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S. HRG. 111–1173 

OVERSIGHT OF THE SBA DISASTER ASSISTANCE 

PROGRAM 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS AND 

ENTREPRENEURSHIP 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

MAY 19, 2010 

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 ELEVENTH CONGRESS 

MARY L. LANDRIEU, Louisiana, Chair 

OLYMPIA J. SNOWE, Maine, Ranking Member 

JOHN F. KERRY, Massachusetts 

CARL LEVIN, Michigan 

TOM HARKIN, Iowa 

JOSEPH I. LIEBERMAN, Connecticut 

MARIA CANTWELL, Washington 

EVAN BAYH, Indiana 

MARK L. PRYOR, Arkansas 

BENJAMIN L. CARDIN, Maryland 

JEANNE SHAHEEN, New Hampshire 

KAY R. HAGAN, North Carolina 

CHRISTOPHER S. BOND, Missouri 

DAVID VITTER, Louisiana 

JOHN THUNE, South Dakota 

MICHAEL B. ENZI, Wyoming 

JOHNNY ISAKSON, Georgia 

ROGER F. WICKER, Mississippi 

JAMES E. RISCH, Idaho 

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 

Snowe, Hon. Olympia, a U.S. Senator from Maine ............................................... 2 

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

WITNESSES

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

Small Business Administration .......................................................................... 5 

Shear, William, Director, Office of Financial Markets and Community Investments, U.S. Government Accountability Office ................................................. 12 

Bergeron, Jaimie, Owner, Fleur-de-Lis Car Care Center .................................... 29 

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Bergeron, Jaimie 

Testimony .......................................................................................................... 29 

Prepared statement .......................................................................................... 31 

Landrieu, Hon. Mary L. 

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

Rivera, James 

Testimony .......................................................................................................... 5 

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

Responses to post-hearing questions from Chair Landrieu .......................... 46 

Shear, William 

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

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

Snowe, Hon. Olympia 

Opening statement ........................................................................................... 2 

Vitter, Hon. David 

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

(1) 

OVERSIGHT OF THE SBA DISASTER 

ASSISTANCE PROGRAM 

WEDNESDAY, MAY 19, 2010 

UNITED STATES SENATE, COMMITTEE ON SMALL BUSINESS

AND ENTREPRENEURSHIP, Washington, DC. 

The committee met, pursuant to notice, at 11:11 a.m., in Room 

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

Chair of the Committee, presiding. 

Present: Senators Landrieu, Hagan, Snowe, and Vitter. 

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

AND A U.S. SENATOR FROM LOUISIANA 

Chair LANDRIEU. Good morning. I would like to call this Oversight Committee of the Small Business Committee together for the 

purposes of our ongoing work in the oversight of the Disaster Assistance Program. 

I am very pleased to have this panel before us today to provide 

some updates and insights into that effort. We have with us SBA 

Associate Administrator James Rivera, we have William Shear 

from the GAO, and, most especially, we have Ms. Jaimie Bergeron 

from New Orleans, owner of Fleur-de-Lis Car Care Center. 

I welcome you, especially Ms. Bergeron, this morning. The 

Bergerons are an example of one of the pioneer businesses that I 

have spoken of so often since this disaster, and I think her testimony is going to be extremely meaningful to the Committee and 

our work today. 

We are focused today on the advancements that we have made 

in our response to disasters. I believe one of the most important responsibilities of this Committee is to ensure that the SBA is fully 

staffed, better prepared and ready to provide quick assistance to 

businesses following disasters. We, obviously, have one continuing 

to unfold in the Gulf of Mexico, putting some of the same businesses that were at risk after the Katrina/Rita devastation and the 

breaking of our Federal levee system. Some of those same businesses are being tested now. We have had unprecedented floods in 

Tennessee and in Rhode Island. So I hope that our new efforts are 

going to pay off. 

Unfortunately, in the past, there have been some terrible stops 

and starts. After the 2005 storms, it took 90 days to process a 

home loan, 70 days to process a business loan, even longer for disbursements for disaster funding. SBA used to required disaster victims to supply mountains of tax records when the SBA and the 
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Federal government should obviously have been able to get some 

of these tax records themselves. That process has been changed. 

As we sit here today, we are less than two weeks away from the 

2010 Atlantic hurricane season. I also mentioned what we have already seen in Rhode Island and Tennessee. 

So I want to say in conclusion that I am proud to have helped 

to lead the efforts of some reforms that have been put into place 

to date. We are looking forward, Mr. Shear and Mr. Rivera, to your 

testimony. But I am also going to continue to press for additional 

relief and support for our small businesses when they are faced 

with not just the economic pressures of the current underlying 

weak economy in our Country, but in addition to that, they are 

faced with these immediate situations before them. Please try to 

provide some testimony this morning in that regard. 

So I am going to turn it over to Ranking Member Snowe. 

OPENING STATEMENT OF HON. OLYMPIA J. SNOWE, A U.S. 

SENATOR FROM MAINE 

Senator SNOWE. Thank you very much, Chair Landrieu, for holding this oversight hearing on SBA’s Disaster Assistance Program, 

which is certainly timely given what is occurring in the Gulf. 

As Ranking Member of the Committee, I join the Chair in welcoming our panelists here today, the SBA Associate Administrator 

for Disaster Assistance, James Rivera; Government Accountability 

Office Director Bill Shear; and Ms. Jaimie Bergeron, from Fleur-deLis Car Care Center in New Orleans, Louisiana. 

We thank you for taking time away from your business, Ms. 

Bergeron, to fly here to Washington. I know that you have had 

your share of experiences with the SBA’s disaster programs, and 

we thank you for your willingness to provide your accounts in 

terms of your experiences. I know you have also had to deal with 

numerous disasters, between Hurricanes Katrina, Rita and Wilma 

in 2005, the Hurricanes Gustav and Ike in 2008, and now the 

Deepwater Horizon oil spill which is fast becoming the worst offshore environmental disaster in the history of this Nation. 

I know in future hearings we hope to hear from the CEO of BP, 

Mr. McKay, who was present at the Commerce Committee, on 

which I serve, yesterday. But certainly we need to know how the 

company is going to be compensating small businesses for their 

losses and what the level of liability BP is committed to as this bill 

continues, and the economic impact, not to mention the environmental impact, continues to grow. 

I assure that as former Chair, now Ranking Member, of this 

Committee, I have witnessed the good, bad and the ugly when it 

comes to the SBA’s response to natural disasters. In the days and 

months and even a year after Hurricanes Katrina and Rita devastated the Gulf Coast back in 2005, I saw the worst side of the 

Federal Government—slow, inefficient and incompetent. 

At the time I was Chair of this Committee and through our tireless efforts, including trips to the Gulf, as my colleagues will recall 

and the Chair will, convening aggressive oversight hearings and 

forging numerous pieces of legislation, we were ultimately successful in including into the 2008 Farm Bill key provisions to address 

many of the fundamental flaws in the SBA’s Disaster Assistance 
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Program, which was important to both of my colleagues who of 

course represent the State of Louisiana, and Senator Vitter as well. 

This legislation was critical, learning from all of that experience 

how essential these reforms were, such as ensuring that the SBA 

maintain adequate loan processing staff and reserve employees 

who can be called upon to respond to these disasters in a timely 

fashion. 

I am very pleased that our aggressive oversight and reforms resulted in a streamlined, improved Agency that is much better prepared today to help victims of natural disasters recover and rebuild. But unfortunately, the job certainly is not complete, and according to the testimony, I am sure we are going to hear from Mr. 

Shear today regarding this. 

According to the GAO, the SBA has only fully met 15 of the 26 

requirements of the 2008 Farm Bill and has missed deadlines on 

5 of the major components of this law. With the SBA currently responding to disasters in Tennessee, where very few people have 

flood insurance, in addition to Rhode Island, Mississippi, California, Kentucky, Massachusetts, New Jersey, West Virginia and 

American Samoa, the Agency must show more urgency in fully implementing all of the reform requirements. 

The GAO has been generally positive about the SBA’s initial response after the 2008 Midwest floods and Hurricane Ike, the 2 

largest disasters since the 2005 Gulf hurricanes. 

And I hope that we hear today that the SBA is fully equipped 

to mount an effective and rapid response to the next catastrophic 

disaster, not to mention the one that is currently underway, and 

how that is going to work with BP, and making sure we extend assistance to small businesses in an effective and efficient way. 

I also look forward to hearing from Mr. Rivera and the SBA 

about the Agency’s response to these recent and ongoing disasters, 

and specifically: 

How many SBA disaster reserves have been activated nationwide? 

Has the SBA improved the application process and simplified the 

burdensome paperwork requirements? 

Why has the SBA not implemented the private Disaster Loan 

Program which was created in the 2008 Farm Bill? 

What are the capabilities of the Disaster Credit Management 

System and is it ready for another disaster the size of Katrina? 

At the current pace of disaster declarations, how much of the disaster loan fund does the SBA expect to spend by the end of this 

fiscal year? 

In addition to these issues, I also hope, Mr. Rivera, that you address the SBA’s response to reports issued by the Agency’s Inspector General last fall, indicating that the SBA is failing to protect 

taxpayers’ dollars by not ensuring compliance with insurance requirements on collateral used to secure loans and for not correctly 

applying insurance offsets to loan balances. As the Federal Government takes increasing responsibility from the States when it comes 

to disaster recovery and response, as has been the trend in recent 

years, we must ensure that taxpayer dollars are protected and used 

efficiently. 
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Today’s hearing represents an opportunity to look ahead, and ensure the SBA is prepared for the hurricane season and is able to 

mount a more comprehensive and aggressive response to future 

disasters. It is paramount that we do not relent in our oversight 

of these programs. 

Thank you, Madam Chair. 

Chair LANDRIEU. Thank you. 

Senator Vitter. 

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

SENATOR FROM LOUISIANA 

Senator VITTER. Thank you, Madam Chair, for calling this hearing. It is very important, and I welcome all of our witnesses, particularly Jaimie Bergeron from Lakeview in New Orleans. I am 

very interested to hear all your testimony. 

I also want to thank Administrator Mills. I talked with her in 

the last few weeks about an aggressive SBA response to the current crisis in the Gulf, and we have gotten significant action that 

I have suggested, and Senator Landrieu and others have suggested, 

including the deferral of loan payments of Katrina and Rita loans 

by people who are now underwater because of this current crisis 

and also new loan opportunities that many others need. 

In addition to that, I would ask that we make part of this discussion the not just authority, but mandate that the President set up 

a quick loan program for fishermen and others in the fisheries industry, under the OPA bill. Again, that is not just an authority or 

a possibility. That is a mandate that he do that. I think that would 

give additional quick relief to folks hard hit in that industry as 

they deal with the BP claims process, and I would ask when that 

is going to happen because again, that is not simply a possibility 

open to the President. It is a mandate under OPA. 

And I look forward to all of your testimony. Thank you. 

Chair LANDRIEU. Thank you. 

Let me begin just briefly introducing the panel. Our first witness, 

James Rivera is Associate Administrator, as has been said. He 

started his career in 1989 as a disaster loan specialist in one of the 

regions. So he comes with a great deal of experience this morning. 

Mr. Shear joins us today from GAO. Mr. Shear is Director of the 

Office of Financial Markets and Community Investment. He is 

overseeing numerous reports addressing the SBA, Federal Housing 

Administration as well as the Rural Housing Service. 

And last, but certainly not least, at my specific request, Ms. 

Jaimie Bergeron is here. And I want to say, besides her experience 

as an insurance adjuster and her own professional experience as a 

small business owner, her personal story as the Katrina saga unfolded was extremely moving to me, having visited her place of 

business on any number of occasions, and her husband, Ray 

Bergeron. And what they went through, I mean Senator Snowe, to 

try to just reestablish their business is truly an amazing and moving business. 

So I am thrilled that you are here, Ms. Bergeron, to really put 

a face and the fabric and the texture behind what we talk about 

today. 

So let us begin with, Mr. Rivera, with your testimony. 
5 

STATEMENT OF JAMES RIVERA, ASSOCIATE ADMINISTRATOR, 

OFFICE OF DISASTER ASSISTANCE, U.S. SMALL BUSINESS 

ADMINISTRATION 

Mr. RIVERA. Good morning, Chair Landrieu, Ranking Member 

Snowe and members of the Committee. Thank you for inviting me 

to discuss the SBA efforts with disaster assistance and recovery. 

The SBA is responsible for providing affordable, timely and accessible financial assistance following a disaster to businesses, 

homeowners and renters. This is available in the form of low interest loans. Since the SBA was created in 1953, we have provided 1.9 

million disaster loans for more than $48.5 billion. 

Today, we have about 1,300 employees with a reserve force of 

over 2,000. These staff members help provide disaster loans of up 

to $200,000 to help homeowners rebuild. We also make loans to 

nonprofits and businesses of all sizes for up to $2 million, to assist 

with any uninsured or otherwise uncompensated physical loss sustained during a disaster. 

More importantly, we offer Economic Injury Disaster Loans to 

small businesses, small agricultural cooperatives and nonprofit organizations who cannot find credit in the conventional markets. If 

a business is unable to meet its obligation and pay its ordinary and 

necessary operating expenses due to a disaster, these working capital loans help provide a low interest rate of 4 percent for up to 30 

years. The maximum loan amount is $2 million combined for both 

physical and economic injury disaster loans. 

In 2009, SBA successfully responded to 25 presidential individual 

assistance declarations, 40 agency declarations, 15 economic injury 

declarations and 148 Secretary of Ag declarations. In total, we approved over 21,000 disaster loans for over $1.1 billion. 

This year, as a result of the Deepwater Horizon BP oil spill, 

small business owners in the Gulf Region who work in fishing, seafood retail, boatyards, shipping companies, processing plants and 

other coastal small businesses may face financial losses from having to shut down or interruptions in their operations due to the oil 

spill. While small businesses harmed by the BP Horizon oil spill 

disaster should seek compensation from responsible parties, SBA 

has a role in helping small businesses affected by the disaster, particularly if there is any delay in receiving payments for claims. 

SBA is ready to assist these businesses by making Economic Injury 

Disaster Loans for them in the States of Louisiana, Mississippi, 

Alabama and Florida. This provides vital bridge financing. 

Currently, SBA has 25 loan outreach centers in the impacted 

areas to meet the small business owners and answer questions 

about SBA loans. Small business owners can visit one of these centers or can apply online through our electronic loan application, 

which was introduced in August of 2008 and now accounts for onethird of all applications submitted. 

We are also supported by the Small Business Development Centers who provided staff to assist fishermen and other small businesses impacted by the Deepwater Horizon BP oil spill in filing potential claims. 

In addition, we are allowing existing SBA disaster borrowers to 

request a deferment, and we are strongly encouraging our private 
6 

lending partners to consider deferment relief for borrowers with 

SBA traditional non-disaster loans. 

I should also note that SBA is currently responding to 38 other 

disaster declarations, including flooding in Tennessee where we 

currently have 17 disaster locations responding to the event. 

Furthermore, I want to emphasize that we have made dramatic 

improvements to our disaster operations since 2005 and Katrina. 

For example, we are currently meeting our processing goal by turning around applications within 7 days for disaster home loans and 

within 14 days for disaster businesses. To put this into perspective, 

the average processing time during the 2005 Gulf Coast hurricanes 

was 74 days for disaster home loans and 66 days for businesses. 

We have also increased the number of work stations for our disaster employees from 360 to 1,750, and we have brought an online 

surge capacity of 350 additional work stations in Sacramento. 

We have also improved the Disaster Credit Management System 

which now gives us the technology to serve up to 10,000 concurrent 

internal users, up from 1,500. 

Finally, we have invested in more front-end training, marketing 

and outreach to improve our preparedness for and our response to 

disasters. We have even brought together focus groups of Americans who have been directly affected by disasters to help us learn 

what works and what does not. 

I appreciate the opportunity to share with the Committee the 

role SBA plays in recovery. We believe that we are prepared to effectively and efficiently respond to the needs of the disaster victims, and I look forward to your questions. Thank you. 

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

Mr. Shear. 

STATEMENT OF WILLIAM SHEAR, DIRECTOR, OFFICE OF FINANCIAL MARKETS AND COMMUNITY INVESTMENTS, U.S. 

GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. SHEAR. Thank you, Chair Landrieu, Ranking Member Snowe 

and members of the Committee. It is a pleasure to be here today 

to discuss our work at the Small Business Administration. 

To complete my statement, we reviewed and updated our report, 

‘‘Small Business Administration: Additional Steps Should Be Taken 

to Address Reforms to the Disaster Loan Program and Improve the 

Application Process for Future Disasters.’’ We issued this report in 

July of 2009. 

After the 2005 Gulf Coast hurricanes, many deficiencies were exposed in the Agency’s Disaster Loan Program and demonstrated 

the need for reform. Since then, SBA has taken several steps to reform its Disaster Loan Program, which includes creating an online 

loan application and increasing the capacity of its Disaster Credit 

Management System. 

In June, 2008, Congress enacted the Small Business Disaster Response and Loan Improvements Act, which placed new requirements on SBA to ensure that the Agency is prepared for future catastrophic disasters. 

In my statement today, I will summarize first the extent to 

which SBA has addressed the requirements of the Act and, second, 

how SBA’s response following the major disasters of 2008 aligned 

with key components of its June, 2007 Disaster Recovery Plan. 

First, with respect to addressing the requirements of the Act, the 

SBA has met 15 of 26 requirements of the Act and partially addressed 6. The remaining 5 provisions do not require action. You 

can see the figure on Page 5 of my statement which shows, I say, 

a lot of small print about summarizing SBA’s progress. 

Since July, 2009, when we issued our report, SBA has taken a 

number of actions. For example, the Agency issued an updated 

DRP in November, 2009. In addition, SBA issued regulations on coordinating with FEMA on timely submission of disaster assistance 

applications. 

With respect to provisions that have been partially addressed, 

SBA has taken steps to address the Act’s requirements for region 

specific marketing and outreach. For example, SBA has begun a 

dialogue with the SBDC State Directors in the Gulf Coast about 

disseminating disaster planning information in the five most hurricane-prone States before the hurricane season begins. However, 

these steps have not been discussed in public documents or venues, 

such as in the DRP or on the SBA web site, which would make the 

information more transparent and easily accessible to the public 

and Congress. 

In our July, 2009, we recommended that SBA develop procedures 

for regional entities that would enable SBA to meet all region specific requirements of the Act. SBA officials told GAO the Agency 

has not yet completely addressed some provisions that require new 

regulations because to do so the Agency must make extensive 

changes to current programs or implement new programs. For two 
13 

requirements that will involve private lenders, SBA plans to implement pilots before finalizing regulations. One pilot for the Intermediate Disaster Assistance Program is expected to be in place by 

September of this year. 

In our July, 2009 report, we recommended that SBA develop an 

implementation plan and report to Congress on the Agency’s 

progress in addressing all requirements within the Act. Such a 

plan could improve transparency, thereby making it clear how well 

prepared SBA is to manage catastrophic disasters. 

Now I will briefly address our second objective, addressing how 

SBA’s response to major disasters in 2008 aligned with key components of its June, 2007 Disaster Recovery Plan. 

SBA’s initial response after the 2008 Midwest floods and Hurricane Ike aligned with certain components of its initial DRP, such 

as using technology and outreach efforts to ensure timely assistance. The individuals GAO interviewed and results from SBA’s 

2008 Disaster Loan Program Customer Satisfaction Survey provide 

some positive feedback about SBA’s performance following recent 

disasters. 

However, interviewees and survey results indicated areas for improvement. In particular, both indicated that application paperwork was burdensome and that the application process needed improvements. SBA officials told GAO that they have been taking 

steps to improve the application process, but did not provide documentation of such efforts. As a result, it did not appear to have any 

formal process for identifying problems in the application process 

and making needed improvements. 

It is a pleasure to testify before this Committee. I would be 

pleased to answer any questions. 

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

Ms. Bergeron. 

STATEMENT OF JAIMIE BERGERON, OWNER, FLEUR–DE–LIS 

CAR CARE CENTER 

Ms. BERGERON. Thank you for inviting me to speak here, Senator 

Landrieu and Senator Snowe and other members of the Committee. 

My husband, Ray Bergeron, and I have operated Fleur-de-Lis 

Car Care Center in the Lakeview neighborhood of New Orleans 

since 1988, and I would like to speak on behalf of Senator Bill 

2986. 

We are a family business that, prior to Hurricane Katrina, employed 9 people. On August 29th, my husband and I enjoyed a 

measure of financial security. We owned an unencumbered home 

and a successful business. 

By August 29th, we were homeless, jobless and in debt. In a few 

hours, the flooding caused by the levee failures wiped out over 20 

years of work and savings. 

In early 2005, we were negotiating for the sale of the business, 

and my husband, who turned 70 years old a few weeks after the 

flood, was looking forward to retirement. Today, there are no purchase offers. We are working 12-hour days, and the SBA holds a 

$250,000 mortgage on our home which we will be force to sell if the 

business fails. 

Prior to the flood, we served an average of 250 customers a day. 

Our business was one of the few in the city to offer full-service gasoline. We were the largest tire dealer in the neighborhood, and we 

offered a full range of mechanical services. 

As soon as the flood waters receded, we began to clean up and 

plan to reopen. Many businesses held off, waiting to see if residents 

would return before they made that commitment. We believed it 

was up to businesses to provide essential services, so residents 

could come back. And they have, but not in the numbers required 

for us to keep our doors open. 

Today, our business is about half of what it was, averaging less 

than 100 customers a day. We have cut hours and eliminated many 

of the services we used to provide because we cannot cover the necessary payroll. We had hoped to be fully staffed by now, but since 

the recession we have been forced to lay off three employees. We 

have only two left, and our SBA funds have run out. We cannot afford to borrow more. 

We applied for an SBA disaster loan in September, 2005. After 

approving our loan, SBA sent us to closing in December, 2005, 

without providing us with the necessary mortgage documents. 

When we asked for a new closing date, we were told that that 

would delay the process, and we were encouraged to sign the loan 

agreement. We did so with the understanding the funds would be 

disbursed as soon as the mortgage documents were returned to 

SBA; that did not happen. 

SBA advanced us $10,000 in January, 2006. We received no additional funds until April of that year, and then only after we agreed 

to take less money than we had been approved for and to pay 2 

different title companies $305 each for title searches on the same 

piece of property. 
30 

SBA based our payments on the amount approved rather than 

the amount borrowed, but later agreed to reduce our payments by 

$200 per month. However, we were forced to begin paying the loan 

back on the anniversary of the closing date, December, 2006. As a 

result, we barely had eight months to restart the business before 

we were required to begin making payments on the loan. 

Although individual SBA employees I dealt with worked hard for 

us, there seemed to be no sense of urgency and no system in place 

to process disaster loans efficiently. 

Recently, the streets surrounding our business were closed for repairs. New roads mean better access, and we hope more customers. 

In the meantime, two of the three points of entry are blocked. We 

are told that repairs will not be complete until December, 2010 at 

the earliest. 

In February, we received a six-month deferment from SBA to 

help us deal with this major business interruption. We are grateful 

for the assistance, although we know that interest continues to accrue and there will be a large balloon payment due at the end of 

the term of the loan. That is a bridge we will have to cross when 

we come to it. 

A few months, Senator Landrieu and SBA Administrator Karen 

Mills visited our business, and I had an opportunity to tell them 

how much the small businesses affected by Hurricane Katrina need 

loan relief to stay in business and create more jobs. Even in our 

current situation, we need one more employee. As things improve, 

we hope to add more jobs, but as of now the debt service does not 

leave us with enough funds to hire even that one employee and be 

confident we can make our payroll. The bill before this Committee 

could help us do that. 

Small businesses in our area are dealing with the twin burdens 

of a prolonged recovery and the effects of the worst recession in 

decades, and now South Louisiana has been hit with another disaster off our coast. Nearly five years later, our business and others 

like it are still in need of the relief this bill will provide, and I ask 

you to support it. 

[The prepared statement of Ms. Bergeron follows:] 
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Chair LANDRIEU. Thank you, Ms. Bergeron. Let me just begin 

with you because it is important I think to put, as I said, a face 

and texture on what this Committee deals with, so that the administrators here understand that Ms. Bergeron is speaking for at 

least 12,000 small businesses on the Gulf Coast that have loans 

similar to her loans and similar situations. And we are trying to 

desperately to provide some relief to these current 12,000 disaster 

loan holders, in addition, understanding the new pressures that 

have come to bear on this particular region because of the unfolding disaster. 

Ms. Bergeron, when you and your husband, Ray, decided to go 

back into Lakeview, would you just take 30 seconds or a minute 

to describe what Lakeview and your neighborhood looked like, how 

it felt and who was there? 

Ms. BERGERON. There was no one there. 

Chair LANDRIEU. This was six months after? 

Ms. BERGERON. Yes. 

Chair LANDRIEU. Could you describe what it looked like? 

Ms. BERGERON. When we first came back, we started cleaning up 

in October of 2005, and there was no one there, literally. There 

were no birds. There were no—it was unbelievable. It was very, 

very unbelievable. It was us, the National Guard, the NOPD and 

the Associated Press, and there was not much else. 

We just felt like the neighborhood would come back. We just 

really believed people—if you are not familiar with New Orleans or 

the Lakeview neighborhood, people have very, very deep roots. A 

disaster like that happening some place else might have turned it 

into a ghost town. But in New Orleans, and particularly in 

Lakeview, people have lived there, generation after generation, and 

they come back. And they have, but right at first, no. 

And we were the only business on the block for a very long time. 

We stayed in business initially with the funds that we got, obviously, from SBA and also because of the cleanup, the contractors, 

with the trucks. We began selling diesel, something we had not 

done before because there was no demand for it, but we switched 

that around because we could see what was coming. 

Chair LANDRIEU. Can you tell me what some of the neighbors 

said when they drove up to your gas station in those first few 

months or even the first year, what they shared with you? 

Ms. BERGERON. Oh, it was amazing. We have pictures on the 

wall of our first customer that came back, pictures of the first fullserve customer and the first self-serve customer. People were just 

like, we are so glad you came back. We are so glad that you are 

here. 

It did give a lot of people confidence. We had people tell us that, 

where they said if you are coming back, I am coming back. And 

that was something that we heard often. 

Chair LANDRIEU. Let me ask you this. There was almost one million people displaced by the storm, and many of them were in 

Baton Rouge which is 90 miles away from the city, and some of 

them were in Houston, and some of them were in other parts of 

the Country. Was there any other gas station that you knew of in 

that first couple or six months to a year that was open within 20 

miles of your station? 
36 

Ms. BERGERON. Not too many. No, not very many. I know there 

were none in Lakeview for quite some time. We were pretty much 

it. There may have been a few in Jefferson Parish adjacent, where 

they had some flooding, but it was not of the severity that we had 

in our neighborhood. 

But we did. We had people coming from all over the city, people 

we had never seen before, people coming from further east, from 

Gentilly and from New Orleans East and places like that, where 

they had nobody that had yet reopened. 

Chair LANDRIEU. I would just end this line of questioning. I have 

one more question to each, and then I am going to turn it over to 

my colleagues. 

This is true of many neighborhoods in the Gulf Coast, but basically the routine would be people would drive in for hours, fill up 

their gas tank at this one gas station that was open, stand outside 

under an oak tree and have mass on Sunday, to see their neighbors, and then the next week would start all again. Without 

churches conducting services and these pioneer businesses opened, 

I do not know how this city and this region would have come back. 

And that is the purpose of this hearing is to see what we can do 

to help them expedite their openings, relieve their burden and give 

them the support because they are actually leading the recovery. 

Not the Federal Government, not the State government, it is the 

small businesses that start to breathe immediate life back into the 

community that has been so devastated. 

So, Mr. Rivera, what would you like add just to this testimony 

briefly? I have some other follow-up questions I can submit in the 

record. But what have you done or what are reviewing that can 

help Ms. Bergeron? 

And are you all supporting the loan relief that I have requested, 

along with Senator Cochran and others, for this current group of 

holders of this debt? 

Mr. RIVERA. Regarding the loan relief, we have the servicing office that has worked pretty effectively with the Bergerons. They 

provided a six-month deferment. My understanding of the discussion was if there is a need at the end of the six-month period—we 

clearly understand her situation—we can take a look at doing another six-month deferment and just working with. We work with 

all our disaster borrowers. I mean there is no doubt about it. 

One of the things that I would like to just comment on, we were 

well aware of the fact of the numerous contacts that the borrowers 

had to make once they received a loan from us, and we have actually reengineered that entire legal department, the account department. We actually have a case manager now, one person that is a 

point of contact for all the SBA borrowers. So anytime that your 

loan is approved, you only deal with that one case manager from 

the time you get your initial disbursement, from the loan closing 

documents to your initial disbursement until it is fully closed. That 

seems to have been a much more effective process instead of having 

to deal with different individuals through that process. We hope 

that that is a successful improvement. 

Chair LANDRIEU. All right, Mr. Shear, just one for you. In your 

testimony, you indicated that 26 of the requirements that this 

Committee has put in the reform legislation which was, as Senator 
37 

Snowe said, inserted in the 2008 Farm bill. In your testimony, you 

said the SBA has met 15, partially addressed 6. 

Could you talk about the top three that have not been yet implemented, why they have not in your mind and what we need to do, 

either additional deadlines to be submitted or additional legislation 

that needs to be passed, or is it a rule, expediting the rule process? 

Mr. SHEAR. The 3 I would put at the top as the most challenging 

for SBA, among the 26 provisions, are the ones dealing with lending through private lenders, and those are the 3 that stand out. We 

understand that by September there will be a pilot with one of the 

programs which is probably the simplest of the three to roll out, 

and we strongly encourage pilots when going into a new activity 

like this. 

As far as legislative proposals, I think the best thing that can 

happen now is to make sure that SBA moves forward judiciously, 

at least on the two where they plan to have pilots, and to assess 

the results of those pilots, so that there are some lessons learned, 

so that these programs can be tailored and delivered on a timely 

basis. So I think it is an oversight issue. 

Chair LANDRIEU. Thank you. 

Senator Snowe. 

Senator SNOWE. Thank you, Chair Landrieu. 

Ms. Bergeron, I am so sorry for all that you have endured and 

experienced. I mean I can see across the board the pain and the 

hardship that you have had to confront, you and your husband, in 

such a horrendous ordeal and for so long. We truly appreciate the 

fact that you are here today to share your experiences. 

Hopefully, there is some way that we can help to make this better. I know there are some things beyond your control and our control when we have these types of disasters, but hopefully we can 

get you through, you and your husband through, in this terrible ordeal. 

One of the issues I wanted to ask you about, have you requested 

a deferment from the SBA with respect to your payments, they are 

allowed to do up to 12 months? 

Ms. BERGERON. We received a six-month deferment because of 

the business interruption issue when they—our business is located 

on a corner. Because with the stimulus package and part of it is 

the Submerged Roads Program, they worked on both roads at the 

same time. So we had a period of time there where there was no 

access at all. You could not get in and out. Now three of the four, 

I am sorry, two of the three access points are closed, but one is 

open now. 

We did request a six-month deferment. We requested and received a six-month deferment back in February. We have to resume 

payments in August with a balloon note at the end. However, Mr. 

Rivera was mentioned re-looking, looking at it again. 

I do not have it with me, but as I recall from reading the letter 

I received from SBA, it said this is one time only. You can have 

a six-month deferment, but please understand that we will not do 

this again. So the idea that it will be looked at again is something 

I have not heard before, and I appreciate that. That would be wonderful, but it is not something that I was aware was even a possibility based on what they sent me. 
38 

Senator SNOWE. I am going to ask a question in a moment to 

why it was not 12 in her circumstance. I mean it seems to me that 

every hurdle, I mean every impediment, had been thrown your 

way, certainly over a protracted period of time. 

I know the State of Louisiana, I know that through Chair 

Landrieu and Senator Vitter that it has borne the brunt of unprecedented disasters in such a short period of time. So we have to do 

everything we can to extend assistance to you. 

So, Mr. Rivera, why would it not be 12 months in her case, and 

why is it a 1-time only situation? 

Mr. RIVERA. The initial request, it is my understanding, predated obviously the oil spill, and the time her request was six 

months. Had she requested 12 months, I am sure we would have 

taken a look at a 12-month deferment because of the dynamics of 

the road closures and stuff. But we will definitely take a look as 

a result of the recent BP oil spill. We will take a look if she wants 

a further deferment after the six months expires. 

Senator SNOWE. Yes, we ought to decide, certainly for our purposes too, what we need to do to change the law in that regard, 

to make sure that that is an option under extenuating circumstances and the contingencies that arise from these kinds of 

events. That is hard to determine. When you make a 6-month request, how do you know it is going to be 6 months or up to 12? 

You should have the options depending on the circumstances. 

Mr. RIVERA. Okay. We understand. 

Senator SNOWE. Does that require a statutory change? 

Mr. RIVERA. No, ma’am. 

Senator SNOWE. It does not, okay. But it is certainly something 

that we would want to incorporate into law at some point, to make 

sure that that flexibility is available. 

See, something positive happened when you came to Washington. 

[Laughter.] 

Senator SNOWE. See how quickly that happened? 

Ms. BERGERON. I see how quickly that happened. 

Senator SNOWE. You just have to endure a hearing. In any event, 

we get things done. 

[Laughter.] 

Senator SNOWE. See what you did, Chair Landrieu, instantaneously? 

So your interaction with SBA, has it been generally positive or 

negative, any difficulties? 

Ms. BERGERON. My interaction with the individuals at SBA was 

positive. They really, the people that I spoke with all seemed like 

they wanted to help, with the exception of the people who were initially at the Disaster Assistance Office. But beyond that, the people 

that I spoke with in the legal department, whatever, they were all 

very, very helpful. 

They tried, but it was a constantly changing requirement. They 

would say: Yes, this is all we need; yes, this is it. And two weeks 

later I would get the phone call: Well, we need this now; we need 

that now. 

We reached a point where we were getting ready to open. It was 

several months past when we had closed. 

Senator SNOWE. So what year would this be? 
39 

Ms. BERGERON. 2006. 

Senator SNOWE. 2006, okay. 

Ms. BERGERON. 2006. We were trying to get open. So finally, we 

had to reduce the amount of money we had been approved for in 

order to get the loan because they came back and said we want you 

to buy a title policy, which would have cost several thousand dollars, and they had already made me pay twice for a title search. 

We just said we have got equipment coming. We have no way to 

pay for it. How much can we borrow that you do not need a title 

policy? They told us, and that is what we did. 

Senator SNOWE. I see. So has that all improved, Mr. Rivera and 

Mr. Shear, that process that she just described? 

Mr. RIVERA. We have completely reengineered the legal aspect of 

it. I mean as I mentioned earlier, one of the challenges we had is 

a disaster borrower would contact a bank of 20 attorneys, and the 

possibility of dealing with a different response when you deal with 

those individuals goes up exponentially. 

So what we have done is again we have a case manager. Once 

your loan is approved, you go to one individual from the loan closing documents to the initial disbursement. If you have any questions, you call the processing center and the disbursement center, 

and you will deal with that one individual. 

We have seen it much more. It has made it a much more effective process since we have gone at this new approach. We heard 

a lot of those stories, and obviously I mean we empathize with the 

situation, and that is why we went to this reengineering effort. 

Senator SNOWE. Mr. Shear, do you have anything to say in that 

regard? 

Mr. SHEAR. Yes, not to the legal requirement itself. While we acknowledge that the Agency has become more responsive to the 

needs of victims of disasters over time, we are still looking for a 

more structured approach to react to problems that are reported, 

from work that we have done and have reported, information coming to SBA, information coming to SBA from its customer satisfaction survey. A more structured or formal process is needed to try 

to improve difficulties in just the day-to-day dealings with victims 

of disaster. 

Senator SNOWE. Mr. Rivera, I just want to ask one question in 

your coordination with BP on assistance to small businesses, and 

I know Senator Vitter raised the fisheries issue as well. In order 

to get funding for fisheries, you have to go through a disaster declaration, though I gather in this instance assistance could be given 

through the Oil Spill Trust Fund. What are you doing, the SBA 

specifically, to coordinate with BP to make sure they are receiving 

assistance and also through the Economic Disaster Loan Program? 

Mr. RIVERA. Yes, ma’am. We have, Administrator Mills has, the 

authority under the SBA Act to do a governor’s certification, to declare a governor’s certification. Five small businesses have to sustain substantial economic injury in that case. 

In the State of Louisiana, we received the first request from the 

governor there, and we started with 6 primary parishes, and then 

we expanded it to 12 primary parishes. Then we received subsequent requests. And we received the requests on a Monday or 

Tuesday as a result of the fisheries closure on Sunday, and then 
40 

we turned around and were able to declare the disaster area on 

Wednesday. So we had a 24-hour turnaround. 

We had the same situation for Mississippi, Alabama and Florida 

as a result of the BP oil spill. 

The way we are responding to this event, if there is a business 

that has had a direct impact as a result of this disaster, they can 

go ahead and file an Economic Injury Disaster Loan application 

with us. As another condition in our loan agreement, we will say 

in the event that there is a like kind claim that they file with BP, 

that we will use those that. We will use those proceeds to pay down 

the loan. 

But there is no requirement that they go to BP first. I mean we 

are being very proactive, and we are leaning forward as much as 

we can. 

We have received about 100 applications so far in the State of 

Louisiana, and we started processing those loans, and then we 

have some approvals already. 

Senator SNOWE. We are going to make sure that BP repays all 

that assistance, correct? 

Mr. RIVERA. Absolutely, but they have other types of assistance 

for physical damage that we may not loan out in this specific case 

to. But correct, they will. 

Senator SNOWE. Thank you. 

Chair LANDRIEU. Well, I wanted to follow up with that because 

I think this is very, very important for the businesses that are 

being stressed with this current situation in the Gulf Coast. Specifically, does the SBA have authority to use the assignment of a 

BP claim as collateral? 

And let me just finish the question. And if not, what are you requiring for collateral for these loans to be made, and what are your 

limits? 

Mr. RIVERA. Right. The Economic Injury Disaster Program will 

not change in its substance. What we will do is we will make a 

loan as we always do. We will take best available collateral in this 

case. 

We are not going to take an assignment of insurance for the BP 

claim. What we are going to do is we are going to put another condition in the loan document. It is an easier, simpler process. There 

is not filing that has to occur. So, once they get the claim, they will 

just use that claim to pay down the loan. 

Chair LANDRIEU. Okay. But let me be clear. You are requiring 

collateral. You are requiring collateral for the loan. 

Mr. RIVERA. Yes, ma’am. 

Chair LANDRIEU. And give us some specifics about options. People could put up what? Their house? 

Mr. RIVERA. We take best available collateral. 

Chair LANDRIEU. Which means what in English? 

Mr. RIVERA. If you have a chattel, we can take a chattel mortgage on your boat. It does not matter if it is a first or second lien 

position. We can take a second or third lien position on somebody’s 

home. We will take whatever collateral is available. 

Chair LANDRIEU. And suppose no collateral is available? 

Mr. RIVERA. Then we just do not secure the loan. I mean that 

is what we do. 
41 

Chair LANDRIEU. You do not make the loan or you do not secure 

the loan? 

Mr. RIVERA. No, we do not secure the loan. What we will do is 

we will just—— 

Chair LANDRIEU. You will make an unsecured loan. 

Mr. RIVERA. Well, we will put a lien on—we will just put a blanket lien on available assets, but there is no real security. We will 

just do a public filing. 

Chair LANDRIEU. The idea would be to create, Senator, some kind 

of avenue for this loan to be paid in full according to the law, which 

is BP’s obligation to these individuals. In other words, if we cannot 

get funding advanced directly from BP, if we do this correctly, 

there is a way that these loans can be made, but no principal and 

interest paid, hopefully for a while until BP can make this whole. 

Now I want to ask you, Mr. Shear, do we have to change any 

laws to allow that to happen in your opinion, or can it be done administratively? 

Mr. SHEAR. We have not examined that situation. We would be 

glad to talk to Committee staff about it and see what we could do 

to try to answer your question and to look into it, but we have not 

addressed that question. 

Chair LANDRIEU. Okay, because I do think that this is sort of the 

most important issue right before this Committee right now—the 

fishermen and other businesses. It could be hotels, tourism, restaurants, seafood processors. I mean there are a number of businesses that are more directly, more immediately affected than others in this region. And depending on how long this situation goes 

on and how grave the environmental impacts have been, which 

have not yet been determined, this could be a very serious situation 

for businesses along the Gulf Coast, from Texas all the way to 

parts of Florida. 

We want to make sure that the laws are adhered to, and one of 

the laws overriding this is that BP is responsible under the Oil Pollution Act to pay for economic injury to individuals, to businesses, 

to governments, both local, State and Federal. They are even picking up the tab, I understand, for the National Guard that is on the 

coast right now. So what we want to make sure is that we eliminate any possibility that businesses in the Gulf Coast would go 

belly-up either waiting for the SBA to process or BP. 

And I will turn this over to you. I know you have to go. 

Senator SNOWE. I just want to raise a question that you raised, 

to address that, the question of collateral. There has to be some 

way for BP to assume the responsibilities for that because if the 

business is going to SBA and does not have the necessary collateral 

to back up that loan, I mean this is the difficulty that they are 

going to, the individual owner is going to, have to assume for a crisis that they did not create. And BP is responsible for it. So it 

seems to me that we have to get some clarity on those issues because the person should or the business owner should be made 

whole. 

And if they have to go to SBA to get the loan because they are 

not getting that immediate reimbursement from BP, and they have 

to put up collateral, and they may not have adequate collateral, 

then clearly there has got to be some responsibility on the part of 
42 

BP to make that, correct that situation, to mitigate that, because 

why should they be in the position—the small business owner to 

be in a position of not being able to access a loan immediately, to 

rectify the situation. 

Chair LANDRIEU. Well, one of the things we are going to do, and 

our time has run out today, but I do plan to have a hearing on this, 

more directly on this subject, probably next week. The date has not 

yet been set, but we are pulling the panel together because it is 

very, very important. 

And just for the record, I wanted to state, Senator Snowe, that 

there are currently 11,745 disaster loans, business loans outstanding relative to Gustav, Ike, Katrina and Rita, from Louisiana, 

Mississippi and Texas. The bulk of course being in Louisiana, over 

7,000 loans currently outstanding, not for this current disaster but 

for past. 

I am also going to submit for the record that these are not insignificant sums for some of these fishing communities. Calcasieu, on 

the western part of our State, has 263 loans outstanding for a total 

of $21 million. 

In Orleans, one of the parishes, not right on the coast but sort 

of the hub of the southeast region, there are 3,000 business owners 

that currently have loans outstanding, these same kinds of businesses—restaurants, seafood processors, small mom and pop hotels, 

maybe seeing some cancellation, marine operators, boat captains, 

$26 million outstanding. 

In Saint Bernard Parish, which you have seen all over the news, 

Saint Bernard and Plaquemines, there are 682 current loans for 

$78 million, outstanding. 

My fishermen and my constituents are telling me: ‘‘We are 

loaned up to the hilt on the Gulf Coast. We have got everything 

we ever owned, mortgaged, from the last disasters, and now we are 

facing a potentially significant slowdown in business.’’ Some people 

are actually completely out of business because they are fishing 

and their fishing waters have been closed. 

So I appreciate, in conclusion, the progress that we have made 

over the last couple of years, but the Ranking Member and I are 

going to be very focused in the next weeks to make sure that we 

are expediting, streamlining every process and proposing any new 

legislation necessary to make sure we do not have hundreds, dozens, hundreds of thousands of businesses collapse, waiting for help 

to come either from us or from BP. 

Does anybody want to give a 30-second answer or response? 

Mr. Rivera, just 30 seconds of anything you would like to add to 

the record before we close? 

Mr. RIVERA. From the perspective of looking at the disaster operation of the Agency a couple years ago, compared to today, we have 

really done a lot of process improvements. We continue to strive 

hard. Customer service is very key from that perspective. And we 

will continue to keep you and your staff informed as we go through 

all these developments. 

Chair LANDRIEU. Mr. Shear. 

Mr. SHEAR. As you know, at the request of you and Senator 

Snowe, we are looking at basically the 5-year anniversary of the 
43 

2005 hurricanes, and we are writing that report. We are nearing 

completion on that. 

But on these issues, and obviously the oil spill is a huge issue, 

we really would welcome any interaction with you and Committee 

staff, if you wanted to us to kind of like act to that body of work. 

Chair LANDRIEU. Well, I most certainly do, and if you could that 

would be extremely helpful. 

Ms. Bergeron. 

Ms. BERGERON. I think I would just say with respect to the SBA 

disaster loans in particular, since that is kind of about what I know 

about this, it is just to think about it in terms of the individuals. 

In our particular case, we could be homeless if this business fails. 

It is not just oh, well, my business failed; I guess I have to go get 

a job. 

I told Administrator Mills, you probably remember. In 2005, I 

owned my house. You own it now. 

It is a very, very difficult thing when you are speaking about collateral for these fishermen, taking their boats and mortgaging their 

boats. Some of them already have tons of loans and mortgages and 

whatever. They cannot pay it. They just cannot pay it. 

It just seems like there must be a more creative way to come up 

with collateral for a disaster loan. For a regular SBA loan, of 

course, it is different. But for collateral, it just seems like there has 

got to be a better way. 

Chair LANDRIEU. Thank you. We are going to look for one, Ms. 

Bergeron. 

Thank you very much. Meeting adjourned. 

[Whereupon, at 12:06 p.m., the Committee was adjourned.] 

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