies. the coronavirus pandemic.
“There were certainly challenges, and it wasn’t all smooth sailing,” said Rep. Steve Chabot (R., Ohio), senior member of the House Small Business Committee. “This is probably the biggest economic disaster in American history, so they had to deal with something unprecedented in record time.”
At the same time, Ms. Carranza has been largely out of sight amid the crisis, using
to take stock of the agency’s efforts. She declined an interview through a spokesperson.
SBA officials say the $ 670 billion paycheck protection program has been successful and the small agency has exceeded its weight. But a recent report from the Inspector General rang the SBA for straying from congressional mandates, and small businesses and their advocates have complained rule changes on the fly.
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In addition to the PPP, the SBA oversees an economic disaster lending program which has also been the subject of complaints.
The information on disaster lending “sort of sits there in a black hole,” said Charles “Tee” Rowe, general manager of America’s Small Business Development Centers, a trading group.
The SBA says it approved 252,340 disaster loans worth nearly $ 25 billion as of May 17. But there’s a big backlog – he had 5.4 million disaster loan applications at the end of last month, more than 50 times what he gets in a typical year. , according to agency planning documents.
Marianne Gooch, president of Houston-based consulting firm DynaComm, hoped to use a disaster loan for ongoing business expenses amid declining customer demand.
Ms Gooch said she first applied on March 21 and has since tried repeatedly to contact the SBA for updates. She said she called the customer service number once and was told there was a four hour wait to speak with a representative.
“I have no answers,” Ms. Gooch said. “I’ll just keep hoping that someday I get an email from them… maybe they’ll reach me one day.”
Responding to a question about the delays at an online congressional hearing Tuesday, Mnuchin said the SBA is “rebuilding the whole system” to handle the volume of disaster lending. “The SBA had significant system issues to get the EIDL program up and running,” Mnuchin conceded.
SBA planning for disasters includes a framework for scaling up personnel and operations to match the severity of an event. The agency recently added workers and advertised job vacancies, including loan officer positions.
The current situation is different from typical disasters, where the damage is localized in one or a few areas and the SBA has more time to expedite its response, according to William Shear, director of the Government Accountability Office who has written and testified extensively. before lawmakers on the disaster lending program.
In the case of the coronavirus pandemic, state efforts to limit the spread of the virus, including compulsory business closures—Come in rapid succession, causing almost instantaneous economic damage to millions of small businesses.
Because the SBA “kind of responds on the fly,” Mr. Shear said, “it’s no surprise that many small businesses say the rules aren’t clear.”
Yet some of the agency’s current challenges mirror those of previous disasters, calling into question everything it has learned from past missteps. In the aftermath of Hurricane Sandy in 2012, for example, the SBA said it faced a surprisingly high volume of disaster loan applications, according to a GAO report. The agency, on average, did not meet its internal speed targets for processing requests and also experienced issues with its technology systems, according to the report.
While the SBA had improved on the speed of the 2017 hurricane season, the GAO found that borrowers still faced “a number of challenges” during the application or review process, including service. poor customer.
“All of the major hurricanes where we’ve evaluated the SBA’s Disaster Loan Program… there have certainly been challenges with the whole system providing the right information to small businesses asking for help,” Mr. Shear said.
Another sore spot for disaster loan seekers: The program was initially open to small businesses in all 50 U.S. states and territories, but the SBA on its website now says it’s only open to businesses. agriculture due to funding limitations. Disaster loans have also been capped at $ 150,000 instead of the usual $ 2 million, according to lawmakers.
Senator Jeanne Shaheen (D., NH) said such questions show why SBA officials must appear before Congress. She joined Mr. Schumer and Senator Ben Cardin (D., Md.) In a recent letter asking Ms. Carranza to open the Non-Farm Business Disaster Lending Program.
Lawmakers’ offices say they are still waiting for a response.
Write to Amara Omeokwe at [email protected]
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