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95–524 2015

THE CALM BEFORE THE STORM: OVERSIGHT 

OF THE SBA’S DISASTER LOAN PROGRAM 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

JULY 8, 2015 

Small Business Committee Document Number 114–018 

Available via the GPO Website: www.fdsys.gov 

SBREP-219 with DISTILLER


Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

STEVE CHABOT, Ohio, Chairman 

STEVE KING, Iowa 

BLAINE LUETKEMEYER, Missouri 

RICHARD HANNA, New York 

TIM HUELSKAMP, Kansas 

TOM RICE, South Carolina 

CHRIS GIBSON, New York 

DAVE BRAT, Virginia 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa 

STEVE KNIGHT, California 

CARLOS CURBELO, Florida 

MIKE BOST, Illinois 

CRESENT HARDY, Nevada 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

YVETTE CLARK, New York 

JUDY CHU, California 

JANICE HAHN, California 

DONALD PAYNE, JR., New Jersey 

GRACE MENG, New York 

BRENDA LAWRENCE, Michigan 

ALMA ADAMS, North Carolina 

SETH MOULTON, Massachusetts 

MARK TAKAI, Hawaii 

KEVIN FITZPATRICK, Staff Director 

STEPHEN DENNIS, Deputy Staff Director for Policy 

JAN OLIVER, Deputy Staff Director for Operation 

BARRY PINELES, Chief Counsel 

MICHAEL DAY, Minority Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Steve Chabot ................................................................................................... 1 

Hon. Nydia Vela ́zquez ............................................................................................. 5 

WITNESSES 

The Honorable Chris Smith, (NJ-04), United States House of Representatives, 

Washington, DC ................................................................................................... 2 

Mr. William Shear, Director, Financial Markets and Community Investment, 

United States Government Accountability Office, Washington, DC ................ 7 

Mr. James Rivera, Associate Administrator, Office of Disaster Assistance, 

United States Small Business Administration, Washington, DC .................... 8 

APPENDIX 

Prepared Statements: 

The Honorable Chris Smith, (NJ-04), United States House of Representatives, Washington, DC .................................................................................. 26 

Mr. William Shear, Director, Financial Markets and Community Investment, United States Government Accountability Office, Washington, 

DC .................................................................................................................. 30 

Mr. James Rivera, Associate Administrator, Office of Disaster Assistance, 

United States Small Business Administration, Washington, DC ............. 53 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

Associated Press - Loans impacting grant money for Sandy victims ........... 58 

U.S. Small Business Administration .............................................................. 61 

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SBREP-219 with DISTILLER

(1) 

THE CALM BEFORE THE STORM: OVERSIGHT 

OF THE SBA’S DISASTER LOAN PROGRAM 

WEDNESDAY, JULY 8, 2015 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 11:00 a.m., in Room 

2360, Rayburn House Office Building. Hon. Steve Chabot [chairman of the Committee] presiding. 

Present: Representatives Chabot, Luetkemeyer, Hanna, Gibson, 

Brat, Radewagen, Knight, Curbelo, Bost, Hardy, Kelly, Vela ́zquez, 

Hahn, Payne, Meng, Lawrence, Takai, Clarke, Adams, and 

Moulton. 

Chairman CHABOT. Good morning. The Committee will come to 

order. 

Before we begin, I would like to make a very nice announcement, 

and that is the fact that before we get started I want to take a moment to welcome our newest member, Congressman Trent Kelly, 

who represents Mississippi’s First Congressional District, and he is 

joining us on the Small Business Committee. This will be his first 

hearing today. 

He is certainly no stranger to public service. In addition to serving Mississippi as a district attorney for the past number of years, 

Congressman Kelly is also Colonel Trent Kelly. I hear he is quickly 

closing in on 30 years in the Mississippi Army National Guard, and 

that is quite a record of service, and we appreciate your service, 

Congressman Kelly. Welcome to the Small Business Committee, 

and we are happy to have you. And we are all looking forward to 

working with you and getting to know you better and letting you 

get to know us better, which will be a wonderful experience I am 

sure. So, but thank you very much, and we are real happy to have 

you. 

We will go ahead and move on to one other introduction. Before 

I give my opening statement, we are going to go ahead and introduce another member, a witness we have this morning, if I can find 

it. Okay. 

We are pleased to recognize this morning our colleague, Congressman Chris Smith of New Jersey. I have had the pleasure of 

serving with Chris on the Foreign Affairs Committee for 19 years 

now, and for those of you who do not serve on that Committee, I 

can tell you that he is one of the hardest working Members of Congress. A leader on foreign policy, veterans issues, and a good friend, 

and I am pleased to welcome him here today. 

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We recognize that our colleague has a very busy schedule, as we 

all do, and has taken time away from it to testify this morning, so 

we will get right to it. Unless anybody has any pressing questions, 

there is generally the comity that we do not—and that is c-o-m-it-y, not the other comedy—that we generally do not ask our colleagues questions. So we will get to the second panel then. 

So without further ado, Mr. Smith, you are recognized for five 

minutes. 

STATEMENT OF THE HONORABLE CHRIS SMITH, (NJ-04), 

UNITED STATES HOUSE OF REPRESENTATIVES 

Mr. SMITH. Thank you so very much, Chairman Chabot. And 

likewise, a good and extraordinarily effective friend. We do serve 

on the Foreign Affairs Committee, as you said, and I have lost 

track of the number of times that we have been hand-in-hand, armin-arm, fighting on behalf of victims for human rights issues. You, 

as Asia Committee, last year, last Congress, and Nydia Vela ́zquez, 

your ranking member, we have worked very hard. Jacob Ostreicher 

and some of the other human rights issues. So it is good to see 

such good friends serving in two important positions on behalf of 

our nation’s small business. So thank you for this opportunity to 

be here. 

You know, I will just note parenthetically, in 1981, my first assignment was to the Foreign Affairs Committee chaired by Parren 

Mitchell and Ranking Member Joe McDade. Small business. What 

did I say? Oh, Small Business with Parren Mitchell and Joe 

McDade. So I know the good work that you do, and I appreciate 

it. We all do. 

Let me just say that it has been more than two and a half years 

since Super Storm Sandy devastated New York and New Jersey, 

and some of my constituents, especially those in hard-hit Monmouth and Ocean Counties, are still recovering today. It is not over 

for them. The nightmare continues. 

As many of you are well aware, the federal response was far 

from perfect. The Federal Emergency Management Agency (FEMA) 

recently reopened all Sandy-related flood claims due to widespread 

fraud and a complete lack of oversight over the National Flood Insurance Program. 

Bipartisan delegations, as I think you know—and Nydia, you 

were certainly a part of this—from New Jersey and New York, 

fought hard to secure critical funding from the U.S. Department of 

Housing and Urban Development. Despite huge remaining unmet 

needs, HUD chose only to make nearly a billion dollars in Sandy 

supplemental funding through the Community Development Block 

Grant Disaster Relief Program available to applicants unaffected 

by Sandy. 

With that in mind, I am here today to shed some light on a hardship, an emerging problem that really has to be rectified, now faced 

by homeowners who were actively encouraged, and in many cases 

pressured, to apply for Small Business Administration Disaster Assistance. They did so not only to determine their eligibility for 

home disaster loans, but also to qualify for additional future relief. 

Due to a complete lack of information, however, and disclosure in 

the loan process, many Sandy victims now find themselves ineliSBREP-219 with DISTILLER

3 

gible—I repeat, ineligible—for further relief through various grant 

programs. 

To illustrate, and I do have a letter from a constituent of mine, 

from Manasquan, who said that they liquidated—it was so bad, 

and they wanted to get their home back into a working order, that 

they liquidated their retirement savings to pay down debts taken 

out to finance their children’s college education, just to qualify for 

a home disaster loan. This not only decimated their savings, but 

also resulted in a substantial tax penalty of $52,000 for the early 

retirement withdrawal. They subsequently applied for relief 

through New Jersey’s Reconstruction Rehabilitation Elevation and 

Mitigation Program (RREM)—that is the HUD program—only to 

be shocked to learn—and I mean shocked. When they called my office, they could not believe that this was happening—of their ineligibility for a grant reward solely because they had qualified for and 

accepted the SBA loan, a circumstance that they were never informed about during the loan process. 

As they emphasized in their letter to me, this begs the question, 

if they had been fully informed of potential consequences, would 

they have taken the SBA loan? And the answer is a decided no. 

With more than 32,000 SBA disaster home loans approved following Sandy, there is no telling how many homeowners have 

found themselves in a similar situation. I am sure that today’s witnesses can speak to the pile of papers presented to the homeowner 

during the loan closing, and it will be helpful to hear whether SBA 

had any discussions with HUD and their state grantees on this 

issue. 

While HUD provided guidance in July of 2013, allowing grantees 

to provide assistance to Sandy victims who had qualified but declined an SBA loan, they have done nothing to assist the families 

who acted in good faith to immediately begin the rebuilding process. 

Last month, I sent a letter to both SBA and HUD requesting further guidance, specifically permitting CD, BG, DR grantees to provide grant awards to Sandy victims who previously accepted an 

SBA loan, at least for the purposes of paying down that loan. I also 

asked that this matter be referred to the SBA’s Office of Inspector 

General, to determine what action or inaction led to so many Sandy 

victims being left in the dark regarding this critical information. 

This very issue should not have been overlooked by SBA, nor 

should it have come as a surprise. Following the Gulf hurricanes 

in 2005 and Midwest flooding in 2008, SBA’s OIG released a report 

entitled, and I quote, ‘‘SBA’s role in addressing duplication of benefits between SBA disaster loans and community development block 

grants detailing a serious lack of communication and agreement 

between federal agencies regarding the Stafford Act’s duplication of 

benefit requirements.’’ 

If the Federal Government itself has failed to understand the implications of these requirements, how can they be counted on to explain it to disaster survivors? While SBA has taken steps to improve its coordination with FEMA and HUD, it has failed to communicate with the survivors it is tasked to assist. Homeowners considering home disaster loans must be fully aware of their potential 

preclusion from further assistance. In post-storm chaos, these loans 

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4 

were the primary option for homeowners needing to rebuild. And 

again, if you did not rebuild quickly, the water damage got worse. 

The black mold got worse. And when there was no sense of what 

might be offered in the future, they grabbed the SBA loan, only to 

find again they were precluded from any other further grant—not 

loan, but grant—in the future. Those who accepted home disaster 

loans should not, as I said, be precluded from future HUD assistance. 

Sandy victims made great sacrifices to rebuild and recover, and 

unfortunately, did so with incomplete or misinformation through no 

fault of their own. No two disasters are the same and the recovery 

process will vary based on the level of federal support provided, but 

we must not continue to ignore the lessons learned from these terrible experience. It is egregious that these Sandy victims have been 

put—what they have been put through, and they must be provided 

an equitable solution. And again, this on top of the National Flood 

Insurance problem debacle just begs the question we have got to 

get this right. 

I would ask that my letter, Mr. Chairman, be included in the 

record, as well as an Associated Press article entitled, ‘‘Buyer’s remorse: Loans impacting grant money for Sandy victims,’’ that was 

put over the wire last December. 

Chairman CHABOT. Without objection, so ordered. 

Mr. SMITH. Appreciate it. 

Chairman CHABOT. Thank you very much. And we thank you 

greatly, Mr. Smith, for your testimony. You are welcome to stick 

around. If you have other obligations, you are welcome to tend to 

those as well, and we will be having our next panel in just a few 

moments. 

Thank you very much, and we will now move to my and the 

Ranking Member’s opening statements before getting to the panel. 

A natural disaster exposes us to the worst of nature, yet in some 

powerful way it brings out oftentimes the best in people. Communities ban together, neighbors help neighbors, and volunteers donate their time and energy, all in an effort to rebuild and to get 

their lives back together. 

In the last decade, America has faced some of its worst natural 

disasters with Hurricane Katrina in 2005 and more recently, Hurricane Sandy in 2012. While these disasters struck certain areas of 

the country, every Member on this Committee has experienced 

some disaster within their district I am sure, because these events 

do not limit themselves to one region, or one state, or one congressional district. 

In my home state of Ohio, we have had our fair share of devastating tornadoes and severe floods and a number of other natural 

disasters. In the aftermath of any disaster, it is vital that victims 

are able to rebuild and return to their normal lives as soon as possible. 

While most individuals are aware of the Federal Emergency 

Management Agency (FEMA) and its role in disaster assistance immediately following a disaster, most are unaware that longer term 

recovery assistance is provided by the Small Business Administration (SBA). In this role, the SBA touches more than just small 

firms. The SBA helps homeowners and renters and businesses and 

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5 

nonprofits by providing various long-term recovery loans. Given 

this, it is imperative that the SBA’s Disaster Loan Program operate 

as efficiently and effectively as possible. On this Committee, we are 

tasked with evaluating the SBA’s ability to properly respond to the 

needs of disaster victims and ensuring that the SBA is prepared to 

handle whatever may be next. 

It was clear that following Katrina the SBA’s procedures needed 

change, but several years later, it appears that challenges still 

plagued the SBA in responding to Sandy. It is disheartening that 

the SBA is still not where we need them to be. While we certainly 

do not hope for another catastrophe, we know it will happen, and 

this Committee wants to make sure that the SBA, the Small Business Administration, is ready. 

Today, we will discuss just how the SBA is doing in its mission 

to provide long-term disaster assistance. Our witnesses can hopefully shed light on the SBA’s efforts. And as I said before, we appreciate Congressman Smith’s addition to that attempt. And I want 

to thank our witnesses for taking time out of their busy schedules 

to be here, and we will introduce you very shortly, and we look forward to your testimony. And I will now yield to the Ranking Member for her opening statement. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. 

Natural disasters profoundly disrupt our lives and affect tens of 

thousands of households every years. These unanticipated events 

leave families and small businesses facing significant costs when 

rebuilding. Typically, insurance covers monetary losses, but that is 

not always the case. Recognizing the gap in the market, Congress 

created the SBA Low Interest Disaster Loan Program in 1953. 

Over the past 62 years, SBA has responded to thousands of natural 

disasters, including several major storms. One of the worst was 

Super Story Sandy in 2012. When Sandy made landfall, the impact 

was particularly severe in New York City. The storm destroyed infrastructure, inundated thousands of homes with floodwater, and 

disrupted our vibrant small business community. 

For small businesses in particular, the first few weeks following 

a natural disaster are a critical period. It is estimated that 40 percent of impacted businesses failed to fully recover. One major reason is the lack of capital to rebuild. As such, it is critical SBA process and disperse disaster loans quickly to maximize the likelihood 

small businesses will survive. Unfortunately, soon after Sandy 

struck, it became clear SBA’s response was lacking. As processing 

delays mounted, the deficiencies in SBA’s management of the Disaster Loan Program demanded a closer look from Congress. 

In early 2013, the committee Democrats released a report on the 

application backlog and processing delays. We found small businesses waited 46 days to get their application processed by SBA, 

a threefold increase over previous Atlantic storms. To make matters worse, SBA had already been heavily criticized for its slow response to Hurricane Katrina, and made commitments to process 

applications in 21 days. 

To build on those findings and fully understand the costs of the 

delays experienced by Sandy victims, I requested the GAO report 

we are focusing on today. GAO identified a number of reasons for 

the problems at SBA, including failing to quickly staff up, underSBREP-219 with DISTILLER

6 

estimating the number of electronic submissions, and failing to implement Private Disaster Loan Programs signed into law four years 

prior. 

In 2008, bipartisan reforms were enacted by this Committee to 

help the Agency respond to large disasters by bringing in the private sector to meet loan demand. This included the Immediate Disaster Assistance Program, the Private Disaster Loan Program, and 

the Expedited Disaster Assistance Loan Program. It is likely one 

or more of these programs, if implemented before Sandy made 

landfall, could have injected much-needed capital into the community immediately after the storm. These private loan programs 

could have also helped free up SBA resources by handling the 

small dollar loan volume. SBA provided GAO with a number of reasons for its failure to timely process disaster loans following Super 

Storm Sandy; however, they were all self-created. Clearly, significant changes need to be made in SBA’s administration of the Disaster Loan Program. It is unacceptable that Sandy victims have to 

wait 46 days or longer to get vital funding to rebuild their businesses. 

I look forward to hearing from today’s witnesses on the findings 

and recommendations contained in GAO’s report. 

Thank you, Mr. Chairman, and I yield back. 

Chairman CHABOT. Thank you very much. 

Thank you. The gentlelady yields back. 

We would ask our witnesses if they would come on up to the 

table, please. We just have two this morning, and I will introduce 

them as they are approaching the bench. 

Our first witness on the panel this morning will be Bill Shear, 

who is the Director of the Financial Markets and Community Investment team at the Government Accountability Office. We look 

forward to your testimony. 

And our other witness will be James Rivera, who is the Associate 

Administrator for the Office of Disaster Assistance at the SBA, the 

Small Business Administration. In this role, Mr. Rivera is responsible for all aspects of the SBA Disaster Loan Program. And as I 

said, we appreciate you both being here today, and I will very briefly, and you are probably familiar with them already, but address 

our five-minute rule, which is basically you get five minutes to testify. The lighting system assists you in that somewhat. The yellow 

light will come on to let you know you have a minute to wrap up. 

The red light will come on and we would ask you to stay within 

that time if at all possible. We will give you a little leeway. So, and 

we also apply that same five-minute rule to ourselves, so it is reasonably fair. 

So we will begin with you, Mr. Shear. You are recognized for five 

minutes. 

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STATEMENTS OF WILLIAM SHEAR, DIRECTOR, FINANCIAL 

MARKETS AND COMMUNITY INVESTMENT, UNITED STATES 

GOVERNMENT ACCOUNTABILITY OFFICE; JAMES RIVERA, 

ASSOCIATE ADMINISTRATOR, OFFICE OF DISASTER ASSISTANCE, UNITED STATES SMALL BUSINESS ADMINISTRATION 

STATEMENT OF WILLIAM SHEAR 

Mr. SHEAR. Thank you. 

Chairman Chabot, Ranking Member Vela ́zquez, and members of 

the Committee, I am pleased to be here today to discuss the Small 

Business Administration’s response to Hurricane Sandy, the costliest Atlantic storm since Hurricane Katrina in 2005. 

Sandy made landfall in the United States on the New Jersey 

Shore on October 29, 2012. My testimony today is based on information in our September 2014 report on SBA’s response to Hurricane Sandy, and includes updates on steps SBA has taken to address two recommendations from that report. 

One recommendation related to better planning for high volumes 

of loan applications. Another recommendation related to evaluating 

lender feedback to inform SBA and Congress about challenges to 

implementing a new loan program and determining if statutory 

changes might be necessary to aid implementation. 

First, with respect to timeliness. Following Hurricane Sandy, 

SBA did not meet its timeliness goal of 21 days for processing business loan applications. From receipt to loan decision, SBA averaged 

45 days to process physical disaster loans, and 38 days for economic injury loans. 

SBA did not expect early receipt of a high volume of loan applications and delayed increasing staffing, which in turn increased processing times. As of September 2014, SBA had not revised its disaster planning documents to reflect the effects that application volume and timing could have on staffing, resources, and forecasting 

models for future disasters. Since then, SBA has made updates to 

its disaster playbook. 

Second, with respect to loan approval, withdrawal and cancellation rates compared to previous disasters, the loan approval rate 

after Sandy was not consistently higher or lower, but the application withdrawal and loan cancellation rates, which were 32 percent 

and 38 percent, respectively, were consistently higher than other 

disasters. 

SBA approved 42 percent of business loan applications after 

Sandy. For Hurricane Sandy and for previous disasters, SBA primarily declined business loan applications because of applicants’ 

lack of repayment ability and the applicants’ credit history. 

Third, SBA has not implemented the Guaranteed Disaster Loan 

Programs Congress mandated in 2008, including the Immediate 

Disaster Assistance Program (IDAP), a bridge loan program in 

which private sector lenders would provide disaster victims with 

loans up to $25,000. SBA has not conducted a formal documented 

evaluation of lender feedback to establish what implementation 

challenges the Agency might face and determine what, if any, statutory changes Congress could consider. 

In June 2015, SBA provided us with documentation of additional 

outreach performed in October 2014, where lenders provided speSBREP-219 with DISTILLER

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cific feedback regarding current statutory requirements and proposed program requirements. SBA has yet to adopt a plan for how 

and whether it will proceed with IDAP implementation or document the challenges it would face in implementing the program. 

Chairman Chabot and Ranking Member Vela ́zquez, this concludes my prepared statement. I would be glad to answer any questions. 

Chairman CHABOT. Thank you very much. 

Mr. Rivera, you are recognized for five minutes. 

STATEMENT OF JAMES RIVERA 

Mr. RIVERA. Good morning, Chairman Chabot, Ranking Member Vela ́zquez, and distinguished members of the Committee. 

Thank you for inviting me to discuss SBA’s Disaster Loan Program. 

SBA appreciates your strong support of the Agency’s disaster operations. 

SBA’s Office of Disaster Assistance is responsible for providing 

affordable, timely, and accessible financial assistance following a 

disaster to businesses of all sizes, private nonprofit organizations, 

homeowners, and renters. This financial assistance is available in 

the form of low-interest long-term loans, and since SBA’s inception, 

we have approved almost two million loans for more than $53 billion. 

While SBA is not a traditional first responder agency, we are on 

the ground immediately following a disaster. SBA’s primary focus 

is providing disaster loans as part of the recovery efforts in coordination with other government partners at all levels. 

SBA offers home loans of up to $240,000 to help rebuild homes 

and up to $2 million for nonprofit and businesses of all sizes. SBA 

also offers Economic Injury Disaster Loans to small businesses, agricultural cooperatives, and many nonprofit organizations who have 

suffered economic injury caused by disaster. These loans provide 

needed working capital to a business or organization until normal 

operations can resume. 

In recent years, we have made many improvements that have allowed us to better respond to disaster survivors, including streamlining application forms and implementing a redesigned electronic 

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

efficient application process. Over the past several years, SBA has 

seen significant increase in its electronic loan application activity. 

In Fiscal Year 2011, 27 percent of SBA disaster applications 

were submitted online using ELA, compared to 83 percent this fiscal year. The continued increase in ELA activity reflects the improvements made by SBA to streamline its online application and 

ensure that disaster survivors have access to program information. 

In 2014, SBA launched a new communication plan referred to as 

a three-step process. When seeking SBA disaster loan assistance, 

we describe the first step as how do you apply for a loan? The second step describes how we verify your property and process your 

loan application. And the third step is how we close and disburse 

and fund your loan. 

The new strategy ensures that disaster survivors have a clearer 

understanding of steps involved when seeking SBA disaster loan 

assistance. 

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SBA made another improvement in its communications with disaster survivors in 2014 by increasing direct contacts with potential 

disaster applicants. SBA contacts all disaster survivors referred to 

by the Federal Emergency Management Agency to SBA by phone 

within 48 hours and informs them of disaster loan assistance and 

various ways to apply. 

By increasing the number of direct contacts with potential disaster loan applicants, SBA helps ensure that disaster survivors are 

aware of all available assistance. SBA has established an accelerated approval process for both home and business loans. Based on 

set criteria, the new RAPID approval process allows us to expedite 

processing loans, and it has the potential to ease the stress on 

SBA’s loan processing resources. 

In coordination with the launch of the new RAPID approval process, SBA implemented a second regulatory change, which raised 

the unsecured loan limit under presidential disaster declarations 

from $14,000 to $25,000 on home and business physical loans, and 

from $5,000 to $25,000 on economic injury disaster loans for all 

declarations. The increased unsecured loan limit allows SBA to disburse more funds to disaster survivors faster, which helps speed up 

the recovery of businesses that offer critical services in communities that are in greater need of limited funds. 

SBA has also established two separate tracks to process home 

and business loans in order to expedite loan processing. Earlier 

this month, we released an updated SOP (standard operating procedure) which is a complete rewrite and brings a back-to-basics approach of SBA disaster loan-making process. The refreshed SOP removed redundancies and streamlined the process for loan-making 

and disbursements by adding more flexible underwriting and guiding SBA staff to help businesses and homeowners. These changes 

should improve the overall customer experience for disaster survivors. 

In response to Super Stormy Sandy, SBA approved more than $2.4 billion in disaster loans to help nearly 37,000 homeowners, 

renters, businesses, and nonprofit organizations recover and rebuild from disaster devastation. SBA responded to the needs of 

residents and business owners by deploying 695 disaster assistance 

workers and field inspectors to staff 248 disaster recovery centers 

located throughout the East Coast, during which time the SBA had 

more than 152,000 contacts in the field. Additionally, SBA’s disaster customer service call center in Buffalo, New York, responded 

to over 212,000 calls with minimal wait times. 

In closing, I appreciate the opportunity to update the Committee 

on SBA’s Office of Disaster Assistance, and I look forward to answering any questions. Thank you. 

Chairman CHABOT. Thank you. 

I ask Ranking Member Vela ́zquez—— 

Ms. VELA ́ ZQUEZ. To go first? 

Chairman CHABOT.—to go first. 

Thank you, Mr. Chairman. 

Mr. Rivera, SBA officials have stated that they will not begin 

regulatory work on the Private Disaster Loan Program or the expedited Disaster Assistance Program until IDAP is fully implemented. So my question to you is, is there anything in the Small 

SBREP-219 with DISTILLER

10 

Business Disaster Response and Loan Improvements as of 2008 

that says IDAP needs to be implemented before SBA can work on 

the others? 

Mr. RIVERA. No, ma’am. There is not anything that stops us 

from executing these other programs. 

Ms. VELA ́ ZQUEZ. Are you aware that the act required the administrator to issue rules for both of these programs within one 

year? If so, why has SBA ignored its legal mandate? 

Mr. RIVERA. So my understanding—you know, this guarantee 

loan program, we work in conjunction between the Office of Disaster Assistance and the Office of Capital Access. It is a guaranteed loan program with preferred lenders and with bank lenders 

from that perspective. The thought process behind this was to first 

pilot and implement the IDAP program for the immediate program, 

and see how that worked within the lending community. And then 

after that, you know, after we would take that process through, we 

would go to the other two programs. 

We have promulgated—— 

Ms. VELA ́ ZQUEZ. You are not answering my question. My question is why have you not begun the regulatory work on the Private 

Disaster Loan Program or expedited it. I understand that you are 

saying that IDAP—that you will not do that until IDAP is fully implemented. 

My question to you is, in 2008, we passed legislation signed by 

the president, that gave the administrator one year to implement 

the program, more so when Congress in 2012, provided $3 million 

for a pilot program. What happened to that money? What did you 

do? 

Mr. RIVERA. So the money part, I mean, it is not appropriated 

to a specific program from that perspective. You know, to be honest 

with you, Congresswoman, I do not know why the other two regulatory programs were not implemented. What I can do is I can 

check back with the Office of Capital Access, and we can get back 

to you for the record. 

Ms. VELA ́ ZQUEZ. Well, I guess you knew you were coming here, 

and you knew that I would be asking those questions because those 

are basic fundamental questions. Do you understand what it means 

for small businesses in lower Manhattan when Con Edison’s plant 

blew up and there was no electricity, no power? Do you know how 

many children and mothers crossed the Williamsburg Bridge to 

come into Williamsburg to get groceries that they were not able to 

get because businesses had to shut down? Do you know what it 

means for small businesses to get access to $25,000 to keep their 

doors open? 

Mr. RIVERA. Yes, ma’am. We are well aware of the—— 

Ms. VELA ́ ZQUEZ. And that is why you have not implemented 

those programs? These are the tools that we provided you right 

after Katrina. That was a real disaster that required a monumental response and we failed the people. And again, this time, we 

provided the vehicles and mechanism. 

Mr. Shear, is there is any explanation as to why this regulation 

and this program have not been implemented? 

Mr. SHEAR. I can only make observations because I cannot get 

behind the minds of people at SBA. There was very little question 

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in mine or others’ minds when we had a sit-down with SBA, actually, on March 1, 2010, that there was a conscientious effort to at 

least establish IDAP, and that the others would probably follow 

shortly after that. And there seemed to be a concerted effort that 

was working across office lines at SBA involving the Office of Disaster Assistance, the Office of Capital Access, and the Office of Disaster Planning, which had been created by the 2008 Act. When we 

came in this time, there just seemed to be a complete lack of focus 

on IDAP or any of these programs. 

And in terms of observations, it just seems from our standpoint 

there was less coordinated effort among these three offices to try 

to push forward on IDAP or any of these. So these are observations 

I can make but I do not really have a good explanation for why, 

in a sense, the ball was dropped in developing these programs and 

in developing IDAP as the first program. 

Ms. VELA ́ ZQUEZ. Mr. Rivera, the GAO report on Sandy’s response said that SBA did not respond as anticipated because it was 

challenged by an unexpectedly high volume of loan applications 

that it received early in its response to the disaster and other technological challenges. How is it possible for the SBA to have this 

kind of managerial and structural mishaps in light of the lessons 

learned from Katrina? 

Chairman CHABOT. Before the question is answered, just let me 

let you know what is going on. Mr. Hanna has yielded his five minutes. 

Ms. VELA ́ ZQUEZ. I thank the gentleman. 

Chairman CHABOT. So she will proceed with that. There are 

four minutes of it left. 

Mr. RIVERA. Okay. Thank you. 

So Hurricane Sandy, we are transparent with GAO and with the 

Inspector General. We provided the information to them. What 

happened in Hurricane Sandy is we had developed the electronic 

loan application where people can apply on line. 

There are two traditional bell curves. There is a paper bell curve 

or paper intake curve on how applications are received. That usually happens between week five and week eight, and then there is 

the new norm, which is the ELA curve, which happens between 

week one and week four. So what happened in Sandy is we did not 

anticipate getting 20,000 applications in that first four weeks 

through the electronic loan application queue. We have course corrected. We have done changes to our processes. Our preprocessing 

department now can handle that type of activity. Our current activity in the electronic loan application side is up over 80 percent. So 

we have adjusted. 

Every disaster is different. Every disaster is unique. We have 

never had this type of engagement from an electronic loan application perspective, so that was the big lesson learned. I mean, we 

have been real transparent. 

Ms. VELA ́ ZQUEZ. Sir, did you run any simulations? 

Mr. RIVERA. We have run simulations. 

Ms. VELA ́ ZQUEZ. Because that is part of the disaster preparedness. 

Mr. RIVERA. Yes. So we have run simulations. We run simulations all the time. On an annual basis we have, like, last year we 

SBREP-219 with DISTILLER

12 

did a mock earthquake in Oakland, California. What we have been 

able to do—staffing was not an issue. So if you go back to Katrina, 

we had three issues. We had space, staffing, and the computer system. Those three issues were not in place when Super Storm Sandy 

hit. What happened, we had sufficient staff. We just did not bring 

them on quick enough because we did not anticipate this new intake curve that the ELA has caused us by getting these additional 

20,000 applications in week one to week three. Usually, that is 

when we are bringing staff onboard. We peaked at 2,500 staff. Our 

staffing strategy has core staff of 1,000. We have 2,000 reservists, 

so we had plenty of staff in reserve. Our mistake, in hindsight—— 

Ms. VELA ́ ZQUEZ. Let me ask you, we are in the middle of the 

hurricane season; right? 

Mr. RIVERA. Yes, ma’am. 

Ms. VELA ́ ZQUEZ. So God forbid something happens. Tell me 

what steps are you taking right now that will position you to respond efficiently and timely. 

Mr. RIVERA. So that is what we have been doing the last couple 

of years. We have been very aggressive. 

Ms. VELA ́ ZQUEZ. That is what I heard right after Katrina and 

right after we provided all the tools that you needed. When we conducted hearing after hearing and we heard what problems you 

were facing that would not allow for the agency to respond adequately, we provided those tools, and today, it has not been implemented. 

Mr. RIVERA. Different issues in Katrina versus Sandy. Like I 

said before, Katrina was about not having a reserve force. We have 

2,000 reservists. We have a contract that will bring on additional 

FTEs if we need additional full-time equivalents. We did not have 

space. We had 366 spaces in the Office of Disaster Assistance prior 

to Katrina hitting. We now have 2,100 seats. We have 1,750 seats 

in our Fort Worth processing center. We have another 300 seats in 

Sacrament in a surge capacity. The third is we could not get 

enough people on the system at the time. When Katrina hit, our 

Disaster Credit Management System was a year in. Now that system is pretty mature. We are 10 years in. We could not get more 

than 800 concurrent users on the system. So think about this. You 

have 4,500 employees. We had to go to three shifts in order—in 

Katrina, in order to meet the capacity. Today, we can go to 10,000 

concurrent users, and we test that every two years, and my annual 

report to Congress shows all the developments we have done from 

that perspective. Sandy was a completely different issue in that as 

the intake curve on the ELA side was much quicker. And we did 

not anticipate it. We acknowledge that. We provided that to GAO. 

We provided that to IGDAP. 

Ms. VELA ́ ZQUEZ. Do you know what the problem is? The problem is credibility. It is credibility. 

Mr. RIVERA. You are absolutely right. We are only as good as 

our last disaster. 

Ms. VELA ́ ZQUEZ. And lack of trust from the American people. 

Mr. RIVERA. Well, I do not know how you want—— 

Ms. VELA ́ ZQUEZ. Right after we passed the legislation, you 

came back and told us that you were ready and all the systems 

were in place, when, in fact, they are not all in place but two. You 

SBREP-219 with DISTILLER

13 

promised that the processing would take only 21 days. You know, 

people shut their doors forever. You know and I know that when 

disaster strikes and we do not provide the assistance they need in 

the first three, four weeks, they are going to shut their doors forever. 

Mr. RIVERA. We understand everything you have just said, Congresswoman. I mean, we clearly take that to heart. We are working 

very hard and very diligently, and we appreciate all the input we 

have gotten from GAO and the Inspector General’s office, and we 

have done a lot of process improvements internally. 

Ms. VELA ́ ZQUEZ. So this is my ask. 

Mr. RIVERA. Okay. 

Ms. VELA ́ ZQUEZ. I want a letter from the administrator to this 

committee as to when these assistance programs, the Expedited 

Disaster System Program, the Private Disaster Loan Program, will 

be up and running. That is the law and that is the mandate. 

Chairman CHABOT. And I would join the Ranking Member in 

that request/demand. 

So, and the Ranking Member’s time has expired. We thank her 

for her questions. Now I will turn to myself for five minutes. 

Mr. Rivera, I assume that you are familiar with the National Response Framework, which superseded the National Response Plan 

in 2008. 

I note that you are nodding in the affirmative. 

Mr. RIVERA. Yes, sir, I am. 

Chairman CHABOT. Okay. In 2012, when Hurricane Sandy 

struck, are you aware of how the National Response Framework 

defined a catastrophic incident? 

Mr. RIVERA. We currently do not have a specific definition. 

Chairman CHABOT. Well, then let me stop you there and refer 

to the definition as it is defined in the framework. It was defined 

as any natural or manmade incident, including terrorism that results in extraordinary levels of mass casualties, damage, or disruption, severely affecting the population, infrastructure, environment, 

economy, national morale, and/or government function. 

Now, given that definition, understanding that the SBA did not 

label Hurricane Sandy—did not label Hurricane Sandy a catastrophic incident when it occurred under Section 12081 of the 

Small Business Disaster Response and Loan Improvement Act of 

2008—given that definition of a catastrophic incident, it seems to 

me that Hurricane Sandy sure would have qualified. Do you agree 

or disagree? 

Mr. RIVERA. Chairman, the way we define disasters is by major 

and minor. I mean, it was a presidential declaration, so we defined 

it as a major. 

Chairman CHABOT. Well, I read the definition to you. You 

heard me read the definition; correct? 

Mr. RIVERA. Yes, sir. I did. 

Chairman CHABOT. Okay. Now, you apparently felt that it did 

not apply, and that was the framework. It was still in effect during 

this time. So does it not seem like a disaster of the magnitude of 

Hurricane Sandy, and the Ranking Member saw this stuff firsthand. I am all the way over in Cincinnati, so we did not see it like 

SBREP-219 with DISTILLER

14 

she saw it. She saw it. Does it not seem like that level of disaster 

would fit within that definition? 

Mr. RIVERA. So from my perspective—— 

Chairman CHABOT. That should be a yes or no answer. I mean, 

do you not agree? 

Mr. RIVERA. So from my perspective, we treat every disaster 

survivor—— 

Chairman CHABOT. From your perspective, yes or no? It is a 

fairly simple question. 

Mr. RIVERA. We do not have that specific definition within the 

SBA. I understand it is in the National Disaster Recovery Plan. 

Chairman CHABOT. It is required under the law. I read the law 

to you. You nodded in the affirmative that the National Response 

Framework had superseded the National Response Plan of 2008, 

and you were aware of that. And I am not here to criticize you individually for this, but what we are trying to do is make sure the 

SBA is following the law in aiding American citizens who so desperately during one of these catastrophic events needs their assistance. And we are not trying to embarrass anybody; we are just trying to make sure that you cannot go back and undo or redo what 

you did not do or did do back then, but you sure as heck can follow 

in the future. 

But just answer me, as one human being to another, does not 

that definition which I read to you, does that not sound like Hurricane Sandy? 

Mr. RIVERA. That is the definition that is in the National Disaster Recovery Framework. Yes, sir. 

Chairman CHABOT. Okay. And that sounds like what happened; 

right? I mean, as far as Sandy. 

Mr. RIVERA. Yes, sir. It was a presidential declaration, and it 

was major. 

Chairman CHABOT. All right. Thank you very much. I appreciate your response. 

Mr. Shear, let me turn to you. Or did you want to say something 

about what I was just saying? You looked like you were kind of 

chomping at the bit. 

Mr. SHEAR. No, go ahead. Please. 

Chairman CHABOT. We are doing okay? All right, good. All 

right. 

If the SBA could fix one thing before the next big disaster, what 

would GAO place at the top of the list? If you need two things, I 

am okay with that, too. But what is the most important thing that 

you think the SBA needs to fix to get ready for the next big one 

before it hits? 

Mr. SHEAR. I am going to stick to our two recommendations 

here. It needs an approach that when there is a disaster of the 

magnitude of Sandy or worse, to be able to scale up. We have gotten some material from SBA that indicates they have updated their 

playbook. We are not quite sure yet, and I have talked to James 

about how we have to be convinced connecting the dots, that the 

changes made to the playbook and the disaster planning documents 

actually would lead to better preparedness. So I would say that is 

one area where we are not quite sure how much progress the AgenSBREP-219 with DISTILLER

15 

cy has made in preparing for the next disaster along this magnitude of Sandy or worse. So that is the first one. 

In dealing with the whole issue of electronic applications, back 

in Katrina we recommended expanded availability of electronic applications for victims of disasters. So there are advantages to that, 

but the advantages can dissipate real quickly if SBA cannot scale 

up to really serve those victims. 

The second part, and this is the part where I really have to be 

the most critical based on our evaluation here, I think SBA really, 

since 2010, when it looked like there was going to be movement— 

it might have been slow movement, but movement toward establishing IDAP and then the other two programs—is that it seems 

like the ball was completely dropped within the Agency; that there 

was not this concerted effort, and to the degree there was one at 

the time, it completely fell apart. And it is not just that these programs like IDAP could help serve victims. I hate to call a disaster 

an opportunity, but it is an opportunity and we supported starting 

with a pilot. It is an opportunity to see how well such a program 

or programs could work when the next major disaster or the next 

catastrophic disaster occurs. So those are really the two big things. 

Chairman CHABOT. Thank you very much. My time has expired. 

Ms. Hahn, the gentlelady from California, is recognized for five 

minutes. 

Ms. HAHN. Thank you, Mr. Chairman, ranking member. 

I am going to ask this question to Mr. Shear. So just listening 

to all of this, and being on the Small Business Committee and kind 

of understanding the core mission of SBA, it is really about small 

businesses, and since a long time ago SBA was involved in direct 

lending to businesses, so it sort of made sense that in the event of 

a disaster SBA would be doing these direct loans to families, homeowners, renters. But given the fact that SBA is not anymore involved in direct lending, and sort of listening to all this, do we 

think SBA is really the right agency in the aftermath of a disaster 

to be the agency that is handling these loan applications and these 

loans? Would FEMA be better equipped maybe to handle this kind 

of financial help to homeowners, renters, families after a disaster? 

I am just asking. 

Mr. SHEAR. You are asking a really good question, and I wish 

I had a really good answer to give you. We have not evaluated that. 

I will just say generally that when SBA cannot do a better job with 

its whole portfolio, including the direct business loans, and when 

there is a call by Congress in response to what has happened to 

the victims of disasters—small businesses and others, the homeowners—to improve things, it puts the Congress in a very difficult 

position. FEMA many times, I do not direct FEMA work but our 

team’s body of work shows that FEMA has certain challenges in 

terms of its responsiveness. But at the same token, SBA is putting 

you in a difficult situation, especially when it seems to have trouble 

standing up new programs, or at least trying to stand up new programs that Congress calls for. It just seems like SBA is especially 

challenged in this way. 

Ms. HAHN. Right. I am new around here, but just listening to 

all this, it does not seem like that is the core mission of SBA, parSBREP-219 with DISTILLER

16 

ticularly since they, again, have not been involved in direct lending 

for decades now. 

Mr. SHEAR. Let me just make reference—at the request of this 

Committee, we are doing a general management review at SBA, 

and we are trying to look at how can SBA be better at what it does 

across the board. 

Ms. HAHN. Right. 

Mr. SHEAR. And it is one that there are certain challenges that 

are created. 

Ms. HAHN. Right. It just seems like it is only in the event of a 

disaster that we are asking SBA to begin processing applications 

for loans. Again, to folks that are not business, it is families, renters, homeowners. That is not what they do regularly, so I was just 

curious if this might be better served in another agency. 

But Mr. Rivera, until that task is given to another agency, I am 

curious to know, particularly since I come from an earthquake region in California, and maybe you can explain to me, in the event 

of a hurricane or it seems like there’s warning. It seems like we 

are following the weather and we sort of know when landfall is and 

what kind of category it is, I am assuming, but maybe you can tell 

me, is that when you begin hiring the reserves? And then how does 

that translate to we still have not figured out when earthquakes 

are coming. They happen very fast, and I am a little concerned that 

you only ran a model for Oakland, which is a very different city 

than, say, Los Angeles. And what is your scenario in terms of an 

earthquake, in terms of ramping up quickly staff processing applications for a major city like Los Angeles? 

Mr. RIVERA. So we had the smaller earthquake back in—last 

year in Napa. That was a small disaster. Well, it is not small if 

it is your business or if it is your home, but we loaned $39 million. 

The Oakland exercise was just one of many exercises. We have exercised Seattle. We have exercised Los Angeles. In 1994, we provided $4 billion to disaster survivors in the Los Angeles community. But you are right. That is the intangible we have. Most disasters tend to be seasonal. 

Ms. HAHN. And do you ramp up staff when there is a warning 

of a hurricane? 

Mr. RIVERA. So what we do is we—— 

Chairman CHABOT. The gentleman’s time is expired, but you 

can answer the question. 

Mr. RIVERA. We have a staffing strategy. It is something we 

have developed in the last four or five years. Basically, we have a 

core staff of 1,000 employees that work year round, currently between 800 and 1,000. We have 2,000 reservists we call on a quarterly basis. We ask them if they are available, if they are not available. If they are not available, we call them and we ask them why 

they are not available. But we have this reserve force in place. We 

are continuing to train. We are continuing to keep everybody prepared from that perspective. We do not have funding to keep 5,000 

people at one time on the rolls, but at the same time, this staffing 

strategy seems to be a pretty successful model from that perspective. 

Chairman CHABOT. The gentlelady’s time is expired. 

SBREP-219 with DISTILLER

17 

The gentlelady from American Samoa, Ms. Radewagen, who is 

the Chairman of the Subcommittee on Health and Technology is 

recognized for five minutes. 

Ms. RADEWAGEN. Thank you, Mr. Chairman. I want to thank 

both you and Ranking Member Vela ́zquez for holding this important hearing today to discuss SBA’s Disaster Loan Program. 

My questions are for Mr. Rivera. 

Following the killer tsunami of 2009 in American Samoa that 

took over 200 lives, and other natural disasters in the U.S. territories, what were your biggest takeaways regarding how the SBA 

can improve the disaster loan program concerning the U.S. insular 

areas? 

Mr. RIVERA. So as you mentioned, we do provide disaster loan 

assistance in the South Pacific, particularly in Guam and American 

Samoa and Palau and some of the islands in that area. So the biggest challenge we have when we are dealing in the South Pacific 

used to be the communication between having an operation in 

Texas which processes and disburses all of our loans in the Fort 

Worth, Texas office, in relation to the time zone difference that we 

have between the South Pacific, which is a day ahead, compared 

to the Texas operation. But it seems, we had a small disaster earlier this year in Palau that seemed to have worked pretty effectively where we were able to match the time zone differences and 

we shifted our staff to be able to cover the normal day that exists 

out in the South Pacific in relation to our process and disbursement centers in Fort Worth, Texas. 

Ms. RADEWAGEN. What is the average rate of approved versus 

submitted loans from all past disasters? 

Mr. RIVERA. So generally, we run about 50 percent. From our 

perspective, we try to make every loan possible. We are much more 

aggressive. Our disaster credit box is much more aggressive than 

a private sector bank, but we do not want to provide a loan to 

somebody that does not have the ability to repay or has adverse 

credit. In presidential declarations, we do have the opportunity to 

refer these individuals back to the Federal Emergency Management Agency, and they are generally able to get a grant of up to 

$30,000 for unmet needs, and that is a better fit if they are able 

to get a grant versus having to have to repay a loan. But to answer 

your question, we run about 50 percent on average. 

Ms. RADEWAGEN. What are some of the reasons applications 

are not approved and processed? 

Mr. RIVERA. Primary reasons are two. One is lack of repayment 

ability, and the second one is adverse credit. Even though we tend 

to be very aggressive—for example, we score the entire portfolio 

when it comes in. Eighty percent of our loans are to homeowners 

and 20 percent are to businesses. But if you have a really low 

FICO score—back in Katrina, we took 400,000 individuals through 

the entire process. Since then, we bifurcate the process where we 

have the lower credit scores that are not going to have repayment 

ability under our traditional cash flow analysis. We go ahead and 

decline them and refer them back to the grant program. 

Ms. RADEWAGEN. I see. 

Do you find that any of those reasons are specific to American 

Samoa or other United States territories? 

SBREP-219 with DISTILLER

18 

Mr. RIVERA. So the quality of credit, obviously, there is a little 

bit of regionality, but generally speaking, we have—the statistics 

are very similar across the country in relation to American Samoa. 

Ms. RADEWAGEN. Thank you, Mr. Chairman. I yield back. 

Chairman CHABOT. Thank you very much. The gentlelady 

yields back. 

The gentlelady from New York, Ms. Clarke, is recognized for five 

minutes. 

Ms. CLARKE. I thank you, Mr. Chairman. And I thank Ranking 

Member Vela ́zquez. And I would like to thank our witnesses for 

their testimonies today. 

One of the most damaging consequences of climate change is the 

increased frequency and veracity of natural disasters. Super Storm 

Sandy was a brutal reminder of this fact. Losses due to Super 

Storm Sandy topped $75 billion in damages to infrastructure, 

homes, businesses, and communities across the eastern seaboard, 

not including the unfathomable loss of life incurred by the storm. 

We do not know where or when the next super storm will occur; 

only that a storm of that magnitude will inevitably hit the United 

States again. Therefore, it is critical that the disaster response and 

assistance programs are some of the most important and significant programs that we can focus on and vulnerable and distressed 

Americans require that we get this right. We must ensure that 

these programs run efficiently and effectively and not compound 

their hardships. 

So I want to circle back to some of the questions raised—well, 

the main question raised by Congressman Smith, which is a matter 

of financial transparency. And part of the challenge during a crisis 

like this is that when people are distressed, they are looking for 

any help that they can receive. Is there somewhere within the application process that borrowers are informed of restrictions or prohibitions on the use of these funds, and that accepting these funds 

would trigger a prohibition on victims receiving federal grant funding? Because I get the impression, particularly when people are 

under stress, that if one vehicle is moving faster than say another, 

they are just going to go with that vehicle in order to survive, in 

order to recover. If, however, they do not realize that at some point 

in time they are not going to be able to apply to another agency 

or another entity for support, that may govern their behavior. Is 

there something that specifically within the process, in bold letters, 

in red ink, indicates to individuals that if you do this, you will forfeit future opportunities to make you whole? 

I am sorry, that is to Mr. Rivera. 

Mr. RIVERA. Okay, thank you. 

So we follow the Stafford Act sequence of delivery, which is a 

FEMA grant, SBA loans, and any supplemental assistance behind 

it. To answer your question, 90 percent of the applications were 

processed when the HUD supplemental came through, so we were 

90 percent into Super Storm Sandy when the HUD funds started 

becoming available. Since Katrina, the ranking member mentioned 

we have a memorandum of understanding between us and HUD 

similar to the way we have a memorandum of understanding between SBA and FEMA. So there is a lot of transparency between 

the federal agencies from that perspective. 

SBREP-219 with DISTILLER

19 

Ms. CLARKE. I am talking about the individuals, the borrowers. 

Mr. RIVERA. So the individuals. So what we have done since 

Super Storm Sandy, we heard a lot of individuals that did not want 

a loan; they wanted a grant. But we what we have done is we have 

gone in and we have highlighted and bolded, as you suggested—— 

Ms. CLARKE. You are saying since the storm. 

Mr. RIVERA. Since then. 

Ms. CLARKE. So there are a whole bunch of folks out there, and 

I have a constituency that was badly hit. And what I am trying to 

say to you is that it is only human when you have mold growing 

in your home, you are being told that you are going to have to elevate your home, that the first vehicle that offers you some relief, 

that you are going to take it. But if within your documentation you 

indicate to individuals doing this will, in other words, make you ineligible for other opportunities, and people know that upfront, then 

people can make informed choices. 

Mr. RIVERA. Yes, ma’am. We understand. And what we have 

done is we do have that information prior to Super Storm Sandy. 

Ms. CLARKE. Post? 

Mr. RIVERA. Post, we did have that information, but apparently 

it was not as clear enough as we could have made it, so we have 

made it even clearer from a duplication of benefits perspective. If 

you have an SBA loan, that is a sequence of delivery. That is the 

option you have to take the loan versus if there is a grant opportunity behind it. 

Ms. CLARKE. I think that we really need to sort that out, sir. 

Mr. RIVERA. Okay. 

Ms. CLARKE. I mean, the average American in a crisis situation 

is not thinking Stafford Act. They are just not. And I think that 

is a bit much to ask that they do. They are thinking how do I keep 

my elderly well, how do I keep my children secure, how do I get 

my life back together? And oftentimes, the SBA is the most visible 

entity on the ground. You have got a lot of folks out there with 

jackets on saying, ‘‘We can help you.’’ But they do not follow up 

with, ‘‘But if you take our help, here are what some of the implications can be for you.’’ And I think that is critical, that level of 

transparency. 

Chairman CHABOT. The gentlelady’s time is expired. 

Ms. CLARKE. Thank you, Mr. Chairman. 

Chairman CHABOT. You are welcome. 

And if you want to make a response? 

Mr. RIVERA. Yes, ma’am. We understand. And as I have mentioned, we will—and we can work with your office, too, if you want 

to see what we have done to show the transparency and how if we 

provide you a loan, you know, the statute basically says we have 

to provide the assistance from that perspective. 

Chairman CHABOT. Mr. Shear, did you have something to say 

there? 

Mr. SHEAR. No. 

Chairman CHABOT. Okay, thank you very much. 

Okay. The gentlelady’s time has expired. 

The gentleman from Nevada, Mr. Hardy, who is the Chairman 

of the Subcommittee on Investigations, Oversight, and Regulations 

is recognized for five minutes. 

SBREP-219 with DISTILLER

20 

Mr. HARDY. Thank you, Mr. Chairman, Ms. Vela ́zquez, I appreciate the opportunity to discuss this today. 

Mr. Rivera, it was mentioned in Mr. Shear’s testimony that the 

initial backlog of loan applications was due to the SBA not anticipating the loans were to come in such a rapid response. Did we not 

take into account that there are 83 percent of all American adults 

utilize the Internet? 

Mr. RIVERA. Yes, sir, we did. And if I can explain. Eighty percent of our loans were to homeowners. We have this generic goal, 

self-imposed goal of 21 days. We processed those in 24 days, so we 

had 85,000 applications, 80 percent of them were homeowners. We 

did that in 24 days. 

What happened is that generally the home track comes in first 

and then the businesses apply subsequent to the homeowners coming in. So we have bifurcated our process now where we have a 

separate home track from front to end and a separate business 

track from front to end. And I strongly believe that is going to alleviate any sort of pressure points when we have businesses—because we are the Small Business Administration, we need to be 

sure that we service those businesses. They will be serviced first 

in, first out on the business track, at the same time we are addressing the home track with the home loan officers, with the home 

inspectors, with the business inspectors, with the business. So by 

bifurcating that process, we believe that that is going to be—that 

will relieve that 40 day clock down and we will be able to really 

manage it within the 21 days. 

Mr. HARDY. Mr. Rivera, Congress passed the Small Business 

Disaster Response Loan Improvement Act in 2008. The SBA was 

expected to implement all the provisions required in a timely manner. Can you explain why the three provisions have not been fully 

implemented over seven years later? In my opinion, that is far too 

long to take to implement those. 

Mr. RIVERA. So the Disaster Guarantee Loan Programs, as I 

mentioned previously, we have—and we thank Bill Shear and GAO 

for providing us with one of the recommendations, which is something that we thought—which we responded to but we will continue to work with GAO to get the responses clear—the process, 

the methodology was to first look at IDAP and see how IDAP 

works. 

So recently, we met back in October 2014. There is a trade association called the National Association of Government Guaranteed 

Lenders (NAGGL). They are basically the 7(a) lenders. We met 

with 27 banks, three CDCs, and three lender-service providers, and 

we asked what else do we need to do in order for you guys to play 

in the disaster scenario? Because we have done everything from an 

SBA perspective. Our systems, between our disaster system and 

the eTrans system where we fund our loans on the Cap Access 

side, that has been put. We promulgated regs back in 2010 as Mr. 

Shear mentioned earlier. We just cannot get the lenders to take the 

level of risk to provide this IDAP type of mechanism. There are 

issues regarding, you know, from the lender’s perspective. And we 

can provide you with what the NAGGL response was on the board 

from that perspective. 

Ms. VELA ́ ZQUEZ. Would the gentleman yield just for a second? 

SBREP-219 with DISTILLER

21 

So you met with 7(a) lenders and all kinds of lenders. And when 

did you learn that they were not receptive? 

Mr. RIVERA. So this has been an ongoing conversation we have 

had with the lenders since the statute was passed. As a result of 

the GAO report—— 

Ms. VELA ́ ZQUEZ. And so what did you do with that information? Did you send a letter to us to let us know that you were confronting those—— 

Mr. RIVERA. Yes. My understanding is we provided a letter to 

GAO as part of our response. 

Ms. VELA ́ ZQUEZ. No, no, no. We passed legislation here. We 

wrote the law. So if there are—if we need to make some adjustment or some fixes or change regulation, we do it here. But if you 

do not share that type of information with us, how do you expect 

Congress to act? 

Mr. RIVERA. Okay. We can—— 

Ms. VELA ́ ZQUEZ. Thank you. And I yield back. 

Mr. HARDY. Thank you. 

Mr. Shear, in your opinion, if those three other implementations 

you had recommended had been in place prior to Sandy, do you 

think it would have made a lot of difference? 

Mr. SHEAR. I will answer it in two ways. 

Mr. HARDY. Okay. 

Mr. SHEAR. The first part, and we focused on IDAP just because 

the agency came forward with us first in basically 2010 and said 

they were going to develop a pilot on IDAP. It is the easiest one 

to implement. We can do it quickly was the argument. The idea of 

a pilot, we always supported it, and a thoughtful pilot, it could 

serve victims of really major, catastrophic disasters. And so it could 

provide those benefits. But even a relatively small pilot program 

would help inform how programs of this nature can be useful and 

what types of adjustments might be necessary to make those programs useful on a more permanent basis. So that was the major 

opportunity that was given up. 

Part of the reason to have a pilot is to see how well something 

works, and no pilot of any one of these three programs has occurred. So the answer is it could have been very helpful, but the 

opportunity lost was there was nothing in place to see how helpful 

it could have been. 

Chairman CHABOT. The gentleman’s time is expired. 

The gentlelady from North Carolina, Ms. Adams, is recognized 

for five minutes, and she is the Ranking Member of the Investigations, Oversight, and Regulations Subcommittee. 

Ms. ADAMS. Thank you, Mr. Chairman, and thank you Ranking 

Member Vela ́zquez for holding this important hearing. And gentlemen, thank you for your testimony. 

Disaster relief is critically important, as we have heard, to residents who lose literally everything as a result of a natural disaster. 

In my home state of North Carolina, many residents living on the 

Outer Banks were faced with limited routes on and off some of our 

most popular islands as a result of the impact of Hurricane Sandy. 

But in addition to homeowners who were impacted, there are many 

individuals who are business owners who are impacted as well and 

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who worked hard to start their businesses and to expand them, 

only to have to rebuild them after the storm. 

Mr. Rivera, my question to you is, according to the bipartisan 

task force for Hurricane Sandy, many applications for SBA Disaster Loan Programs were required to use their residence as collateral. What percentage of business owners used their personal residences as collateral to obtain the SBA Disaster Loan in response 

to Hurricane Sandy? And how does that percentage compare to 

other disasters? 

Mr. RIVERA. I do not know the statistics for North Carolina in 

relation to how many residences we take as collateral when we 

have a business loan, but our policy is when we have a business 

loan, we take best available collateral, and if you are one-to-one, 

we do not pursue the residence as collateral from that perspective. 

We have changed our SOP where we have loosened up our guidelines where we are just not making the residence as collateral as 

the primary source of collateral. If there is sufficient business assets to get you to a reasonable place where we are collateralized, 

we will use the business assets and bypass the residence. 

Ms. ADAMS. So in the event that a business owner uses their 

personal residence as collateral and they defaulted, what options 

are provided for those persons? 

Mr. RIVERA. So looking back, it is a little bit harder for us to 

forgive any collateral that we have in place, but I mean, we can 

obviously have that discussion on a case-by-case basis and see what 

the situation is with each individual disaster survivor. 

Ms. ADAMS. Okay. Mr. Rivera, would you describe the general 

process by which a business owner must apply for an SBA disaster 

loan, how that compares to the process business owners had to 

take for Hurricane Sandy? 

Mr. RIVERA. So our current process, it is the same across the 

board. What we do is we provide the electronic loan application. It 

is a two-page application, front and back. It is very similar to a 

credit card application. It is SBA Form 5. We ask that you fill it 

out. We ask that you complete the IRS release form. We do not ask 

for copies of tax returns. We ask for a copy of a tax transcript that 

enables us to get copies of the tax transcripts from the IRS directly. 

And then we also ask that they provide us with any sort of personal information that they have, like a personal financial statement, so forth and so on. But we do provide * we have a call center 

that is open up in Buffalo, New York. For example, this year, we 

have taken about 125,000 phone calls and this has been a low year 

from a disaster perspective. And we provide on-the-ground support 

when there is a disaster recovery center to meet face-to-face. We 

also use our resource partners, our SBDCs, our WBCs, and our 

SCORE partners that help us on the ground that can help with any 

additional requests we have as far as any additional documentation 

that we need. 

Ms. ADAMS. So the earlier question that I asked regarding the 

numbers in North Carolina, if you could provide those for me I 

would appreciate it. 

Mr. RIVERA. Yes, ma’am. I will. 

Ms. ADAMS. Thank you. 

Mr. Chairman, I yield back. 

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Mr. Chairman, I yield back. 

Chairman CHABOT. Thank you very much. The gentlelady 

yields back. 

The gentleman from New Jersey, Mr. Payne, is recognized for 

five minutes. 

Mr. PAYNE. Thank you, Mr. Chairman. And to our ranking 

member, I appreciate all her hard work over the years on this 

Committee. 

Mr. Rivera, just to follow up on something my colleague, the 

gentlelady from New York, Ms. Clarke, brought up. In my information in preparing for this Committee hearing, there was an Associated Press article from December 14, 2014, called ‘‘Buyer’s remorse: 

Loans impacting grant money for Sandy victims.’’ And it talks 

about a homeowner that applied for your loan and got the loan, 

and subsequently, the loan repayment cost was a bit much for her 

and she was looking to possibly apply for some grants from some 

other area of FEMA, what have you, and was then told that, well, 

since you took that loan, you are ineligible. And I think that is the 

point that the gentlelady from New York was making, is that, you 

know, until it came down to it and she looked for other avenues, 

she did not realize that that disqualified her for any other type of 

help. So I think what we are asking is you need to make that clear 

to these loan applicants up front that this potentially disqualifies 

you from any other grants that you could possibly receive. I think 

that is the clearest way to make it—people do not understand that 

when they take this loan, it disqualifies them or they are not capable of accessing other governmental programs. Okay? 

Mr. RIVERA. Yes, sir. Understood. 

Mr. PAYNE. All right. 

You know, Mr. Shear, in your testimony, you noted that Super 

Storm Sandy, the approval rate for business loans was higher than 

for Hurricane Ike and comparable to Irene. However, the approval 

rate was lower than for Katrina, Rita, and Wilma. Just in New Jersey, we almost lost approximately 200,000 businesses. Can you 

shed some light on why the approval rating varied so much? 

Mr. SHEAR. I cannot address your specific question because it 

was not like we analyzed basically individual loan applications, the 

credit histories of the borrowers, or what information was submitted from the standpoint of ability to repay. So we noticed a 

similar pattern, but I cannot explain why in this disaster the approval rate was 42 percent rather than something either higher or 

lower. 

Mr. PAYNE. Okay. All right. Thank you, sir. 

Let us see. Mr. Rivera, it looks like of the 14,558 original business loan applications that were submitted, 4,715 were withdrawn. 

Of that figure, the SBA was actually responsible for withdrawing 

almost 3,000. In New Jersey, it is estimated that small businesses 

incurred approximately $3.5 billion in damages and the SBA issued 

$819 million, roughly 25 percent of the need. Can you elaborate on 

why the SBA would withdraw an application, and what alternative 

services were offered to the small business owners in need of disaster relief? 

Mr. RIVERA. Yes, sir. 

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In situations where we offer—we will make a loan commitment 

to a business, so we give them up to 60 days if they want to accept 

the loan commitment. And often, they do not like the terms of the 

conditions, and we will go back and we will try to rework the debt 

with them to see if we can make the payment more affordable. Or 

they will collect insurance and they will not want to secure their 

business assets because they do not want to have an SBA loan, because our debt is debt on top of debt. It is not to improve working 

capital. It is not for new facilities to expand to increase their working capital. Our debt is basically to take them back to where it was 

pre-disaster, or as close to it as we can pre-disaster. So we often 

run across situations where somebody will have some insurance 

and they will decide based on their insurance recovery that they 

do not want to take any additional debt so they will go ahead and 

withdraw their application or cancel their application and they will 

say they will just go ahead and work from a smaller insurance recovery than they will with the SBA loan. 

Chairman CHABOT. The gentleman’s time is expired. The 

gentlelady from New York, Ms. Meng, who is the Ranking Member 

of the Agriculture, Energy, and Trade Subcommittee, is recognized 

for five minutes. 

Ms. MENG. Thank you, Mr. Chairman. Thank you to our ranking member for your hearing on this issue. 

Obviously, this is something that has affected people from all 

across the country, but specifically, many of our constituents in 

New York. I wanted to get a better understanding of how the interest rates for disaster loans compare to other similar SBA small 

business loans. How are the interest loans determined and if there 

is any uniformity of that process from disaster to disaster? 

Mr. RIVERA. So we determine our interest rates on a quarterly 

basis. It is a statutory formula. It is based on treasuries compared 

to, for example, the 7(a) program where it is prime plus whatever. 

We are capped statutorily at 4 percent and 8 percent. Our current 

home rate is running around 2 percent—2 percent for no credit 

elsewhere, 4 percent for credit elsewhere. And 90 percent of our 

loans are no credit elsewhere, so it is the lower rate. On the business side, we run the two rates of 4 percent and 6 percent, which 

prime is at, what, 2-3/4, so it is a point and a quarter over prime 

from that perspective. It is a fixed loan, fixed interest rate, and it 

is a fixed term also, so we can expand terms up to 30 years on a 

no-credit-elsewhere loan. 

Ms. MENG. So it is different for homeowners and for small businesses? 

Mr. RIVERA. Yes, ma’am. It is two different calculations based 

on the statutory definitions we have. 

Ms. MENG. And traditionally, it is lower for homeowners? 

Mr. RIVERA. Yes, ma’am. It is generally lower. 

Ms. MENG. Compared to small businesses? 

Mr. RIVERA. Mm-hmm. 

Ms. MENG. Regardless of the earnings of the small business? 

Mr. RIVERA. Yes, ma’am. 

So we can make loans to businesses of any size, and often, if it 

is a large business, they will have a credit-elsewhere loan, so it will 

be a 6 percent loan, and it terms out at seven years, where often 

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they can borrow cheaper with commercial paper or with their lender themselves. They may be a prime borrower, and if prime is at 

2-3/4 and they are getting a 6 percent rate, they will not want our 

terms and conditions. 

Ms. MENG. Okay. Thank you. 

I yield back. 

Chairman CHABOT. The gentlelady yields back. And I now yield 

to the Ranking Member to make a statement. 

Ms. VELA ́ ZQUEZ. Thank you, Mr. Chairman. 

I would just like to ask Mr. Rivera that you submit for the record 

a Sandy era loan application that was filled out by an applicant 

during Sandy. Not the actual one that you have. 

Mr. RIVERA. Yes, ma’am. We can do that. 

Ms. VELA ́ ZQUEZ. Thank you. 

Chairman CHABOT. Thank you very much. 

And I want to thank you both for participating this afternoon. 

And as we have heard, the SBA serves a vital role in helping communities rebuild following a disaster. The Committee understands 

that is no easy task, but it is of utmost importance. It is imperative 

that the SBA continue to improve its process to ensure that future 

disaster victims are able to secure the necessary loans that they 

need, and the Committee will continue to monitor the SBA’s 

progress. 

And I would ask unanimous consent that Members have five legislative days to submit statements and supporting materials for the 

record. And if there is no further business to come before the Committee, we are adjourned. 

Thank you very much. 

[Whereupon, at 12:24 p.m., the Committee was adjourned.] 

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A P P E N D I X 

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Good morning Chairman Chabot, Ranking Member Velazquez, 

and distinguished members of the Committee. Thank you for inviting me to discuss SBA’s Disaster Loan Program. SBA appreciates 

your strong support of the agency’s disaster operations and your 

continued leadership in making our country better equipped to deal 

with natural and other disasters. 

I am James Rivera, the Associate Administrator for the SBA Office of Disaster Assistance (ODA). ODA is responsible for providing 

affordable, timely and accessible financial assistance following a 

disaster to businesses of all sizes, private non-profit organizations, 

homeowners, and renters. This financial assistance is available in 

the form of low-interest loans, and since SBA’s inception in 1953, 

we have provided 2 million loans for more than $53 billion dollars. 

SBA’s Role in Responding to a Disaster: 

SBA is not a ‘‘first responder’’ agency even though we are on the 

ground in the immediate aftermath of a disaster. SBA’s primary 

focus is providing low-interest, long term loans as part of the recovery effort in coordination with other government partners at all 

levels. As part of an overall effort to assist survivors to get back 

on their feet, SBA’s disaster home loans of up to $240,000 help 

local community residents return and rebuild their homes. Moreover, nonprofits and businesses of all sizes are eligible for loans of 

up to $2 million dollars. 

Additionally, SBA offers Economic Injury Disaster Loans (EIDL) 

to small businesses, small agricultural cooperatives, and most private non-profit organizations who have suffered economic injury 

caused by a disaster. These loans provide working capital to a business or organization until normal operations can resume following 

a disaster. 

Preparedness and SBA’s Key Improvements to the Disaster Assistance Program: 

SBA has made a number of improvements in recent years that 

have allowed us to better respond to disaster survivors. First, we 

have streamlined application forms and implemented a redesigned 

electronic loan application—which has led to a more transparent 

and efficient application process. 

Over the past several years, SBA has seen significant increases 

in its Electronic Loan Application (ELA) activity. In Fiscal Year 

2014, 79 percent of SBA disaster loan applications were submitted 

online using ELA, which was a substantial increase from previous 

years—27 percent in Fiscal Year 2011, 36 percent in Fiscal Year 

2012 and 55 percent in Fiscal Year 2013. ELA activity continues 

to increase in Fiscal Year 2015, currently at 83 percent. The steady 

increase of ELA activity reflects the improvements made by SBA 

to streamline its online application and ensure that disaster survivors have access to ELA and program information. SBA’s electronic loan application provides disaster survivors with immediate 

access to the disaster loan application and helps to ensure they 

have access to much needed disaster funds at the soonest possible 

time following a declared disaster. 

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Second, SBA has taken several steps to enhance its communication strategy and improve customer service to disaster survivors. 

Effective and clear communication to the public about the availability of disaster loans is critical to ensure that disaster survivors 

have access to funds for repairing and rebuilding homes and businesses at the soonest possible time after a declared disaster. 

In 2014, SBA launched a new communications plan referred to 

as ‘‘The Three Step Process’’ when seeking SBA disaster loan assistance: Step 1) How do you apply for loan; Step 2) How do we 

verify your property and process your loan; and Step 3) How the 

loan is closed and funds disbursed. The new strategy ensures that 

disaster survivors have a clearer understanding of the steps involved when seeking SBA disaster loan assistance. 

SBA also made another important improvement in its communication with disaster survivors in Fiscal Year 2014 by increasing 

direct contacts with potential disaster loan applicants. SBA now 

calls all disaster survivors referred by the Federal Emergency Management Agency (FEMA) to SBA within 48 hours and informs them 

of the availability of disaster loan assistance and the various ways 

to apply, including: 1) online using SBA’s Electronic Loan Application (ELA); 2) in-person at a disaster recovery center; and 3) by 

mail. SBA supplements initial phone calls with follow-up calls, 

emails and in some cases a letter sent by mail. By increasing the 

number of direct contacts with potential disaster loan applicants, 

SBA helps to ensure that disaster survivors are aware of the availability of SBA disaster loan assistance and informed about the various ways to apply for assistance. 

Third, SBA has implemented separate home and business loan 

processing tracks in order to mitigate processing delays in the future. After a disaster, homeowners normally apply for loans faster 

than small businesses. Typically, small business owners first assess 

the economic damage to their businesses caused by disrupted supply chains, displaced consumers, structural damage, inventory loss, 

and a range of other complex factors. As a result, businesses tend 

to apply for disaster loans later than homeowners and renters. Separate home and business loan processing tracks helps to ensure 

that business applicants do not face long delays as a result of submitting applications behind a large number of home loan applications which are being processed in the order they were received. 

Fourth, in April 2014, SBA implemented a new regulatory that 

allows for a modified approval process (RAPID) for both home and 

business loans. In keeping with private lending practices, SBA recognized that applicants with higher credit ratings could generally 

be processed more quickly. The new RAPID approval process considers the applicant’s credit without the need to complete the entire 

cash flow analysis and was made effective for disasters declared on 

or after April 25, 2014. Because the RAPID approval process provides an expedited processing channel for home and business loans, 

it also has the potential to ease the stress on SBA loan processing 

resources used to process files that require more time to complete. 

As part of the regulatory change implementing the new RAPID 

approval process, SBA also raised the unsecured loan limit from 

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$14,000 to $25,000 on home and business physical disaster loans 

for Presidential (major) disaster declarations, and from $5,000 to 

$25,000 on EIDL loans for all declarations. The increased unsecured loan limit allows SBA to disburse more funds to disaster survivors faster which not only helps homeowners and businesses to 

jumpstart their rebuilding project, it could also help to speed up 

the recovery of businesses that offer critical services in communities. 

On July 1, 2015, we released SOP 50 3 8, Disaster Assistance 

Program, a complete re-write of our standard operating procedures 

which brings a ‘‘back-to-basics’’ approach to SBA’s loan making 

processes. The refreshed SOP collects for the first time our efforts 

made over the last several years to improve the disaster survivor’s 

experience when applying for disaster loan assistance in several 

meaningful ways, including streamlining processes to help facilitate faster loan processing and disbursements, adding more underwriting flexibility to extend disaster loan assistance to more survivors, and helping business owners and homeowners in communities rebuild and prepare for future disasters. In an effort to improve the overall customer experience for disaster survivors, we 

have introduced new changes to the process and removed countless 

redundancies in the new SOP. 

Response to Superstorm Sandy 

A number of these improvements were made in response to lessons learned as a result of Superstorm Sandy. The effects of the 

devastation caused by Sandy were far-reaching. SBA approved 

more than $2.4 billion in disaster loans to help nearly 37,000 

homeowners, renters, businesses and non-profit organizations recover and rebuild. 

As reflected in SBA’s Disaster Preparedness and Response Plan, 

ODA currently maintains 1,750 workstations in the Fort Worth 

processing and disbursement center and 350 more surge 

workstations in our Sacramento disaster center. During Sandy, we 

not only used the Ft. Worth location and our Sacramento surge 

space, but also expanded the loan processing footprint to include 50 

workstations at the Buffalo Call Center. At the height of the response to Sandy, we had 2,451 employees engaged in disaster response. Additionally, SBA responded to the needs of residents and 

business owners by deploying 695 SBA disaster assistance workers 

and field inspectors to staff 248 Disaster Recovery Centers located 

throughout the East Coast. At these centers, SBA representatives 

provided one-on-one service to disaster survivors and personally 

met with disaster survivors to answer questions, explain SBA’s disaster loan program and help complete disaster loan applications 

and close disaster loans. As such, during Sandy, SBA had more 

than 152,700 contacts in the field. 

Superstorm Sandy disaster survivors in New York, New Jersey, 

Connecticut, Rhode Island, and Maryland—all of which received 

Presidential Disaster Declarations—were able to apply for home 

and business disaster loans online or in person at any of the Disaster Recovery Centers throughout the region. Disaster survivors 

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could also apply for business disaster loans at any of the 49 Business Recovery Centers (BRCs) run by SBA with additional assistance from local resource partners such as SBDCs, SCORE, and 

Women’s Business Centers. Additionally, North Carolina, Virginia, 

West Virginia, and Puerto Rico received SBA Administrative Disaster Declarations, making affected homeowners, renters, and businesses eligible for SBA disaster assistance. 

Many disaster survivors do not have easy access to television, 

radio or the internet. To address these situations, SBA has a telephone hotline, which also provides language translation services. 

For Superstorm Sandy, our Disaster Customer Service Call Center 

in Buffalo, New York, responded to over 212,200 calls with minimal 

wait times. 

In closing, I appreciate the opportunity to update this Committee 

on SBA’s disaster recovery effort for Superstorm Sandy and recent 

improvements to the Disaster Loan Program. We firmly believe 

that the reforms we have instituted have enabled us to be prepared 

to efficiently and effectively respond to the needs of our nation’s 

disaster survivors. I look forward to answering any questions. 

Thank you. 

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