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S. HRG. 112–903 

HURRICANE SANDY: ASSESSING THE FEDERAL 

RESPONSE AND SMALL BUSINESS RECOVERY 

EFFORTS 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

AND ENTREPRENEURSHIP 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

DECEMBER 13, 2012 

Printed for the Committee on Small Business and Entrepreneurship 

( 

Available via the World Wide Web: http://www.fdsys.gov 
(II) 

COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP 

ONE HUNDRED TWELFTH CONGRESS 

MARY L. LANDRIEU, Louisiana, Chair 

OLYMPIA J. SNOWE, Maine, Ranking Member 

CARL LEVIN, Michigan 

TOM HARKIN, Iowa 

JOHN F. KERRY, Massachusetts 

JOSEPH I. LIEBERMAN, Connecticut 

MARIA CANTWELL, Washington 

MARK L. PRYOR, Arkansas 

BENJAMIN L. CARDIN, Maryland 

JEANNE SHAHEEN, New Hampshire 

KAY R. HAGAN, North Carolina 

DAVID VITTER, Louisiana 

JAMES E. RISCH, Idaho 

MARCO RUBIO, Florida 

RAND PAUL, Kentucky 

KELLY AYOTTE, New Hampshire 

MICHAEL B. ENZI, Wyoming 

SCOTT P. BROWN, Massachusetts 

JERRY MORAN, Kansas 

DONALD R. CRAVINS, JR., Democratic Staff Director and Chief Counsel 

WALLACE K. HSUEH, Republican Staff Director 
(III) 

C O N T E N T S 

OPENING STATEMENTS

Page 

Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana .................. 1 

Vitter, Hon. David, a U.S. Senator from Louisiana .............................................. 4 

Menendez, Hon. Robert, a U.S. Senator from New Jersey ................................... 5 

Blumenthal, Hon. Richard, a U.S. Senator from Connecticut ............................. 10 

Cardin, Hon. Benjamin L., a U.S. Senator from Maryland ................................. 11 

Gillibrand, Hon. Kirsten, a U.S. Senator from New York .................................... 72 

WITNESSES

Panel I 

Rivera, James, Associate Administrator, Office of Disaster Assistance, U.S. 

Small Business Administration .......................................................................... 12 

Chodos, Michael, Associate Administrator, Office of Entrepreneurial Development, U.S. Small Business Administration ....................................................... 16 

Panel II 

Zimmer, Hon. Dawn, Mayor, City of Hoboken, NJ ............................................... 51 

King, James L., State Director, New York State Small Business Development 

Center .................................................................................................................... 57 

Law, Kevin S., President and Chief Executive Officer, Long Island Association ........................................................................................................................ 65

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Association of Small Business Development Centers 

Letter dated December 13, 2012, to Chair Landrieu ..................................... 118 

Blumenthal, Hon. Richard 

Opening statement ........................................................................................... 10 

Cardin, Hon. Benjamin L. 

Opening statement ........................................................................................... 11 

Chodos, Michael 

Testimony .......................................................................................................... 16 

Prepared statement .......................................................................................... 18 

Gillibrand, Hon. Kirsten 

Opening statement ........................................................................................... 72 

King, James L. 

Testimony .......................................................................................................... 57 

Prepared statement .......................................................................................... 59 

Landrieu, Hon. Mary L. 

Opening statement ........................................................................................... 1 

Documents for the Record ................................................................................ 22 

Responses to post-hearing questions from: 

James Rivera ............................................................................................. 84 

Michael Chodos .......................................................................................... 96 

Hon. Dawn Zimmer ................................................................................... 98 

Letter dated December 6, 2012, from Senators to SBA Administrator 

Mills ............................................................................................................... 113 

Note for the record ........................................................................................... 116 

Chart titled ‘‘Hurricane Sandy & SBA Disaster Loans: Business Loans 

Account for 13% of Overall Sandy Applications’’ ........................................ 121 
Page

IV 

—Continued 

Chart titled ‘‘Hurricane Sandy & SBA Disaster Loans: Homeowner Loans 

Account for 87% of Overall Sandy Applications’’ ........................................ 122 

Chart titled ‘‘Hurricane Sandy SBA Disaster Staff on the Ground’’ ............ 123 

Chart titled ‘‘Damage Comparison’’ ................................................................ 124 

Chart titled ‘‘Average SBA Disaster Business Loans’’ .................................. 125 

Chart titled ‘‘SBA Resource Partners: SBDCs, WBCs and SCORE’’ ............ 126 

Lautenberg, Hon. Frank R. 

Prepared statement .......................................................................................... 82 

Law, Kevin S. 

Testimony .......................................................................................................... 65 

Prepared statement .......................................................................................... 67 

Lieberman, Hon. Joseph I. 

Prepared statement .......................................................................................... 80 

Manhattan Chamber of Commerce 

Letter dated December 10, 2012 ..................................................................... 120 

Menendez, Hon. Robert 

Opening statement ........................................................................................... 5 

Prepared statement .......................................................................................... 7 

Rivera, James 

Testimony .......................................................................................................... 12 

Prepared statement .......................................................................................... 14 

Snowe, Hon. Olympia J. 

Responses to post-hearing questions from: 

James Rivera ............................................................................................. 99 

Michael Chodos .......................................................................................... 105 

James Rivera and Michael Chodos .......................................................... 107 

James L. King, Hon. Dawn Zimmer, and Kevin S. Law ........................ 110 

James L. King ............................................................................................ 111 

Vitter, Hon. David 

Opening statement ........................................................................................... 4 

Zimmer, Hon. Dawn 

Testimony .......................................................................................................... 51 

Prepared statement .......................................................................................... 53 
(1) 

HURRICANE SANDY: ASSESSING THE 

FEDERAL RESPONSE AND SMALL BUSINESS 

RECOVERY EFFORTS 

THURSDAY, DECEMBER 13, 2012 

UNITED STATES SENATE, 

COMMITTEE ON SMALL BUSINESS

AND ENTREPRENEURSHIP, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:06 a.m., in Room 

SD–428A, Russell Senate Office Building, Hon. Mary L. Landrieu, 

Chair of the Committee, presiding. 

Present: Senators Landrieu, Cardin, Vitter, and Risch. 

OPENING STATEMENT OF HON. MARY L. LANDRIEU, CHAIR, 

AND A U.S. SENATOR FROM LOUISIANA 

Chair LANDRIEU. Good morning. Thank you all for joining us 

today to discuss the Small Business Administration’s response to 

Hurricane Sandy, the President’s recent supplemental request in 

this space, and State and local small business recovery efforts in 

the impacted region. 

I would like to thank our witnesses that will be testifying in just 

a moment, and I will introduce them in just a moment, but let me 

make a couple of brief opening statements. 

We are here today to evaluate the response and recovery effort 

in the aftermath of Hurricane Sandy, which struck the Northeastern United States on October 29 as the largest sized storm system in U.S. history. Hurricane Sandy claimed the lives of 132 

Americans, damaging or destroying more than 651,000 homes and 

459,000 businesses, leaving more than 8.5 million families without 

power, heat, or running water. Most of the water and electricity 

and power grid has been turned back on, but yet I understand 

there are still communities that are challenged. 

The scale of this disaster has created significant housing and 

transportation challenges, and successful recovery will require a 

sustained effort on the part of the Federal, State, and local officials, private businesses, voluntary organizations, neighbors, and 

survivors, of course, themselves. 

Earlier this week, I had the chance to tour some parts of the triState area that were hardest hit. I was led on that day trip by Senator Menendez. Senator Lautenberg’s staff was in attendance. Senator Tester and Senator Stabenow took the opportunity, Senators 

from Montana and Michigan, to come and tour the area, because 

we are very concerned, and Senator Vitter, who will be joining us 
2 

today, was scheduled to come and planned to, but weather delayed 

him. So we have both Republicans and Democrats with their eyes 

on the disaster. 

One of the reasons we are here today, however, is to make sure 

that the Federal Government, through the Small Business Administration, is doing everything in its power to assist the thousands 

of small businesses that have been hurt in this natural disaster. 

By and large, the Federal response has been robust to Hurricane 

Sandy. More than 500,000 people have registered for temporary 

housing and individual assistance. FEMA, they were on the ground 

right away, has provided over 15 million meals, 20 million liters of 

water, 1.7 million blankets, and 135,000 tarps. DOD has delivered 

9.3 million gallons of gasoline to over 300 gasoline stations, and 

270 million gallons of salt water have been pumped out of transit 

tunnels. There have been over 17,000 Federal personnel and over 

11,000 National Guardsmen, and I want to take a minute to thank, 

again, the first responders at every level, from firehouses to police 

stations to volunteers in the neighborhood as well as the National 

Guard from so many States that came to the aid of the Northeast. 

The President and numerous administration officials have been 

on the ground surveying damage and meeting with State and local 

leaders. In fact, Governor Cuomo and Governor Christie have been 

here to the Capitol to express their desperate need for help and 

support. 

I want to start with some positive statistics and then go into just 

a few areas that I am concerned about. One of the areas that I am 

concerned about is the fact that the SBA has only approved $205 

million in disaster loans to approximately 32,000 homeowners, 

renters, and businesses. However, the disbursement—while those 

numbers sound fairly impressive—the disbursement is only $6 million, and we want to get to the bottom of that today. I understand 

this number is expected to grow, and, in fact, since this statement 

was put together, those statistics have changed. But I think it is 

important to keep our eyes on the results, what is happening right 

on the ground for businesses and homeowners making decisions 

about when to rebuild, how to rebuild, and where to rebuild, and 

if they are going to rebuild. It is a big decision. 

As Chair of this committee and a Senator from one of the hardest 

hit States in recent years, I believe that one of the most important 

responsibilities of our committee is to ensure that the SBA be fully 

staffed, better prepared, and ready to quickly assist businesses following disasters. In the aftermath of Hurricanes Katrina and Rita, 

I took the opportunity as Chair of this committee to really tune up 

this response, and I am very proud to see it in operation today. 

In the past, planning was insufficient. Staff and funding came up 

short. There were just immeasurable delays, red tape, and paperwork. Following the 2005 storms, it took over 74 days to process 

a home loan and 66 days to process a business loan, even longer 

for disbursement of disaster funding. SBA pushed disaster victims 

for mountains of tax records which had been lost in flooding. I 

think all those days are behind us, I hope, and I hope we will hear 

testimony that the red tape has been eliminated, that we are not 

requiring survivors to produce multiple copies of tax records that, 

in many cases, were lost in the storm itself. 
3 

So for this reason, I am pleased to see that we have had a great 

deal of improvement with the SBA and your response to the disaster today. And I want to note that these reforms included a disaster loan limit increase for businesses from $1.5 million to $2 million. New tools were authorized, such as bridge loans or private 

disaster loans following catastrophic disaster. As I said, improved 

coordination between the SBA, IRS, and FEMA. And, very importantly, allowing nonprofits, for the first time, to be eligible for economic injury disaster loans. 

In a storm like this, the first groups that are going to be turned 

to are your faith-based organizations, your volunteers, your Chamber of Commerce, your local organizations that were themselves 

devastated, losing headquarters, losing membership, losing staff 

members, sometimes geographically if not in loss of life. People 

have moved away or are not living in the community where they 

lived. It is very important to get these nonprofit organizations back 

up. They will become the leaders, of course, in the recovery. 

Building on these reforms, the 2010 Small Business Jobs Act also 

included a provision allowing aquaculture businesses to receive economic injury loans, a very important business to the State that 

Senator Vitter and I represent and to many coastal communities. 

I hope these will come in handy this time around. 

So I am pleased to report that the time frame for home loans has 

been reduced from nine days to 74 days after Katrina and Rita. 

That is good. Business loans for Sandy are averaging ten days, 

compared to the 66 days in 2005. However, I do think that we need 

to do more in terms of getting money on the ground, and we will 

share with you some of what you have shared with us in terms of 

actual disbursement. 

We also, I believe, need to modify SBA requirements that borrowers must use their personal home as collateral when other collateral is available, and I have asked for that provision to be included in the supplemental, to give borrowers the maximum flexibility that they need at a time like this, particularly businesses 

that have been utterly destroyed. And believe me, I saw for myself 

thousands, literally thousands, in just the few hours that I was on 

the ground. 

Senator Blumenthal, we did not make it to your State, but we 

were in New Jersey, in Longview Beach, a small community. I 

think Mayor Mancini has been the mayor there, and his father was 

the mayor before. He, of course, said to us they have never seen 

anything like this in 50 years, and block after block after block, 

restaurant, gas station, barber shop, toy store, hairdresser, on and 

on and on, just completely gutted with the debris out front. 

Now, we have seen these visuals before at home and it is heartbreaking. And right now, at a very sensitive time in the calendar, 

holiday season, with Christmas coming up, these families and businesses that have, in large measure, Senator, invested their entire 

lives building a business that is successful and somewhat seasonal, 

because you are on a coastal area, have to make a decision whether 

they are going to reopen or not for Memorial Day. So getting these 

loans out and getting them with the reduced paperwork, of course, 

the care for the taxpayer, is what our goal is. 
4 

I am going to not go into the examples that I have about some 

of those businesses because I do want to hear from the leaders of 

the Small Business Administration. But I will say that the President sent up just yesterday, the day before, a $6.4 billion supplemental request—I am sorry, last week he sent it up—and the 

Chairman issued his mark last night, and that document is now 

public. I believe that the sooner we pass the $6.4 billion supplemental, which provides absolutely essential mitigation, help for 

small businesses, homeowners, and most importantly, flexible community development disaster grants is absolutely essential for the 

recovery of this region, because, as we knew going after Gustav 

and Ike and Katrina and Rita, if the people do not have confidence 

that at least their local leaders have been given access to serious 

money, and $60 billion is a serious amount of money, they will lose 

hope, because a disaster is so overwhelming. And that is the last 

thing you want people to do, is lose hope. You need to really harness that resiliency and the human spirit, to believe that they can 

rebuild these communities in the face of overwhelming odds, and 

to build them stronger and more resilient. 

So we are going to get into the testimony in a minute. Let me 

call on Senator Vitter, and I thank him for sitting in for Senator 

Snowe—he brings a tremendous amount of experience to this 

issue—and recognize him for a short opening statement. And then 

we are joined by Senator Blumenthal and Senator Menendez, and 

I would be looking very forward to their comments of their own 

eyes on the ground and personal experience with their constituents 

in this situation. Senator Vitter. 

OPENING STATEMENT OF HON. DAVID VITTER, A U.S. 

SENATOR FROM LOUISIANA 

Senator VITTER. Thanks, Madam Chair, and thanks to all our 

witnesses. I just wanted to make three points briefly. 

First of all, I want to again express my real sympathy for and 

support of all the victims of Sandy. This was a horrible, devastating disaster, wiping out homes and businesses and livelihoods 

and it has a very tragic human face and we always need to keep 

that in mind. So I am certainly supportive of acting quickly in 

terms of help and aid that is going to directly, immediately help 

those victims. And we also need to do that in a thoughtful, responsive, and responsible way with the American taxpayer in mind. We 

can do both of those things. So I certainly support that. 

Secondly, on the SBA side, I think there is good news and there 

is room for continuing improvement. The good news is, I do think 

we have come a long way positively since Katrina and Rita, and 

the SBA disaster response has been significantly improved. The initial response at SBA in 2005 was slow and inadequate before Steve 

Preston took over and really turned the disaster program around, 

and it has improved since then. 

We were able to work on this committee in a very bipartisan way 

to write and enact further improvements and reforms that Senator 

Landrieu mentioned, and I was proud to work with Mary and Senators Kerry and Snowe and others on those improvements, including the SBA disaster reforms in the 2008 farm bill. But we can con-
5 

tinue to learn and can continue to improve and enact reforms and 

we need to do that, including in this context. 

And third and finally, I want to touch on an area that is outside 

this committee’s jurisdiction, but nevertheless very important, 

which is the Corps of Engineers and Corps reform. The Corps is obviously another Federal agency that is very important with regard 

to any disaster like this and we have to improve the Corps process 

and address real reforms so that we can work quickly and adequately, address needs like this. We have been working on that, including in a bipartisan way, and I hope to include many further 

significant Corps reforms in the next water bill, which Senator 

Boxer and I are actively working on now. 

So, again, thanks to all of you, and I am certainly all ears. 

Chair LANDRIEU. Thank you. 

I would like, if I could, Senator Blumenthal, because Senator 

Menendez has a time crunch, would you allow him—— 

Senator BLUMENTHAL. Absolutely. 

Chair LANDRIEU. Thank you. Senator, you have been such a 

champion for the people of New Jersey and the entire region. 

Thank you for joining us this morning and we are happy to hear 

your opening remarks. 

OPENING STATEMENT OF HON. ROBERT MENENDEZ, A U.S. 

SENATOR FROM NEW JERSEY 

Senator MENENDEZ. Well, Madam Chair, thank you very much 

for the opportunity, and thank you for coming to New Jersey with 

several of our colleagues and touring the devastation along the Jersey Shore. And I want to thank Senator Vitter, who was on his way 

to join us. I appreciate it. Unfortunately, weather deviated his 

flight and we could not get together, but I appreciate the effort. 

Senator VITTER. I got a wonderful tour of the Pittsburgh airport 

rather than seeing what Sandy had done. 

Senator MENENDEZ. Well, it looked a lot better than what you 

would have seen in New Jersey, I will tell you that. But thank you 

very much for the effort and for your comments and to my colleagues for their courtesy. 

You know, Madam Chair, you and Senator Vitter are certainly 

no strangers to natural disasters and you have been an incredibly 

important friend and ally throughout the process and helping us 

understand the lessons of Katrina. 

This is the worst natural disaster that my State has ever faced. 

The surge came quickly. It destroyed whole communities. It took 

houses from their foundations. It changed the topography of the 

coastline. It devastated some of the most densely populated communities in the country. It took lives and property. 

More than two-thirds of our residents and businesses lost power. 

Forty percent of the nation’s transit riders had their commutes disrupted. Many still today have their, not only their rides disrupted, 

but costing them a lot more to make their transit commute to 

work, so much more of their income is being bit out of the process. 

And a countless number of small businesses are now faced with the 

overwhelming job of cleaning up and trying to get back to business. 

In New Jersey alone, there are more than 34,000 applications for 

SBA disaster loans that have been submitted. These small busi-
6 

nesses simply do not have the resources or capital that larger companies do to quickly rebuild. It can often take weeks, if not months, 

to get back up and running, valuable time and revenue lost at the 

worst possible moment. And as you saw, Madam Chair, on Monday 

on Long Beach Island, power has still not been restored and small 

businesses are still closed as a result. 

And while SBA loans can be helpful, many small businesses simply do not have the capacity to add more debt to their books. Small 

business owners around the State have told me that they already 

took out significant debt to either start up their business, survive 

the great recession, or even repairs after Hurricane Irene struck in 

the summer of 2011. 

So for those small businesses, like shopkeepers and the little 

ferry in Munaki—I see the distinguished Mayor of Hoboken is here 

who is going to tell you some of those experiences. Pam Bond and 

Jeff Spinardi, who own the store in Hoboken called ‘‘Greetings from 

Hoboken,’’ they have three full- and four part-time employees. They 

lost power for a week. They lost one of the most critical times for 

their sales. They could not even make the rent. And despite their 

own struggles, when the shelter did not have any electricity, they 

gave up their stock so that, in fact, they could light up the place 

with candles. That is the type of tremendous response we have 

seen, and there is so much more. 

So, Madam Chair, what you are doing here is incredibly important. 

My final comment is I appreciate that the supplemental appropriation that we will be considering has CDBG monies that can 

give us the wherewithal with the flexibility, based on some of your 

own experiences with businesses in Louisiana, to be able, when it 

is appropriate, to give them a grant, which may very well make the 

difference between staying open and closing, or getting open or 

closing, or getting their business back or not, and in so doing, also 

hiring so many people that, in fact, were hired by these small businesses, which are the engine of our entire economic background. 

And I would ask consent to have my entire statement put into 

the record. 

[The prepared statement of Senator Menendez follows:] 
7 
8 
9 
10 

Chair LANDRIEU. Thank you, Senator Menendez, and without objection. 

Senator Blumenthal. 

OPENING STATEMENT OF HON. RICHARD BLUMENTHAL, A U.S. 

SENATOR FROM CONNECTICUT 

Senator BLUMENTHAL. Thank you, Madam Chairman. I, first of 

all, want to thank you for giving me the opportunity to participate 

this morning, and second, for your personal involvement and outreach to these communities, not only in New York and New Jersey, 

but also Connecticut, and not just in this disaster, but also going 

back to 2011 and the catastrophes that Connecticut suffered—three 

of them—in that period of time, when you personally contacted me 

and offered assistance. So I want the people of Connecticut to know 

they have a real friend in the Senator from Louisiana. Your leadership has been really tremendous in this area. Thank you to Senator 

Vitter, as well. 

I want to just briefly say thank you to the President for providing the strong leadership that he has in the wake of this disaster in Connecticut. He promptly declared Connecticut an emergency area and that permitted the SBA to come forward, along 

with FEMA, and I want to thank the folks who came from SBA, 

the people on the ground who have been there for quite some time 

now, many of the FEMA officials in advance of the storm. 

And unfortunately, many of these recent storms in their depth 

and scope and the devastation they have caused indicate that we 

may face a new normal in this kind of catastrophic weather-related 

event and we need to prepare for it in the longer term as well as 

the short term, and that is why I think those reforms of 2008 and 

the suggestions made by Senator Landrieu this morning and other 

improvements that will be made are so critically important. 

I think you need to know that the Connecticut SBA office has already approved about $6.7 million in disaster assistance for struggling businesses in Connecticut as well as residents. That figure is 

significant, but there are a large number of requests for funding 

that are still being processed, and, therefore, a large number of 

homeowners and small businesses that need assistance. The requests for assistance, quite frankly, are still in the pipeline and we 

would appreciate even prompter attention and processing of them. 

Nearly a month and a half after Hurricane Sandy, many Connecticut residents are still waiting to hear if they are able to repair 

their storm damaged homes, and small business owners are still 

waiting to find out if they will have enough capital to restore their 

equipment to pre-disaster conditions. And these struggling victims 

have waited long enough to put their lives and their livelihoods 

back on track. They deserve to have that opportunity and I hope 

that the supplemental will be approved promptly with the additional $250 million for SBA that will enable it to service these 

loans as quickly as possible. I appreciate your assistance, hope we 

can contact you, reach out to you, and work with you in accomplishing these goals. 

Thank you, Madam Chairman. 

Chair LANDRIEU. Thank you, Senator Blumenthal. 

Senator Cardin. 
11 

OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, A U.S. 

SENATOR FROM MARYLAND 

Senator CARDIN. Well, Senator Landrieu, I want to join in thanking you for your leadership, not just from the Small Business Committee but on the Appropriations Committee. We have had many 

conversations, and the legislation that I hope you will be considering as early as today on the supplemental Appropriations emergency bill is critically important to move forward and I thank you 

for the support there, not only for the small business programs, but 

also for FEMA, for the Department of Housing and the CDBG 

funds. All those are going to be critically important for the recovery 

of those communities that have been so devastated by Sandy. 

Maryland was hit hard, now, not as hard as New Jersey or New 

York, and our prayers and help go out to those communities that 

are much broader in the amount of damage that was done. But if 

you lived in Crisfield, Maryland, on the Eastern Shore, lower Eastern Shore, a community in which almost one-third of the population lives below the poverty level, your homes have been destroyed. You are looking to your government to help you during 

this time. That community needs a Federal partnership. 

If you live on the other end of our State, in Oakland, Maryland, 

in Appalachia, where just about every home lost power, 3,000 trees 

came down—this is a county that has 30,000 population. Thirty 

inches of heavy snow fell in a very short period of time. So both 

ends of our State were hit very, very hard and need help from the 

Federal Government, and I very much appreciate the fact that this 

committee is holding this hearing to see how the small business 

programs can be effectively brought into play during this disaster 

to help small businesses. 

Oakland, Maryland, and Crisfield, Maryland, have something in 

common. They may be separated by the shore to the mountains, 

but their economies are dependent upon small businesses. That is 

where the people work. So we do need to focus on how we can help 

the small businesses get back on their feet so that we can have the 

type of economic progress in both of these communities that have 

been so disrupted because of Sandy. 

Let me also thank you for your help on an issue that originated 

in this committee, the surety bond level, which during the Recovery 

Act we increased from $2 million to $5 million. It worked very successfully, helped create jobs and helped deal with a problem of procurement that was difficult for small businesses because of the surety bond limit. I appreciate the fact that you are addressing that 

also in the supplemental, and thank you for your help. I think that 

will also provide some additional relief to not just the communities 

affected by Sandy, but our country in helping small businesses deal 

with our current economic pressure. 

So thank you for this hearing and thank you for your leadership. 

Chair LANDRIEU. Thank you, Senator Cardin. 

Michael Chodos is with us, the Associate Administrator for the 

Office of Entrepreneurial Development at the SBA. He is responsible for overseeing the agency’s counseling, mentoring, and training programs for current and future entrepreneurs. I am going to 

ask him to speak second and have James Rivera, who is the Associate Administrator for the SBA Office of Disaster Assistance. Mr. 
12 

Rivera basically runs the disaster program, but we asked Mr. 

Chodos to be here because he is responsible for the counseling, 

mentoring, and training which is going to obviously have to step 

up its game in the Northeast to help people with the technical assistance and training they are going to need to get back on their 

feet, potentially change a business model, potentially make some 

adjustments to help them stay in business. 

But, Mr. Rivera, please keep your remarks to five minutes so we 

can do a round of questions, and we will call on Mr. Chodos, because we have a very distinguished panel coming up and we are 

going to start that second panel in probably about 20 minutes. 

STATEMENT OF JAMES RIVERA, ASSOCIATE ADMINISTRATOR, 

OFFICE OF DISASTER ASSISTANCE, U.S. SMALL BUSINESS 

ADMINISTRATION 

Mr. RIVERA. Good morning, Chair Landrieu and distinguished 

members of the committee. Thank you for inviting me to discuss 

SBA’s efforts in response to Superstorm Sandy and our role in disaster response and recovery. SBA appreciates your strong support 

of the agency’s disaster operation and continued leadership in making our country better equipped to deal with large natural disasters. 

Administrator Mills and Deputy Administrator Johns have seen 

firsthand the tremendous damage caused throughout the Northeast 

by Sandy, and as you know, the damage is immense. This is one 

of the largest disasters our country has confronted since Hurricane 

Katrina ravaged the Gulf Coast more than seven years ago. 

I can assure you that the Federal Government is leveraging all 

of its resources to provide timely and effective assistance to all of 

the affected areas. SBA is working closely with our response and 

recovery partners at FEMA and HUD. We are closely coordinating 

with local and State agencies and regular contact with local officials to ensure we are doing everything possible to assist the maximum number of businesses and homeowners in the affected communities. 

In terms of our efforts, we are providing a ‘‘one SBA’’ approach 

to our Sandy response. Directors from across SBA are leveraging 

public and private sector resources, including our partners at the 

SBDCs throughout the affected areas. Thus far, we have deployed 

over 300 Disaster Customer Service Representatives to the region. 

As you know, SBA is providing—is responsible for providing affordable, timely, and accessible financial assistance in the form of lowinterest loans to businesses of all sizes, homeowners, renters, and 

nonprofit organizations in the aftermath of a disaster. 

SBA has made a number of improvements in recent years that 

have allowed us to better respond to the disaster survivors. For example, we have reduced disaster loan processing times, streamlined application forms, and implemented a redesigned electronic 

loan application, all of which have led to a more transparent and 

efficient application process. We continue to meet our goal of processing all disaster applications within 14 to 18 days. We have now 

designated a case manager for each approved application so borrowers know their principal point of contact when they have a 

question or need help. 
13 

Last year, we signed a Memorandum of Understanding with 

HUD, improving our coordination on duplication of benefits to ensure that those with unmet needs are still eligible for HUD Community Development Block Grants. SBA and HUD now have a 

transparent mechanism to share data across agency regarding loan 

borrowers and grant recipients. 

Superstorm Sandy disaster survivors in New York, New Jersey, 

Connecticut, and Rhode Island, all of which received Presidential 

Disaster Declarations, can apply for home and business disaster 

loans online or in person at any of the 100 centers across the area, 

including the FEMA-led Disaster Recovery Centers or the SBA-run 

Business Recovery Centers, with additional assistance from local 

resource partners such as SBDCs, SCORE, and Women’s Business 

Centers. Additionally, North Carolina and Virginia received an 

SBA Administrative Disaster Declaration, making affected homeowners, renters, and businesses eligible for SBA disaster assistance. To date, SBA has approved over 3,600 applications for $230 

million. 

Many disaster survivors do not have ready access to television, 

radio, or Internet. To address these situations, SBA has a Disaster 

Customer Service Center that is handling disaster victim calls 

seven days a week and also providing language translation services. As of this week, SBA has personally met more than 50,000 

people on the ground. SBA has responded to over 80,000 phone 

calls in its Disaster Customer Service Center with a wait time of 

less than 60 seconds. Between our processing centers, call centers, 

and on-the-ground staff, SBA has over 2,300 disaster employees 

currently working on Superstorm Sandy. This is in addition to our 

SBA District Offices and all of our resource partners. 

Whether on the ground in the affected areas or at a regional center, the SBA is keenly focused on one primary goal: Meeting the 

needs of the families and businesses who have been affected by this 

tragic event and helping to rebuild following this devastating 

storm. We know that this is a long-term process and we are committed to doing the hard work necessary to ensure that these small 

business owners and their communities are able to emerge stronger 

than before the disaster. 

I appreciate the opportunity to update this committee on SBA’s 

disaster recovery efforts for Superstorm Sandy. We firmly believe 

that the reforms we have instituted are helping us efficiently and 

effectively respond to the needs of our nation’s disaster survivors. 

I look forward to answering any questions, and thank you. 

[The prepared statement of Mr. Rivera follows:] 
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Chair LANDRIEU. Thank you. 

Mr. Chodos. 

STATEMENT OF MICHAEL CHODOS, ASSOCIATE ADMINISTRATOR, OFFICE OF ENTREPRENEURIAL DEVELOPMENT, 

U.S. SMALL BUSINESS ADMINISTRATION 

Mr. CHODOS. Chair Landrieu, Senator Vitter, and members of 

the committee, thank you for the opportunity to testify regarding 

the role we and our partners play in helping affected individuals 

and communities respond and recover from Hurricane Sandy. 

Since Sandy struck, SBA has been on the ground across the affected region providing individuals and businesses with information, support, and access to disaster recovery loans. As communities rebuild, SBA is there from day one and we will stay deeply 

involved over the long term. That is why, in addition to our Disaster Response Team, SBA’s Office of Entrepreneurial Development 

and its vast network of business counselors and economic development partners play a key role in immediate disaster response and 

also in helping the region’s small businesses restart, rebuild, and 

thrive again. 

There are hundreds of thousands of small businesses in the affected areas across the Mid-Atlantic and Eastern Seaboard. With 

44 Small Business Development Centers, 14 Women’s Business 

Centers, and hundreds of SCORE volunteers in the affected area, 

our partners work collaboratively with SBA’s Office of Disaster Assistance to help staff Disaster Recovery Centers. They also provide 

intake space for Business Recovery Centers in their own service 

center locations and set up informational events in communities 

across the area. 

In this early period, our resource partners help business owners 

map out the recovery process, collect information, and apply for disaster loans. They also connect business owners with other local, 

State, and Federal resources ranging from help accessing local governmental and utility programs to connections with the IRS to obtain copies of critical tax documents. And they help small businesses take the first concrete steps to get the capital, resources, 

and mentoring they need to get back up and running. 

For example, our New York SBDC created an excellent one-stop 

Sandy recovery website to provide information about important resources with FAQs for small businesses. It is now a critical tool for 

individuals and businesses across the State. 

But in addition to access to resources, thousands of affected businesses will need individual help, one business at a time. In just one 

recent example, our Women’s Business Center at Hunts Point Economic Development Center in the Bronx was contacted by a local 

manufacturer and distributor which experienced significant damage to critical machinery and equipment and needed help accessing 

capital. Our WBC helped the business apply for an SBA disaster 

loan, reviewed its financial information and plans, and helped to 

craft a long-term plan to recover and rebuild sales. This process is 

being repeated by our SBDCs, WBCs, and SCORE volunteers 

across the region and will increase substantially in the coming 

months. 
17 

SBA-supported counseling and training makes a difference. 

Those who receive counseling and training are more likely to start, 

their businesses are more likely to survive over the ensuing years, 

and they are better prepared to seek financing and to plan effectively for future growth. Together, our resource partners will play 

a key role in economic rebuilding and growth across the region. 

In addition to the on-the-ground support being provided by our 

resource partners, SBA also takes a comprehensive industry-focused approach to strengthening and rebuilding sectors and supply 

chains where small businesses have been hit the hardest. No small 

business is an island. Every small business has its own suppliers 

and vendors, and thousands of small businesses across the region, 

in turn, play key roles in supply chains for manufacturers and distributors. 

The affected region is a vibrant center for small business participation and innovation in manufacturing, health care, finance, and 

numerous other sectors. Through its extensive experience with regional innovation clusters and accelerators, SBA knows that successful regional economic growth depends upon effectively connecting small businesses with investment and growth capital, networking and procurement opportunities, and supply chain connections. Our existing cluster and accelerator initiatives work, and in 

the coming months, we plan to use what we have learned to support targeted and networked economic development in affected industries across the region. 

SBA and its partners are already on the ground and we will 

make sure businesses affected by Sandy will get the help they need 

in the days and months ahead. We thank you for your support, and 

I look forward to answering any questions. 

[The prepared statement of Mr. Chodos follows:] 
18 
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Chair LANDRIEU. Thank you all very much. 

We have been joined by Senator Risch. Any opening statement, 

Senator? 

Senator RISCH. No. 

Chair LANDRIEU. Okay. Let me just submit for the record one of 

the successes post-Sandy, post-Katrina, was a more efficient application process, and I want to submit for the record the two-page 

disaster loan application, the one-page personal financial statement, and the one-page request for tax information. The fact that 

this has been streamlined is very, very important, but as I said, we 

still have a great deal more to do, and without objection, I will put 

that into the record. 

[The information of Chair Landrieu follows:] 
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Chair LANDRIEU. Let me make sure we start with the facts, because I am going to have a series of these hearings through this 

disaster because it is a long haul. I mean, Senator Vitter and I are 

in the seventh year of recovering from Katrina, and I do not want 

to frighten people that are listening to this, but it is a long road 

for recovery after a catastrophic disaster. We still have neighborhoods and business corridors that are struggling. 

But I just want to start with making sure we know what our 

challenges are. The record that I have, and I want to see if it 

matches with what you have, is that in New York, the documents 

that have been submitted show that there are 265,000 businesses 

that have been destroyed. And in New Jersey, it is 189,000. Is that 

generally the records that you have, Mr. Rivera? 

Mr. RIVERA. Senator Landrieu, yes, that is correct. 

Chair LANDRIEU. Okay. Now, just for comparison, in Katrina, 

which was no question a catastrophic disaster on the Gulf Coast, 

we only lost 18,700 businesses. So I am going to repeat these numbers, because this is a big effort. Two-hundred-and-sixty-five-thousand businesses have been lost in New York, and 189,000 in New 

Jersey. 

Now, the only program that I know of in the Federal Government that is specific to meet the needs comes through your agency. 

We are pushing very hard for the Community Development Block 

Grant to change into a much more flexible and better designed tool, 

which is one of the primary tasks in this supplemental, which I 

hope Congress will say yes, to maybe use some of that money to 

craft more robust assistance. 

But given that, you can understand why I was a little bit concerned to hear that in New Jersey, we have 1,498 applications have 

been received. Sixty-eight have been approved and only nine have 

been disbursed to date. In New York, we have 2,474 applications 

received. We have 105 have been approved and 12 loans have been 

disbursed. And the average loan, according to the documents preparing for this hearing, was $13,000. Now, I understand those loan 

amounts have increased because this is a real moving target. I 

mean, every 24 hours, these numbers move. 

But just to give some reference, in Katrina, the average business 

loan was $1,116 [sic]. In Rita, it was $95,000. Wilma was $135,000. 

Ike was $129,000. Gustav, $59,000. Isaac, $39,000. And yet we are 

at a fairly low amount for Sandy. Now, that number will go up, the 

average loan amount. 

But I want the members of this committee to know and for the 

administrators to know that my eyes are on the results, not the 

process, not how many people we have in the field, not how many 

offices we have opened, not how much money we are spending. My 

eyes are going to be for the next year, with the help of this committee, and I think I have the support of both Republicans and 

Democrats on this, on the results of getting loans quickly into the 

hands of businesses or grants. 

It is impossible for these communities to recover without small 

business leading the way. It is just not going to happen. Homeowners can rebuild, but if there are no gas stations open, if there 

are no grocery stores, if there are no retail shopping centers—and 
44 

I am telling you, seven years after Katrina, we still have neighborhoods that are looking for business opportunities. 

Now, I do not think the Federal Government can do it all, but 

I do think the Federal Government can be a big supporter in this 

effort and I am looking for smart partnerships. 

So would you please comment on these numbers. Keep your responses short because I do have another question. 

Mr. RIVERA. Okay, thank you, Senator Landrieu. You know, you 

are absolutely correct. We are very early into this disaster. Generally, we get most of our applications between week four and week 

eight, and then we have a 14- to 18-day processing goal. We are 

currently processing these applications within ten days. So what is 

happening is we are now—this is week six from the disaster. We 

are now starting to get a lion’s share of influx of disaster applications and we process within that time frame, accordingly. But we 

are confident that we are going to be able to get these applications 

processed timely, and then once we get the loan approved, we will 

generate the loan closing documents and we get the initial disbursement out within the first five days of the date of the application—— 

Chair LANDRIEU. Let me ask you this. What are the deadlines for 

application, because I believe we may have to have those extended. 

In my experience, people are still so traumatized at this time after 

the disaster. I mean, they are having a hard time getting their 

head around the fact that they have lost their home, they have lost 

their church, they have lost their business. It is difficult to make 

decisions, particularly when you do not know what your neighbors 

are doing or what the business next door is doing, and people may 

need more time. So what are the deadlines, and do you have the 

authority to extend them? 

Mr. RIVERA. So the current deadline in New York was just recently extended. For all the States, the deadline is December 31. 

In New York, the deadline was extended to January 28. But under 

the Presidentially Declared Disasters, we will work with FEMA to 

see if we can get a possible deadline. 

Chair LANDRIEU. So you are saying you do have the authority to 

extend deadlines if you find that it is necessary? 

Mr. RIVERA. We do not, but FEMA does, because it is a Presidentially Declared Disaster, but we will definitely work with them. 

Chair LANDRIEU. Okay, because I am going to ask the next panel, 

do they believe the businesses in their community need more time 

to fashion their loan request. 

Mr. RIVERA. Right. 

Chair LANDRIEU. My third question, and I am sorry to go a little 

bit over—I will turn it over to Senator Vitter in a minute—explain 

in some detail, if you can, what the preliminary conversations have 

been with Secretary of HUD, who is probably the best person in 

America to lead this disaster, in my humble opinion, Shaun Donovan—he is well experienced, he is educated, he is from that region—what have the initial conversations been about the possibility of some express business loans—$10,000, $20,000, $25,000 

loans—to proven successful, businesses, longstanding? I am not 

talking about new entrepreneurs taking opportunities in the aftermath, as legitimate as that may be. I am talking about long-
45 

standing businesses, so that we can answer the question, are loans 

the only thing that is available? What is your answer to that, and 

what are the outlines of that preliminary discussion? 

Mr. RIVERA. So, our initial discussions with HUD are that we are 

working together with them. I mean, he is obviously going to be the 

point person for the President in responding to the disaster of 

Superstorm Sandy across the area. 

We have had some initial discussions on the flexibility of how we 

can coordinate. We have the Memorandum of Understanding that 

we had signed, thanks to your efforts. But we are looking at coordinating between how we can make the disaster loans and how the 

CDBG funds and the flexibility that they may be able to be provided as part of the supplemental. 

Chair LANDRIEU. For a possibility for some small express grants? 

Have you all gotten into any of that discussion yet, or is it still 

very preliminary? 

Mr. RIVERA. It is still preliminary. You know, as I mentioned, we 

are still early in the disaster. It is week six and we are working 

as hard as we can, as fast as we can, to get the best results we 

can. But we are still early in that process. 

Chair LANDRIEU. Okay. Senator Blumenthal, questions, and then 

I will get to you, Senator Risch. 

Senator BLUMENTHAL. Thank you, Madam Chair. 

One quick question. Could you comment specifically on the different alternatives in terms of collateral that may be available? 

Senator Landrieu raised that point earlier, which I think is very 

well taken. 

Mr. RIVERA. Okay. So, we follow the private sector practice. We 

will generally take the business assets, and if there is a residence 

available, we will pick up the residence. But as part of the proposed language, we will see, from our perspective, how that works 

from a collateralization. But we do follow private sector practices. 

Senator BLUMENTHAL. Well, would you then use collateral other 

than someone’s home, and would that be a departure from existing 

policy or—— 

Mr. RIVERA. Yes, it would be a departure from our existing policy 

and we would look at what other collateral is available based on 

the proposed legislation. 

Senator BLUMENTHAL. So you will undertake that policy? 

Mr. RIVERA. We will look at if we can do that. You know, once 

the legislation is passed, we will come back and we will figure out 

if that is the best approach we can take. 

Senator BLUMENTHAL. Thank you. 

Chair LANDRIEU. Senator Risch. 

Senator RISCH. Thank you, Madam Chairman. 

Mr. Chodos, you used an example of a business that you have 

helped since the catastrophe, and I think, where did you say it was, 

in New York? Was it in—— 

Mr. CHODOS. The Bronx. 

Senator RISCH. Okay. What kind of business was that? 

Mr. CHODOS. That is a beverage distributor, I believe. 

Senator RISCH. And what type of insurance did they have? 

Mr. CHODOS. So, I will get back to you on that, Senator, and find 

out specifically what insurance they had. I will say that the avail-
46 

ability of insurance is one of the key items of information that is 

obtained when a business is applying for immediate either FEMA 

grants or SBA disaster loans. So getting the full packet of information is part of that intake process, and more broadly, our resource 

partners who help staff both the Disaster Recovery Centers and the 

Business Recovery Centers take a holistic approach when a business walks in the door to find out, where are they overall? What 

do they have? What are the needs? What is the plan going forward? 

Senator RISCH. Perfect, except. I am looking here at the application, U.S. Small Business Administration Disaster Business Loan 

Application, and it has got a form number and what have you on 

it. You know, if I was a claims processor or someone in your position looking at one of these, this thing would be incredibly short 

of information when it comes to making a decision as to whether 

taxpayers’ money should go into this. 

I look at item number 16, insurance coverage, parentheses, if 

any, and I am going to get to the ‘‘if any’’ part here pretty quick. 

You do not even ask how much coverage a person has on this application. You have got coverage type. You have got name of insurance company or agent and phone number of insurance agent and 

policy number. Now, I have not had time to study this thing, so 

maybe it shows up somewhere else here, but Mr. Rivera, you seem 

anxious to answer that question. 

Mr. RIVERA. Well, Senator, that is part of the application process. 

It is the SBA Form 5, or 5C, and basically, what we do is the loan 

officer will have that discussion with the disaster survivor and with 

the insurance agent. So that communication does occur. We make 

sure that there is no duplicative funding that occurs from that. 

Senator RISCH. One would hope so. It seems to me, though, 

that—and I understand you want to keep this short and you want 

to keep it concise and easy to fill out, which is good. But to me, 

the most important thing after a disaster a person reaches for is 

their insurance policy. Bless the Federal Government, but even insurance companies are better than the Federal Government, generally, to responding to claims. And it would seem to me that if you 

looked at the claims forms that you are required to fill out for an 

insurance company, you could probably take a lesson there to get 

yourself quite a bit of information. 

For instance, item number 16, insurance coverage, if any, it says 

coverage type. Most people, when they say coverage type, they are 

kind of at a blank because they do not deal with that all the time. 

But if you listed and had them check a box, such as property, contents, business interruption, they could check the box very quickly, 

I would think, and let you know what it was and how much the 

coverage was, because that would seem to me to be critical when 

you are examining one of these claims. 

I would assume you have a group that works with a claimant as 

far as dealing with their insurance company. 

Mr. RIVERA. The loan officers do deal with the actual insurance 

agent when they are processing the application, yes, sir. 

Senator RISCH. And you feel comfortable with their area of expertise in that regard? 

Mr. RIVERA. Yes—— 
47 

Senator RISCH. Insurance companies can be somewhat difficult, 

at times, when it comes to claims time. 

Mr. RIVERA. We have pretty good success dealing with the individual, the disaster survivor and the insurance agent. I mean, it is 

a pretty transparent process from our perspective. 

Senator RISCH. Okay, thank you. I can see I am way over here, 

but I have got a number of other questions. 

Chair LANDRIEU. Go ahead. 

Senator RISCH. Okay. All right. In any event, if I were you, I 

would take a look at that application form. Again, I do not want 

to see the usual kind of Federal form that looks like the phone 

book, but rather—I like this idea of keeping it simple, but you need 

more information, it seems to me, than what you have. 

Out of the—go back to Katrina for a minute. Madam Chairman 

indicated there were 18,000 businesses either destroyed or affected 

or what have you. What percent of those had insurance? 

Mr. RIVERA. I would have to go back and check our records. I was 

not in the Office of Disaster Assistance. I was with the agency, but 

I was not with the Office of Disaster Assistance at the time, but 

we can get back with you for the record. 

Senator RISCH. Do you head the Office of Disaster Assistance? 

Mr. RIVERA. Yes, sir, I do. 

Senator RISCH. It would seem to me that that is a critical question. Can you give me a ballpark? Was it half of them? Was it 

three-quarters of them? 

Mr. RIVERA. I do not venture to guess. I really do not know, but 

we can get that information for you. 

Senator RISCH. I am disappointed in that. Did you do anything 

with Katrina as far as making it a learning experience for other 

small businesses in America about how important insurance is in 

these situations? 

Mr. RIVERA. Oh, absolutely. I mean, we have a pretty good preparedness package that goes out. I mean, we have a marketing and 

outreach program where we talk about insurance being key. We do 

make loans for uninsured or underinsured losses. We do make the 

loan up front and then we will take an assignment of the insurance 

policy. I mean, there are a lot of lessons learned here, but I do not 

want to just state a specific percentage without knowing the actual 

factual number. So we can get that number for you. 

Senator RISCH. Please. Also, the 265,000 in New York and the 

189,000 in New Jersey, I would be really interested as far as your 

determination on how many of those people had insurance and how 

many did not. 

Mr. RIVERA. Okay. We can get back with you on that, also. 

Senator RISCH. I am assuming you would agree with me that 

that is critical, the amount of insurance that they have, when people are looking to the Federal Government to step in and fill a gap. 

Mr. RIVERA. Well, just to clarify, that is part of our process. I 

mean, if you have insurance—we will make a loan for $100,000 and 

let us say you have $50,000 of insurance. We will either make the 

loan up front and then reduce the full amount by that $50,000, or 

we will make the net loan of $50,000. But we only make loans for 

uninsured or underinsured losses. 
48 

Senator RISCH. And will you also take an assignment on insurance proceeds? 

Mr. RIVERA. We do when we make a loan commitment before the 

insurance is settled. 

Senator RISCH. I think that is enough for this round. 

Chair LANDRIEU. Thank you, Senator. 

Let me assure you, we can get that information. I think that is 

very important. But for the record, is not the insurance given on 

SBA Form 5, which has to be completed and attached to this? 

Mr. RIVERA. Yes, ma’am. 

Chair LANDRIEU. Okay. So in addition to the two pages, which 

are—as the Senator pointed out, we do want a simple but complete 

process—there are five other forms, one for insurance, one from the 

IRS, a 1413 Form, which is another SBA, and another, 2202, which 

is a schedule of fixed liabilities and all fixed debt. So if there are 

some improvements, Senator, that you want to suggest, please let 

us know. 

But I do think that the insurance is required, and very important, because this is really the Federal Government is helping to 

fill the gap, helping to step up and provide some funding quickly 

and in advance. Sometimes those insurance proceeds can be very 

slow. And, frankly, some insurance companies are much better 

than others about honoring the contracts that they have with these 

businesses, and that is another important oversight that I hope 

that the committee of jurisdiction, which is not this committee, but 

can provide in this recovery. 

Are there any other questions, because I would like to move to 

the second panel and give them an opportunity. Anything else you 

all want to add? 

Mr. RIVERA. No, ma’am. Thank you. 

Senator RISCH. Madam Chairman, can I—— 

Chair LANDRIEU. Go ahead. 

Senator RISCH. We have been hit with a $60 billion request 

from—did that come from the White House? 

Chair LANDRIEU. It did. It came from the White House and the 

Appropriations Committee has reviewed it. 

Senator RISCH. What part of that would be attributable to or 

within this committee’s jurisdiction? Does anybody have an idea? 

Chair LANDRIEU. Go ahead. You can—— 

Mr. CHODOS. Roughly, it would be—the request for the SBA are 

a $500 million disaster subsidy, $250 million for disaster administration, $40 million for the economic development initiatives we 

discussed, $10 million for related administrative expenses, and $5 

million for the IG. 

Chair LANDRIEU. And how much of that loan authorization, how 

much of that money—how much will it leverage in additional 

loans? 

Mr. RIVERA. Approximately $4.5 billion for lending authority. 

Chair LANDRIEU. Okay. 

Senator RISCH. I have got one other that is not related to that, 

but who put those numbers together, by the way? Was that you, 

Mr. Rivera, that put those together, your shop? 

Mr. RIVERA. The agency? 

Senator RISCH. Yes. 
49 

Mr. RIVERA. I am sorry. Which numbers are you—— 

Senator RISCH. These numbers that you just gave us as far as 

how much—— 

Mr. RIVERA. So it is a ‘‘one SBA’’ approach. Part of it is mine in 

the Office of Disaster Assistance. Part of it is Michael’s in the Office of Entrepreneurial Development. And then there is a surety 

bond piece up in Capital Access, also. 

Senator RISCH. I assume if we want to know more about how you 

put those numbers together, we can get in touch—staff can get in 

touch with your shop to find that out? 

Mr. RIVERA. Oh, absolutely. Yes, sir. 

Senator RISCH. Okay. When someone applies for a Small Business Administration loan, is their insurance vetted at that time? 

Mr. RIVERA. Yes, sir. When the loan officer gets the application, 

that is part of their underwriting due diligence, is that they have 

to contact the insurance company as part of that processing effort. 

Senator RISCH. So, theoretically, anybody with a small business 

loan will receive compensation from their insurance company as opposed to having an issue with coming to the SBA for it and just 

asking—— 

Mr. RIVERA. Well, you know, that is one of the decisions a small 

business owner needs to make, I mean, if they feel they have adequate insurance or if they feel they are underinsured. We are just 

providing one option for their tool box from a loan commitment perspective. 

Senator RISCH. When you do your due diligence, do you require 

that they satisfy you that they are fully insured for losses as to 

their structures, their inventory, their interruption of business and 

that sort of thing? 

Mr. RIVERA. Yes, sir. When we speak with the insurance agent, 

we do have exactly what the insurance settlement is at that time 

or what they anticipate the insurance settlement to be, and we 

work—— 

Senator RISCH. I am sorry. I am talking about for before any disaster, when somebody comes to you for a loan. 

Mr. RIVERA. For a disaster loan or—— 

Senator RISCH. No, I am sorry. Maybe this is more appropriate 

for Mr. Chodos, but I am looking for someone who comes in for an 

SBA loan, no disaster on the horizon or anything else. I am—— 

Mr. RIVERA. Yes, sir. The guarantee loan program that is run 

through the banks, that we run through our lending partners—— 

Senator RISCH. Right. 

Mr. RIVERA [continuing]. That is part of the normal private sector practice, that insurance is required. Correct. 

Senator RISCH. Go back to Katrina, if you would, or if you can 

give me these kinds of numbers. What do you find as far as people 

who have an SBA loan coming back to the SBA after a disaster and 

wanting either a loan or disaster relief or something like that? 

Mr. RIVERA. So, for an individual that has already received a disaster loan? 

Senator RISCH. Right. 

Mr. RIVERA. So there is an opportunity in the event that there 

is uninsured or underinsured losses. I mean, there may be a situation where we require flood insurance because they are in a flood 
50 

plain and there may be additional damage above whatever the 

flood insurance policy covers because of the different footprint or 

the different type of event that occurs from one disaster to another. 

Senator RISCH. Thank you, Madam Chairman. 

Chair LANDRIEU. And, Senator, we can get you some information 

about the stand-alone SBA program. I just was checking with the 

staff. The default rate in that program is very comparable to the 

private sector default rate and it is a modest, in my view, subsidy 

for that program relative to the leverage it provides for small businesses when they are sort of the lender of last resort. 

And I want to make clear, and I think the Senator has a very 

good line of questioning, that insurance underlies this whole recovery process. Homeowners have insurance. There is flood insurance. 

Now, these insurance policies can be expensive, but it is required 

in many of these communities. 

The small business loans are there, really, to fill the gap or to 

get money more quickly until insurance proceeds come in. But it 

would be important for the record to submit how many of the businesses that are successful in not just applying but in receiving 

loans, what is their level of insurance coverage. 

But let us go to the second panel, if we could. Thank you very 

much. The second panel, thank you all. And if you all could stay 

and listen to the second panel, I would appreciate it. I think it is 

very important to hear from mayors and business leaders on the 

ground. 

The first is the Honorable Dawn Zimmer, who became the first 

female Mayor of Hoboken, New Jersey, in 2009. Mayor Zimmer 

began her career in public service as an advocate for public park 

space but has become a successful mayor dedicated to fiscal responsibility, public-private partnerships, and improving the quality of 

life for local residents. Unfortunately, Hoboken is one of the more 

devastated municipalities in the region, and no mayor can appreciate what you and your city council and citizens have been going 

through. We just offer you our best in this effort. 

Mr. Jim King has been the State Director of the New York Small 

Business Development Center network since 1984. He oversees 24 

Regional Centers, 35 Outreach Centers that serve over 35,000 

small businesses each year. All of your experience, Mr. King, will 

most certainly be called on and tested for the job that is ahead of 

you. 

Mr. Kevin Law is the President and CEO of Long Island Association, one of the most respected business organizations in New York. 

The Long Island economy is made up of over 100,000 businesses, 

90 percent of which employ 20 people or less. We are looking forward to hearing directly from you, Kevin, about what your businesses are saying, many of them struggling to recover, and how we 

can be as helpful as possible. 

But, Mayor, let us start with you, and again, our hearts go out 

to the people that you have lost and are devastated, but we are 

going to stay with you for the long haul, the long road ahead. 
51 

STATEMENT OF HON. DAWN ZIMMER, MAYOR, CITY OF 

HOBOKEN, NJ 

Ms. ZIMMER. Thank you very much. Good morning, Chairwoman 

Landrieu. 

Chair LANDRIEU. Make sure your buttons are pressed and that 

you are speaking directly into your microphone. 

Ms. ZIMMER. Good morning, Chairwoman Landrieu and committee members. It is a privilege and an honor to be here today. 

Again, my name is Dawn Zimmer and I am the Mayor of Hoboken, 

New Jersey. 

Hoboken is located just across the river from New York City. We 

are the proud birthplace of baseball and Frank Sinatra and the 

home of ‘‘Cake Boss.’’ We have more than 50,000 residents and 

hundreds of businesses call our square-mile city their home, which 

is why we are one of the most densely populated cities in America, 

actually, more than New York City. We are proud to be one of the 

most walkable communities in the country, and we rank number 

one in per capita use of public transportation for commuting. We 

are a vibrant urban community filled with hundreds of boutiques, 

restaurants, and outdoor cafes. 

But Hurricane Sandy was devastating for Hoboken, our businesses, and our residents. For the first time in history, the Hudson 

River spilled into Hoboken from both the north and the south, and 

more than half of our city was flooded. Our community center, public works garage, three of our four firehouses, and more than 1,700 

homes were flooded. We estimate the total damage to our community at well over $100 million. Thankfully, our main street, Washington Street, did not flood, and is again open for business. But 

hundreds of businesses located off of our main street were severely 

flooded. 

Even the businesses that did not flood have been severely impacted by one of our principal means of transportation to New 

York. The PATH train was flooded and still has not been restored. 

Many businesses report up to a 60 percent reduction in business 

due to the difficulty of getting to and from Hoboken. 

Some businesses that flooded remain closed or are forced to operate at an alternate location as they try to navigate the insurance 

gauntlet. I call it an insurance gauntlet because the National Flood 

Insurance Program is not designed to meet the needs of the urban 

environments. I believe there is a fundamental unfairness to the 

system that I respectfully ask Congress to try to address. 

When businesses located in a flood zone buy their properties, 

they are forced to purchase flood insurance by their mortgage companies. But the flood insurance program treats garden-style businesses as if they were basements. If they rent, which many businesses do, then the direct uninsured costs are often passed on to 

the small business renters. 

Under FEMA’s definition of a basement, the coverage is greatly 

limited to only those things like the boiler, hot water tanks, and 

electrical control panels. These rules do not reflect the reality that 

in places like Hoboken, New York City, and other urban areas, the 

premises characterized as ‘‘basements’’ house vibrant businesses 

and principal residences, which are critical elements to the vi-
52 

brancy of our cities. A store or apartment that requires you to walk 

down one or two steps is, plain and simply, not a basement. 

The business owners and residents who work and live in these 

stores and homes are required to buy flood insurance, are required 

to pay premiums into the Flood Insurance System, yet they receive 

virtually no coverage. After having paid flood insurance premiums 

for years, many discover for the first time that their claims are denied because the flood insurance they were required to purchase 

does not actually insure them. What we have is, unfortunately, not 

a rule that protects against moral hazard, but a trap that victimizes people in their greatest time of need. 

For many businesses, their only option is from the Small Business Administration. But many business owners I have spoken 

with tell me they cannot afford more debt. But they do need help, 

and we are at risk of losing the small businesses that make our 

community special. 

So I respectfully ask that this committee and the Congress consider other options for providing direct relief to our small business 

owners. Unfortunately, those businesses without flood insurance 

who do seek assistance from the SBA will be the next victims 

caught in the flood insurance trap. If they are able to receive an 

SBA loan, they will be required to get flood insurance and pay into 

a program that offers virtually no assistance for the urban gardenstyle business. Their insurance costs will go up excessively, but unless Congress takes action to address the definition of a basement 

or the coverage provided to those units, then the garden-style business or homeowner will be forever caught funding a flood insurance 

system that fails to benefit them in any meaningful way. 

The inequity of this system is apparent when we see homeowners 

receiving $250,000 in coverage for vacation homes on the shore 

while primary homes and businesses fall through the cracks of the 

flood insurance program. 

In the immediate term, I strongly urge Congress to provide direct 

assistance for businesses and residents caught in the flood insurance trap. Specifically, I ask you to take action to address the unfair basement issue for the future. I suggest that rather than denying people coverage, businesses and residents should be given incentives to invest in taking the necessary steps to reduce the impact of flooding. For example, there could be a system of encouraging the installation of energy-efficient waterless tanks on higher 

floors that could be installed in closets. But the current system 

does not provide incentives. It just inflicts pain on innocent victims 

at a time when they are most vulnerable. 

I thank you so much for your willingness to listen to our concerns and for the opportunity to speak to you. 

[The prepared statement of Ms. Zimmer follows:] 
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Chair LANDRIEU. Thank you, Mayor, for that excellently crafted 

statement. I have already directed the staff to begin working on 

some of those suggestions. And although the flood insurance is not 

the jurisdiction of this committee, we most certainly are going to 

ferret that request as quickly as we can over to the appropriate jurisdiction. 

Mr. King. 

STATEMENT OF JAMES L. KING, STATE DIRECTOR, NEW YORK 

STATE SMALL BUSINESS DEVELOPMENT CENTER 

Mr. KING. Madam Chair and members of the committee, thank 

you so much for inviting me to speak about Hurricane Sandy. 

Since the storm hit, we have done very little else. Our previous 

experience with disasters probably helped prepare us. We were 

among the first responders in 9/11 for the small business community, and a few years later, I was privileged to travel to Louisiana 

and work with Mary Lynn when she was—Mary Lynn Wilkerson— 

when she was confronting Hurricane Katrina and laying out a 

strategy for that effort. She has since returned that favor many 

times over by sharing much information, materials, and she also 

chairs our association’s National Committee on Disaster Recovery, 

which is working to institutionalize the best practices found nationally so that we can be even better in the future. 

The sheer magnitude of the destruction can be overwhelming to 

small businesses as well as responders. It is hard to know where 

to begin to determine the steps that will be most productive and 

to deal with the feeling of isolation. 

SBDCs are part of the community, so that creates a bond where 

small business people tend to turn because they are familiar with 

us. The same occurs within the SBDC family. Immediately after 

the disaster, I had other States reaching out to me with offers of 

support, from personnel and equipment and just about everything 

else you could think. Our plan is to get through the holiday season 

pretty much on our own and then reach out to request their assistance soon thereafter. 

With that background, I would like to comment on what I have 

seen about the Federal response. There have been definite improvements, especially since 9/11, and I think since Hurricane Katrina. 

The change in the past disaster teams, when they came in after 9/ 

11, they had all the answers. They did not want to listen to anybody. That has changed dramatically since then. Immediately after 

the hurricane, I received a call from James Rivera wanting to coordinate efforts, and that is something I just would not have anticipated. 

Prior to the hurricane, we had eight offices in the primary disaster areas with two outreach locations. Today, we have 25 offices 

that are operational because we transferred staff around to be in 

proximity to where the businesses that were the hardest hit need 

the assistance, and that is because a lot of these folks cannot afford 

to travel distances to get the help they should be receiving. 

We also have our staff going basically mobile. We have given 

them laptops. Verizon Communication has donated communication 

devices for us. And we are actually going into the businesses so 

that we can deliver information and the assistance needed. 
58 

The day after the hurricane, we had 30 volunteers from Upstate. 

We have been deploying those 30 individuals in the areas of highest need since the initial days of the recovery. 

The loss of power was a critical factor, also, not so much that it 

is blaming the utilities, but when you do not have the power, you 

do not have communications, you do not have the Internet, and 

most of the modes of communication we use these days are electronic, so they just went out the window. 

So far, we have had 72 local events, basically providing information, and we have had to go back to the old-fashioned way of putting up posters and word of mouth to get the attendees in position. 

Many of the documents that the Office of Disaster Assistance 

uses are now online, and that is a phenomenal improvement over 

what I can remember from the previous disasters. And their communication with us made a huge difference in an area like Staten 

Island, which was extremely hard hit. We were able to put them 

in touch with our local host sponsor, the College of Staten Island, 

and they located their Business Recovery Center there with the college and that made a huge difference. 

The Rockaways—I do not know whether you are familiar with it, 

but it is basically a peninsula area, the south part of Queens—they 

had 1,100 businesses operational before the hurricane. The week 

after the hurricane, they had five open businesses. Today, they still 

have just a handful. We recently held an event out in Howard 

Beach. We had 45 businesses show up and we were able to provide 

assistance at the event for all 45 of them, get them started in the 

process. 

I think here in New York, we have about 600,000 businesses that 

are in the disaster area. I consider about 100,000 of them to be the 

primary disaster folks. And we are estimating that we could see up 

to 40,000 of them. 

Chair LANDRIEU. I am sorry. Could you repeat the last two lines? 

Mr. KING. We have about 100,000 businesses in the primary disaster area that received the most damage and we are anticipating 

seeing over the next several years up to 40,000 of them ourselves. 

That is a huge undertaking, especially when you consider the 

amount of services they require. 

I reviewed the correspondence with SBA. I received over 100 emails since the storm from SBA. That includes my entire SBA 

team and all the way to the Administrator, and that is not counting telephone calls. 

I would also like to give a shout out to our delegation. A lot of 

those 72 events we have been holding have been cosponsored with 

our delegation members, both in the House and the Senate. 

[The prepared statement of Mr. King follows:] 
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Chair LANDRIEU. Thank you, Mr. King. 

Mr. Law. 

STATEMENT OF KEVIN S. LAW, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, LONG ISLAND ASSOCIATION 

Mr. LAW. Yes, Madam Chairwoman, thank you very much, other 

Senators of the committee. I want to thank you for the opportunity 

to be with you today. I would also like to thank my home State 

Senators Chuck Schumer and Kirsten Gillibrand, who have truly 

been great advocates for New York State and our country. 

My name is Kevin Law. I am the President and CEO of the Long 

Island Association, which is a leading business organization in the 

Long Island metropolitan region. For those not familiar, Long Island is a long island. It goes from Brooklyn to Montauk Point, but 

Brooklyn and Queens are politically part of New York City and so 

the Long Island I am referring to is Nassau and Suffolk Counties. 

We are America’s first suburb, a region of about three million people, and we are the home of the middle class and the middle class 

is built on our small businesses. The Long Island economy is made 

up of over 100,000 businesses, and 90 percent of those businesses 

have 20 employees or less, and thus, small businesses are clearly 

the backbone of the Long Island economy. 

Superstorm Sandy had a devastating impact to Long Island, including hundreds of millions of dollars in damages to our roads and 

rail system, a record setting 945,000 residential and commercial 

customers who lost power, which is more than 90 percent of the entire grid, nearly 100,000 individual homes affected by flood surge 

of nearly 15 feet, and breaches to our barrier beaches. 

The wrath of Hurricane Sandy extended to the business community. Tends of thousands of small businesses lost power for weeks, 

which resulted in lost sales, and many small businesses were flooded and damaged beyond a simple repair. Small businesses that 

were already struggling in this slow and bumpy economic recovery 

now question whether they can still survive and remain open for 

business. 

We thank the efforts and the hard work of FEMA and the SBA. 

These two Federal agencies have been on the ground on Long Island since Sandy hit, doing everything they can to help us recover. 

In fact, just two days ago, the LIA, we hosted an event with Congressman Steve Israel and SBA Administrator Karen Gordon Mills 

and we invited the businesses that were impacted, and the horror 

stories that they shared with us were gut wrenching. In addition 

to all the lives lost and homes lost, to hear the stories of folks’ businesses ruined and destroyed, as well, was indeed gut wrenching. 

And while the SBA has made available to the business community those resources which it legally can, we think some changes 

may be warranted. Almost all the Federal money that is available 

to small businesses is in the form of loans. After this storm and 

in this economy, small business owners are resistant to taking on 

more debt. Most of the money lost by small businesses can never 

be recovered. 

If you are a homeowner, you may be eligible for a grant from 

FEMA. But if you are a business owner, your only Federal option 

is an SBA loan, and this has to change because those that do not 
66 

get back into business fast may find themselves unable to ever 

open again. Small businesses often live in week to week, have 

fewer reserves, and are more dependent on daily cash flow, and 

thus, rebuilding on loans alone is problematic. And thus, I urge you 

to enhance SBA’s programs so that it could include grants to small 

businesses, as well. 

You know, there are other items. Senator Chuck Schumer recently proposed new legislation that would also aid small businesses in the aftermath of Hurricane Sandy. That would provide 

tax credits and deductions for clean-up expenses, and we certainly 

support those. 

Additional Federal efforts could also include recognizing that 

businesses may not have suffered physical damage from Hurricane 

Sandy, but rather extraordinary losses of revenue due to the power 

failures and the ability for customers to even come and patronize 

their establishments. 

And so, currently, most businesses are ineligible for any kind of 

Federal storm relief, and the storm recovery funding that is approved by Congress should have some flexibility in it so that the 

State and local governments can adequately respond to small businesses who may never recover from their substantial numbers of 

lost sales. 

We are not only looking to the Federal Government. You know, 

as the Senator mentioned before, of course, there is insurance, and 

our local governments are trying to help. They are providing sales 

tax relief and property tax exemptions where they can to businesses impacted. Our Governor, Governor Cuomo, has created a 

State fund to assist small businesses and has created also an Empire State Relief Fund, which I have asked to be an advisory committee member of, to help small businesses and homeowners with 

the gap that is not covered by insurance and FEMA grants. 

But we need Federal help, too. Long Island has always been 

there for America. We have helped put the man on the moon. We 

are the region where the DNA genetic code was cracked. And we 

have always been there for America. We need America there for 

Long Island now. And, thus, we are supporting the President’s bill 

that has been before you because we need those resources to get 

our businesses back on their feet. 

And, Madam Chairwoman, I thank you very much for the opportunity to present to you and to the committee today, and I see my 

dear friend and our great Senator from New York, Senator Kirsten 

Gillibrand. Thank you, Senator. 

[The prepared statement of Mr. Law follows:] 
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Chair LANDRIEU. Thank you very much. We really appreciate the 

testimony. 

I am going to call on Senator Gillibrand in just a moment for her 

opening remarks and potentially some questions, but Mayor, let me 

start with you. You know, as you look out on the destruction of Hoboken, one of the communities hardest hit, and you have got homeowners, you have got public facilities, and you have businesses, and 

then you have got transit and general infrastructure, et cetera, et 

cetera, how are you thinking about organizing the small business 

recovery? What are the tools that you are either using in terms of 

organization? What organizations are you looking to locally to help? 

And have you had this discussion with some of the other mayors 

about best practices that could be applied to help your small businesses get back up and running? And I know this is a lot with just 

a few weeks after the storm, but any initial thoughts, besides the 

excellent testimony that you presented this morning, about actually 

having the flood insurance program work for its intended purpose 

to help people in a time of need? 

Ms. ZIMMER. I mean, as I mentioned, the concern is, you know, 

basically businesses, and as my fellow panelists have testified to, 

the concern is that in this economic climate, the four percent rate 

offered by the SBA is a challenge for businesses. They are really 

concerned about taking on the four percent, and so they are going. 

The feeling was—we had meetings with the Small Business Administration, the Governor’s Business Action Center was there, and 

trying to give businesses as much information as possible. But the 

bottom line is, what is available through the Federal Government 

is that four percent loan. 

So, I mean, if there is a way to have grants or if there is a way 

to possibly have a lower interest loan—and so we are working with 

the Chamber, we are working with the Hudson County Chamber 

has come in and assisted. I mean, I will say that more information 

sharing would also help us to be able to help the businesses, as 

well, but I think trying to—as you look at these numbers, I mean, 

the numbers that you outlined for both New York and New Jersey, 

I mean, the economic impact is tremendous when you look at the 

total impact. 

So I think this is a situation where we really—we do need—we 

need to do as much as we can on the State level, but we need to 

do as much as we can on the Federal level, because—you know, so 

really stepping back and saying, can we give grants directly to 

business owners so that we can make sure that they can stay in 

business? And I can tell you firsthand from my personal experience, I mean, I live in Southwest Hoboken. I live in the flood zone. 

My home was flooded. I walk every day to work, down First Street, 

and business after business down First Street is boarded up. 

So it is a major concern, what that impact is going to be. We are 

going to continue that process. I mean, certainly, extending the 

deadline would definitely be helpful, but really looking at the possibility—— 

Chair LANDRIEU. Extending the deadline, lowering the rate—— 

Ms. ZIMMER. Lowering the rate—— 

Chair LANDRIEU [continuing]. Pushing out some express grants 

as a possibility—— 
71 

Ms. ZIMMER. Some express grants so that, yes, so that those businesses that are really teetering and that grant is either going to 

make the difference between them staying in business and being 

a part of the local economy and providing jobs and improving the 

quality of life for Hoboken residents or literally going out of business. And that is where we are at right now. These next two 

months are crucial for so many businesses. 

And I know it is a challenge to get to the bottom of, like, who 

is at that stage, but I think that there are many, many businesses 

at that stage, and so that a grant program to help to make sure 

that businesses do stay in business ultimately will help the economy. It is going to help on the local level, the State level, and the 

Federal Government level. Otherwise, we are going to have—as all 

of you know, it is a spiraling impact, so—— 

Chair LANDRIEU. Yes. And, Mr. King, let me just reconcile some 

numbers. You referred to something in your testimony about 

100,000 businesses. My records show that there are 265,000 in 

New York and 189,000 in New Jersey. That is not counting Connecticut or Maryland or, et cetera, some of the other States that 

were hit, as well. So what is your 100,000 number that you put out 

in your testimony? 

Mr. KING. Sure. The 100,000 are the firms that we have looked 

at from the population, Census population information, that were 

in the primary disaster area. These are firms that incurred the 

worst of the storm. 

Chair LANDRIEU. Well, how do these—— 

Mr. KING. They were flooded with up to ten, 12 feet—— 

Chair LANDRIEU. How do these jive with the FEMA numbers? 

Are you saying you have another set of official numbers? 

Mr. KING. I think the—well, the FEMA numbers include the primary and the secondary areas. The secondary areas had significant 

disruption of businesses, but not as much physical disaster, in our 

estimation. 

Chair LANDRIEU. So what would your comparable numbers, then, 

be, if you have different numbers for New Jersey and New York? 

Instead of the 189,000, what would your numbers be for New Jersey, and instead of the 265,000, what would your numbers be for 

New York? And if you would give those for the record. You do not 

have to do it today, but get those to us at the end of today. 

Mr. KING. Sure. 

Chair LANDRIEU. Now, my other question is, if you do your normal business with 24 Regional Centers and 35 Outreach offices, 

how do you handle a surge? I mean, if you are processing your 

daily requirements, which have got to be less than ten percent of 

the pressures that you are feeling now, how are you not surging 

your capacity to take care of the requests that must be flying over 

your transom right now? 

Mr. KING. Well, what we did immediately was pretty much exhaust my annual travel budget by transferring people into the impact area and moving people around into the highest need areas. 

We have pretty much canceled all vacations, eliminated anything 

that gets people out of the office for extended periods of time, just 

making sure that we have as many professionals as possible. And 

we are stretched, I will readily admit it. We are looking to increase 
72 

the capacity and we hope that the President’s bill goes through 

and—— 

Chair LANDRIEU. Let me ask you, does this map represent the— 

this map represents all the SBA resource partners in the nation, 

and I wish we had blown it up just for the Northeast. I am going 

to do that for our next hearing. Would you provide him with this, 

please, Amy. 

Does this reflect basically your network, this Northeast network? 

These are SBA, CDBGs, Women’s Business Centers, SCORE chapters, that could be potentially helpful to the people along the 

Northeast that need to find a regular center that is open. And then 

in addition to these red dots that are there—and please provide the 

committee with a copy of that, as well. In addition to these, this 

map, there are, I guess, Disaster Relief Centers that are set up 

where FEMA is present, HUD is present, any flood insurance agencies are present, potentially the Red Cross, I believe, as I am, unfortunately, familiar with these centers. So in addition to these centers that are established, Mr. Law, there are Disaster Centers that 

are established so people can sometimes get there, walk in, besides 

doing their business by telephone or Internet, et cetera. 

But, Mr. King, my point is, if this is what your normal operations are, you are going into a very abnormal situation over the 

next year or year and a half or two or three. You have got a tremendous responsibility to the hundreds of thousands of small businesses that are looking to this network for support and help. So I 

want to make sure that you and I are working off the same numbers, because I am not, again, not to take more time in this committee—I am going to call on Senator Gillibrand in a minute—interested in how many people walk in the front door. I am not interested in how many forms are filled out. 

I am interested in how many businesses actually receive help 

and support from their insurance companies first, and then for any 

gaps, from appropriate and well crafted and fiscally responsible 

Federal and State programs, because Senator Risch knows this, 

that there will be no recovery without small businesses recovering. 

I mean, homeowners also are workers and business owners, and if 

they cannot get their businesses back or show up for work at the 

local bakery, they will not have the money to pay their home loan 

back for their home in the community. So this is essential and we 

have got to figure out a better way to bring help, I think, in my 

view, more quickly and more supportive. 

Senator Gillibrand, let me get you for either questions or a statement, and thank you for your leadership. 

OPENING STATEMENT OF HON. KIRSTEN GILLIBRAND, A U.S. 

SENATOR FROM NEW YORK 

Senator GILLIBRAND. Thank you, Madam Chairwoman. Thank 

you for your work on this. I appreciate that you are holding this 

hearing. I think it is essential that we understand—— 

Chair LANDRIEU. You have to turn the microphone on and lean 

into the mic. 

Senator GILLIBRAND. It is essential that we understand how to 

meet the needs of these business owners, because you are quite 

right. When we talk about what are the biggest needs in any State 
73 

right now, it is the economy, and small businesses are the economic 

engine for growth. They create two-thirds of all new jobs. So if we 

do not have them up and running soon, we are not going to have 

any economic recovery when we so desperately need it. 

And so I appreciate the laser-light focus of your questions, getting to the bottom of how are we going to meet the needs of these 

businesses. 

I do want to recognize our two New Yorkers. Kevin Law, President of the Long Island Association, he has been an unbelievable 

advocate for business growth, for economic development. For the 

past two years, he has been leading the effort to strengthen Long 

Island’s economy specifically, trying to attract new businesses and 

strengthen the ones that are already there. And Long Island 

uniquely represents both large businesses, major manufacturers, 

but also small businesses, Mom and Pop shops. It has a lot of IT 

companies, advance manufacturers, research institutions. And so 

the broad array of businesses that come out of Long Island will be 

important to make sure we are meeting their needs. 

I also want to welcome James King, our Director of the New 

York State Business Development Center. I appreciate your dedication to service, especially in this time of great need. You will have 

enormous burdens placed on your workload, but we appreciate 

what you are doing. 

And Madam Mayor, thank you for joining us. I know how tough 

it is for Hoboken right now, so my heart goes out to the families 

that you represent. 

I just have a couple of basic questions. I was very interested in, 

Mayor, your point that the SBA loan for someone who has access 

to credit is six percent, which seems extremely high given that the 

average interest rate at a conventional bank loan is five percent. 

And I am wondering, if we can get that percentage down, do you 

have a target that you are looking for, and how much grants would 

be useful, as well? If you were to devise your ideal support for 

small businesses in Hoboken, what would it look like? 

Ms. ZIMMER. Well, actually, my understanding of the loan rate 

is four percent for SBA loans, but still, the feedback that we got 

from the business—— 

Senator GILLIBRAND. It is four percent if you have no credit, but 

if you have other sources, it is even—— 

Ms. ZIMMER. Okay. 

Senator GILLIBRAND. So if you are a successful business, your 

lowest interest rate from SBA is six percent. If you have a tough 

time getting loans, it is four percent. 

Ms. ZIMMER. So, I mean, people have said, for individuals, they 

can get 1.6 percent, so, I mean, I think going as low as possible. 

For me to give a—I would say getting the same rate that the individuals get, I think would be a great start. 

Senator GILLIBRAND. Mm-hmm. 

Ms. ZIMMER. And then as far as the—you are asking, like, how 

much grant money would we want for businesses, or—is that what 

you—— 

Senator GILLIBRAND. Mm-hmm. 

Ms. ZIMMER. Yes. I mean, it is—right now—I mean, one thing 

that I will say that is a little bit of a challenge is getting the—one 
74 

thing that would help to make us all more effective across the 

board is more data sharing. So, like, for me, I do not have all of 

the data on our business community, and since the SBA has a lot 

of this information, FEMA has a lot of this information, and we 

have had AmeriCorps come in and they have a whole system where 

they immediately have everyone sign a waiver so the information 

can be shared. 

So if we could start sharing more information, because there is 

assistance coming in from corporations. There are donations. There 

are people who—like, AmeriCorps has been coming in and working 

with our volunteers, literally breaking down walls, like doing that 

initial mucking out that needs to be done that some businesses still 

have not done in Hoboken. So I think that is, like, one place to, 

like, start sharing more information right away, and having that 

system both for the SBA and for FEMA to share, so—— 

Senator GILLIBRAND. Let me ask Mr. King, what have you set up 

for New York? I thought Senator Landrieu’s question about using 

current infrastructure is—are you able to leverage the SBA infrastructure that is available effectively to do this outreach and do 

this data collection? Tell us what you intend to do to make sure 

you are actually contacting, reaching, and supporting every business in New York that has been affected. 

Mr. KING. Sure. Our approach is kind of a continuum, because 

the SBA represents the largest resource opportunity. So we worked 

with the State and the city in setting up these microloan kind of 

rapid response loans running through New York Business Development Corporation on a quick turnaround. Some of those turnarounds have been 48, 72 hours. It is totally electronic and it is a 

kind of a seamless transition from that microloan initiative into the 

SBA lending process. So it kind of moves the client along in the 

process and improves the efficiency of it. But that is a very small 

pool of funds that is available. It only goes up to $25,000 and I 

think there is a total of about $15 million available. So that is anticipated to be consumed rather rapidly. 

I think if there was an opportunity to bolster those programs and 

put some small amounts of—relatively small amounts of money 

into the hands of the business owners so they can enhance the recovery efforts, it is very critical. And what I am talking about, the 

100,000 businesses that we are really concerned about. We anticipate that 100,000 are businesses that are either not going to return 

or they need to be totally rebuilt. I mean, a lot of other businesses 

received damage, lost a great deal of income, but we think that 

with the normal process, they are going to be back, you know, they 

are able to make it. 

But there are some that they have been operational long-term. 

The owner is getting more senior. They do not want to put their 

home up as collateral because that is their retirement and they are 

concerned and they just may not return. They may walk away from 

their business. 

Chair LANDRIEU. Thank you. 

Senator Risch. 

Senator RISCH. Thank you, Madam Chairman. 
75 

First of all, Mayor Zimmer, I, like everyone here, extend our condolences to your losses. These things are very, very difficult. They 

are hard to plan for and disrupt lives without warning. 

I was interested in your—I spent a share of my career litigating 

coverage questions in insurance policies, so I understand that pretty well from both sides of the table. I was really interested in your 

comment about the basements versus non-basements and what 

have you. First of all, who are the insurers we are talking about 

here? Is this a Federal insurance policy you are talking about or 

are these private insurance? 

Ms. ZIMMER. Well, the National Flood Insurance Program. I 

mean, it is, as you probably know, it is Federal but it is private. 

I mean, it is Federal because it is backed by the Federal Government and the rules are approved by Congress. But then it is private because the policy—— 

Senator RISCH. I do not think those rules are approved by Congress. It is the bureaucracy, I would think, more likely than by 

Congress, but—— 

Ms. ZIMMER. Well, I—— 

Chair LANDRIEU. The Banking Committee. 

Ms. ZIMMER. Ultimately, I mean, I have been asking about this 

basement, you know, the definition of a basement, and I have been 

told by FEMA that it would require an Act of Congress to change 

the rules of the basement issue. So—and as far as you were saying, 

like, do businesses have insurance, I mean, yes, the businesses, 

they have—so there are those that have flood insurance that are 

not going to get that much coverage because they may be in a basement. 

Then there are those that, quite frankly, never expected the 

Hudson River to come into Hoboken and they were not required to 

have flood insurance and they have never, ever flooded before. But 

when they go to get coverage for all of their lost inventory, hundreds of thousands of dollars of inventory, they are not going to get 

the coverage because they are told, well, that was a flood, so you 

are not going to get the coverage. So they are trying for an SBA 

loan. And then once they get that SBA loan, then for next year, 

they are going to be required to get flood insurance and they are 

not going to get that much coverage for the flood insurance. So it 

is kind of a—it is a spiraling issue that is a major challenge for 

our local businesses and for our residents, as well. 

Senator RISCH. Coverage questions are frequent after an event. 

That is not unusual. But let me say this. I am going to have a look. 

I am going to have staff have a look at the question on the basement issue that you have talked about. Can you, in a nutshell, give 

me an executive summary as to what the difference is in coverage 

on a basement versus the first floor? 

Ms. ZIMMER. Yes. I mean, a basement, you—apparently, I am 

told, there was someone in 1984 who said a basement, for that, you 

get your hot water tank, your boiler covered, and your electrical 

panels, and that is it. 

Senator RISCH. You mean you cannot cover stored inventory—— 

Ms. ZIMMER. Maybe a deep freezer—I am sorry? 

Senator RISCH. You cannot cover stored inventory or anything 

like—— 
76 

Ms. ZIMMER. Nothing. No. 

Senator RISCH [cotinuing]. That in a basement? We will certainly 

have a look at that. That is odd, to say the least, but I have run 

into a lot of odd stuff on coverage questions. 

Senator GILLIBRAND. In the last few weeks, I have learned it apparently was a real problem for New Jersey specifically, that they 

had this garden basement rule for their insurers that is extremely 

odd, so we will look into it and get you information. 

Senator RISCH. We will. Thank you very much for bringing that 

to our attention. 

Ms. ZIMMER. Great. 

Senator RISCH. Mr. King, you were critical of the Federal Government’s response, modestly, or at least to a degree. I am not 

going to criticize you for that. I understand, and I was a Governor 

and I dealt with the Federal Government and the bureaucracy 

when we had issues with them. Tell me about your State. How is 

your State as far as responding to this? 

Mr. KING. You know, the State has been looking at just about everything that it can. One of the problems that always comes about 

when we talk about grants is that our experience is it tends to 

postpone the action of a lot of small business owners. So once you 

start talking about it, you are much better off if you announce it 

and firm it up so that people can put it into their total development 

scenario. 

And our State started talking about grants and they came out 

with, you know, the city came out with a very small grant of about 

$10,000 that was being made to small businesses specifically. And 

that really worked out quite well because it was in combination 

with a microlending program, so it put some additional monies in 

the hands of folks that might not otherwise have pulled the trigger 

and started the recovery process. 

Senator RISCH. Thank you. My experience is exactly the same. 

When you are dealing with—if you ask for the Federal Government, you are going to get the Federal Government. Unfortunately, 

you get everything that comes along with that. They are slow. 

Their paperwork is just awful. If you start with the Mayor, she can 

make things happen. You go to the Governors, they can make 

things happen. But as soon as you get to the Federal Government, 

it is awful, and I appreciate your frustration in that regard, and 

frankly, I would like to promise you things would be different, but 

this has been going on for a long time. 

Mr. KING. Well, I—— 

Senator RISCH. A lot better people than us have tried and things 

continue to go on. 

Mr. KING. Well, I just want to make it perfectly clear, I think it 

is a heck of a lot better than it was when I first got DP involved 

following 9/11, because we were working with, at that time, about 

12,000 businesses that were directly impacted by the 9/11 disaster 

in New York, and that was very, very difficult. 

In contrast to then, today is a cakewalk, in all honesty. I mean, 

it has hugely improved. Is there still room for improvement? Absolutely. I cannot think of a situation where, if we did not help every 

small business that needed it in a very short period of time, we 

would not be at that point of perfection. But I think Senator 
77 

Landrieu said there are going to be a lot of businesses needing help 

and we are struggling with that. We are trying to come up with 

the resources to deal with it, and we are some of your biggest 

cheerleaders on getting action on the request for the $60 billion because it does include financing for Small Business Development 

Centers to extend this effort. And we do not think it is going to be 

a one- or two-year situation. I mean, we are going to be looking at 

repopulating businesses that do not come back for probably five 

years. 

Senator RISCH. Thank—— 

Chair LANDRIEU. And how—go ahead. 

Senator RISCH. Well, I will conclude with this. First of all, I 

agree with the Chairman that this recovery is not going to take 

place unless the small businesses recover. Unfortunately, Congress 

is not going to help small businesses in one regard, and that is we 

are going through a kabuki dance up here right now, but at the 

end of the day, small businesses and individuals who are under 250 

are going to keep their tax rates the same. But if they are a small 

business that is not a small small business, you can tell them their 

taxes are going up next year. I think virtually everyone around 

here agrees with that, that if it is over 250, they are going to wind 

up paying more in taxes. My side is not going to vote for that, but 

it is going to happen simply because the tax rates automatically go 

up the first of the year and there are not enough votes here to keep 

that in place. So that is an unhappy message to give them, but that 

is the message, unfortunately, that you have to take home and that 

is not going to be helpful to small businesses starting in 2013. 

Thank you, Madam Chairman. 

Chair LANDRIEU. Thank you. 

I am going to end with asking each of you to say, in your view, 

how important is it for Congress to act or not on the supplemental 

and what are your people saying about the signal that that may 

send to them. And I know $60 billion is a significant number, but 

in your experience, Mayor, what you are seeing on the ground, 

what are your people telling you about the importance of that recovery package? 

Ms. ZIMMER. It is extremely important to the City of Hoboken, 

both for our local businesses and for our residents. I mean, there 

is a—for the people impacted by the storm and people are staying 

with friends and businesses are located in other areas, or they are 

right now making that decision, am I going to open back up or am 

I just going to go out of business. And so it is extremely important, 

and the sooner the better it can be acted on so that we can get 

those unmet needs met and get people back to living in their homes 

and keep their businesses going, which is, as we have all discussed, 

is so important to our local economy. So it is extremely important 

to the City of Hoboken. 

Chair LANDRIEU. Mr. Law, and then I will get you, Mr. King. 

Mr. LAW. Yes. As I mentioned, our counties and local governments are doing their part. Our State Government is doing their 

part. Our philanthropic community is doing their part. But unless 

we get the approval of the President’s proposed package of aid to 

our region, we are not going to recover. So it is critically important 

that we have that. And as I said before, too, Long Island, New 
78 

York, we have always been there for everybody else and we need 

America to now be there for our region, as well. 

Chair LANDRIEU. Thank you. 

Mr. King. 

Mr. KING. You know, I would just like to agree with my fellow 

panelists that it is truly critical. If we are going to respond as we 

should and help the businesses and the people who are in the center of the storm, we have to have some resources to do it. If we do 

not have those resources, then we are not living up to our own expectations. 

Chair LANDRIEU. Thank you. 

This committee will come to an end, but the record will remain 

open for two weeks. I thank the members from the region for showing up and thank Senator Risch for his leadership. 

Meeting adjourned. 

[Whereupon, at 11:51 a.m., the committee was adjourned.] 
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