According to SBA officials, when a disaster is declared in an area, a staff member from an SBA field operations center, located in Atlanta, Georgia, or Sacramento, California, contacts the area’s SBDC network to identify a site for setting up a business recovery center, which may be the local SBDC office. Officials added that SBDC staff members co-locate in a business recovery center, when possible, so business loan applicants can access SBDC services at the center. Additionally, SBA officials said that SBDCs help SBA by doing the following: conducting local outreach to disaster victims, assisting declined business loan applicants or applicants who have withdrawn their loan applications with applications for reconsideration or re-acceptance, assisting declined applicants in remedying issues that initially precluded loan approvals, and providing business loan applicants with technical assistance, including helping businesses reconstruct business records, helping applicants better understand what is required to complete a loan application, compiling financial statements, and collecting required documents. SBA offers two types of disaster loans for businesses: (1) Physical Disaster Loans, which help replace damaged property or restore property to pre-disaster condition, and (2) Economic Injury Disaster Loans, which provide working capital to help small businesses survive until normal operations resume after a disaster. See table 1 for additional details of both types of disaster business loans. SBA has divided the disaster loan process into three steps: application, verification and loan processing, and closing, as shown in figure 1. This report focuses on step 1, the loan application process. Physical Disaster Loan applicants have 60 days and Economic Injury Disaster Loan applicants have 9 months from the date of disaster declaration to apply for a loan. Disaster victims may apply for a disaster business loan through the Electronic Loan Application online portal or by paper submission. The information from online and paper applications is loaded into SBA’s Disaster Credit Management System, which is the system SBA uses to process loan applications and make determinations for its disaster loan program. The Paperwork Reduction Act seeks to “ensure the greatest possible public benefit from and maximize the utility of information created, collected, maintained, used, shared, and disseminated by or for the Federal Government.” A collection of information, such as forms, includes a request for information from 10 or more persons to be submitted to the federal government. The act requires agencies to establish a process for evaluating and approving collections of information. The act created the Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget (OMB) to perform all Paperwork Reduction Act functions. As part of the review process for a collection of information, OMB’s director must determine whether or not an agency’s proposed collection of information should be approved for public use. The director may approve a collection of information for a maximum of 3 years. Agencies are required to renew information collection forms before expiration to maintain a valid OMB control number. In addition to the process requirement, the act includes broader requirements, including that agencies reduce information collection burdens on the public, ensure that the public has timely and equitable access to public information, and improve information technology practices to reduce burden. SBA’s disaster business loan application forms are examples of a collection of information, so each form must be approved by OMB. SBA requires all disaster victims in need of a disaster business loan to submit the applicable loan application forms. To apply for a loan, a disaster victim must complete the required disaster business loan application forms (see app. II) and relevant additional forms: SBA Form 5 – Disaster Business Loan Application; OMB Control Number 3245-0017; expiring on January 31, 2018 (see app. II, fig. 5). SBA Form 413D – Personal Financial Statement; OMB Control Number 3245-0188; expiring on January 31, 2018 (see app. II, fig. 6). SBA Form 1368 – Additional Filing Requirements Economic Injury Disaster Loan and Military Reservist Economic Injury Disaster Loan; OMB Control Number 3245-0017; expiring on January 31, 2018 (see app. II, fig. 7). SBA Form 159D – Fee Disclosure Form and Compensation Agreement; OMB Control Number 3245-0201; expiring on October 31, 2017 (see app. II, fig. 8). Internal Revenue Service (IRS) Form 4506-T – Request for Transcript of Tax Return; OMB Control Number 1545-1872; expiring on December 31, 2016 (see app. II, fig. 9). Figure 2 shows that, according to SBA, in fiscal year 2014 it took a disaster business loan applicant approximately 4.5 hours to complete all the relevant forms, including gathering required documentation such as the most recent tax return. Consistent with the Paperwork Reduction Act’s requirement that agencies establish a review process, SBA’s Records Management Division oversees SBA’s Paperwork Reduction Act Clearance Process, which is documented in a standard operating procedure (SOP). The Paperwork Reduction Act requires an agency to establish a process to evaluate an information collection. SBA’s 2006 Forms Management Program, SOP 00 30 3, provides written operating procedures for the agency’s Paperwork Reduction Act clearance process. Figure 3 shows the overall process. First, Records Management Division officials identify which SBA forms will expire in 6 months, determine the program office responsible for each form, and issue an expiration memorandum to the program office with a timeline to complete the Paperwork Reduction Act clearance process. The Records Management Division uses the Regulatory Information Service Center and Office of Information and Regulatory Affairs Consolidated Information System, OMB’s electronic system, to identify which collections of information, such as loan application forms, will expire in 6 months. Next, Records Management Division officials said they solicit public comments and coordinate with the relevant program offices as well as Office of General Counsel (OGC) and Office of Inspector General (OIG) to evaluate the information collection. After the internal reviews are completed, the Records Management Division submits the Paperwork Reduction Act submission package to OMB electronically and concurrently posts a 30-day Federal Register notice seeking public comment on the proposed collection of information. Following this comment period, OMB notifies SBA whether it has approved SBA’s Paperwork Reduction Act submission package and, if approved, provides the OMB control number and expiration date for the approved forms. SBA’s requirement that program offices complete and sign routing forms aligns with Paperwork Reduction Act requirements that the head of an agency certify that the information collection is necessary for the proper performance of the agency’s functions. The Records Management Division coordinates the program office reviews. For example, ODA oversees the renewal of Forms 5 and 1368. Two forms, OMB Form 83-I and SBA’s Form 58, document that program offices involved in the collection of information have reviewed and approved the Paperwork Reduction Act submission package. The first form is OMB Form 83-I, which is OMB’s Paperwork Reduction Act submission form that an agency uses to certify that it is in compliance with the Paperwork Reduction Act requirements by identifying the type and purpose of the collection information being submitted to OMB. Form 83-I also includes a supporting statement, which justifies the necessity of a collection of information and use of statistical methods to reduce burden, if applicable. The second form is SBA’s Form 58, which is SBA’s Record of Clearance and Approval that tracks the completion of SBA’s Paperwork Reduction Act Clearance Process. SBA program offices responsible for the renewal of the collection of information, such as ODA, complete these forms and document approval by the necessary SBA stakeholders. SBA’s requirement that OGC review and provide feedback on each Paperwork Reduction Act submission package before it is sent to OMB conforms to the act’s requirements for independent review of the information collection. The Paperwork Reduction Act requires an agency to establish an independent process that evaluates whether or not the Paperwork Reduction Act submission package meets the act’s requirements. SBA Form 58 allows the involved program offices and OGC to review the Paperwork Reduction Act submission package and verify its compliance with the act’s requirements. OGC officials stated that they review OMB Form 83-I, supporting statements, and applicable information collection instruments to ensure compliance with Paperwork Reduction Act requirements. OGC also determines whether recent statutory, regulatory, or other changes are reflected in the collection of information and described in the supporting statement document. OIG also reviews and comments on each Paperwork Reduction Act submission package before it is sent to OMB. According to OIG officials, their comments are intended to make the program stronger and address difficulties encountered in criminal, civil, or administrative matters that changes to the form could help avoid in the future. OIG officials said they also review for clarity and check for issues and deficiencies that OIG has identified in prior audits. OIG officials stated that they do not sign the SBA Form 58 to preserve their independence and not create a perception that the OIG endorses a program office’s document. According to SBA, the agency’s policy to have both OGC and OIG review and have OGC sign- off on a Paperwork Reduction Act submission package helps the agency not only to achieve its goal of getting OMB to approve the package prior to the expiration of a disaster business loan form, but also to identify and address risks or areas of noncompliance. Consistent with applicable federal internal controls, SBA has a monitoring system to identify and remedy deficiencies in the Paperwork Reduction Act clearance process. Federal internal control standards state that management should establish and operate activities to monitor controls and that management should also remediate identified internal control deficiencies on a timely basis. According to SBA officials, as part of its monitoring system, if a program office is nonresponsive or fails to meet the timelines outlined in its expiration memorandum, then the Records Management Division may elevate the issue to the Chief Operating Officer, who would contact the program office’s Associate or Assistant Administrator to address the matter. Records Management Division officials also said that they may obtain from OMB an extension of an expiration date so that a collection of information is not out of compliance with the Paperwork Reduction Act. We found that SBA’s disaster business loan application forms generally include the required elements, such as having an OMB control number, valid expiration date, an estimate of how long it will take to complete the form, and a statement notifying applicants that they are not required to respond to the request for information if the form does not display a valid OMB control number. We also observed from a demonstration that the Electronic Loan Application disaster business loan application forms include the OMB control number, expiration date, and a disclaimer that if the OMB control number is missing, an applicant is not required to complete the forms. Although SBA’s disaster business loan forms generally are in compliance with these Paperwork Reduction Act requirements, we identified three instances of noncompliance. Consistent with OMB’s finding in its 2014 Information Collection Budget Report, we found an instance of noncompliance when SBA’s Form 159D – Fee Disclosure and Compensation Agreement was not submitted for OMB’s review prior to its expiration date. SBA was aware of this violation, and to address it, Records Management Division officials said that the program office responsible for Form 159D instituted personnel and operational changes, including weekly reviews of pending expirations, progress reports for renewals in progress, and designation of individuals accountable for Paperwork Reduction Act compliance. In addition, we found that SBA Form 159D – Fee Disclosure and Compensation Agreement did not have an expiration date and SBA Form 413D – Personal Financial Statement did not include a statement informing applicants that they do not have to complete a form that does not display a valid OMB control number. SBA officials corrected these forms in October 2016. SBA’s Records Management Division officials told us that it documents any deficiencies in a memorandum to the appropriate program office and directs that office to remedy the issue in consultation with other program offices, if necessary. Records Management Division officials also said that the program office resubmits the collection of information to the division. Records Management Division officials added that no standard time frames have been set for remediation because timing depends on when the deficiency is identified and the nature and complexity of the issue. In addition to the Paperwork Reduction Act clearance process and the related monitoring system, SBA has feedback mechanisms in place. The federal internal control standards state that management should use quality information to achieve its objectives. SBA uses two survey instruments to solicit customer feedback from a sample of business loan applicants and recipients (see app. III). According to SBA officials, SBA uses the surveys, both administered by phone, to solicit input and suggestions for improvements. First, SBA contracts with a third-party group to administer the American Customer Satisfaction Index (ACSI) survey. Second, SBA’s Customer Service Center conducts its own customer satisfaction survey to solicit feedback from selected business loan applicants and recipients, including suggestions for improving the disaster loan process. One question from the Customer Service Center questionnaire asks, “Based on your experience with the SBA, do you have any suggestions for making the process easier?” According to SBA officials, the collected suggestions undergo multiple levels of consideration within SBA’s Continuous Improvement Process Board and ODA’s Associate Administrator decides whether to implement a recommendation. In addition to receiving suggestions from loan applicants, the Continuous Improvement Process Board receives suggestions from SBA employees. Recent and planned actions for the disaster loan program, described in SBA’s Fiscal Year 2015 Annual Performance Report, have focused on promoting disaster preparedness, streamlining the loan process, and enhancing online application capabilities (see table 2). According to the report, SBA’s objectives with respect to disaster assistance are to deploy its resources quickly, effectively, and efficiently in a manner that preserves jobs and helps small businesses return to operation. The actions SBA has taken or plans to implement are intended to achieve these objectives. Many of SBA’s recent and planned changes to the disaster loan program described in its 2015 performance report incorporate various leading practices intended to reduce paperwork burdens. We reviewed and identified leading practices from the Hurricane Sandy Rebuilding Task Force Report (2013), an OMB memorandum to agency heads (June 2012), and the Small Business Paperwork Relief Task Force Reports (2003, 2004). These materials note the following leading practices, among others: Separating application tracks for business and home disaster loans: As we previously reported, SBA implemented separate tracks in October 2013. Expediting approval of loan applications that meet minimum credit score and other requirements: SBA revised its disaster loan program regulations in April 2014 so that SBA now may consider an applicant’s credit rather than business cash flow in assessing the applicant’s repayment ability. Using electronic communication and “fillable fileable” forms: SBA introduced the online application capability in August 2008, where loan applicants can complete and submit forms online, and SBA is currently updating the system with more features. Using “smart” electronic forms to assure data submitted meets information system requirements: SBA’s online application portal includes system checks that ensure information entries meet formatting requirements. The portal also provides notices specifying formatting requirements. Further, SBA has reported that increased use of electronic loan applications has reduced errors and loan-processing times. SBA has a dedicated web portal for disaster loan assistance (available at https://disasterloan.sba.gov/ela/, see app. IV, fig. 12) where disaster victims can apply for a loan online and check on the status of a loan application. According to SBA officials, recent enhancements to the web portal include a feature that allows a loan applicant to check the status of an application, including the application’s relative place in the queue for loan processing. The web portal also includes a frequently asked questions page, phone and email contacts to SBA customer service, and links to other SBA information resources. An SBA official we interviewed explained that information from electronic applications is imported directly into the Disaster Credit Management System, instead of SBA staff manually entering information from paper applications into the system. As a result, SBA officials said, the agency has reduced the likelihood of errors in loan applications, reduced follow-up contacts with loan applicants, and expedited loan processing. SBA has published several written and electronic resources about the disaster loan process, but much of this information is not easily accessible to loan applicants and SBA’s resource partners from the disaster loan assistance web portal. Available resources include the following: The disaster business loan application form (Form 5, see app. II, fig. 1) lists documents required for a loan application along with additional information that may be necessary for a decision on the application. SBA’s Fact Sheet for Businesses of All Sizes (see app. IV, fig. 13) provides information about disaster business loans, including estimated time frames, in a question-and-answer format. For example, the fact sheet answers questions concerning collateral requirements of disaster loans, information that must be submitted for a loan, and the amount of time an applicant might expect to wait before the application is approved or denied. The 2015 Reference Guide to the SBA Disaster Loan Program and three-step process flier (see app. IV, fig. 14 and 15) set out the three steps of the loan process, required documents, and estimated time frames. SBA’s online Partner Training Portal provides disaster-loan-related information and resources for SBDCs (available at https://www.sba.gov/ptp/disaster; see app. IV, fig. 16). The training portal includes two videos—one explaining the disaster loan process and the other explaining the disaster assistance program—and three documents that provide information on disaster preparedness, types of disaster loans, and loan procedures. However, SBA has not effectively integrated these resources into its disaster loan assistance web portal, as much of this information is not easily accessible from the web portal’s launch page. The federal Guidelines for Improving Digital Services state that an agency should (i) integrate its digital presence into its overall customer experience strategies, and (ii) publish information in ways that make it easy to find, access, share, distribute, and repurpose. Additionally, the Paperwork Reduction Act has a broad requirement that an agency disseminate information in a manner that is efficient, effective, and economical. SBA’s web portal appears to serve as a one-stop shop where disaster victims can apply for and access more information about loans, among other things. However, when a user clicks on the “General Loan Information” link in the web portal, it routes the user back to SBA’s main website, and the web page featuring loan-related information contains a menu of additional links. In particular, and as shown in figure 4, to access the fact sheet, the reference guide, and the three-step process flier, a site user may click on three successive links and then select from a menu of 15 additional links. Among the latter group of 15 links, the link for Disaster Loan Fact Sheets contains further links to five separate fact sheets for various types of loans. Similarly, to access the reference guide or the three-step flier, the user must click on the Disaster Policies and Procedures link, which is 1 of 15 available link selections. In addition, key disaster loan information resources are not integrated into SBA’s Partner Training Portal and SBDCs were unaware of key resources. As mentioned earlier, SBA’s performance reporting indicates that the agency shared the reference guide with resource partners. Most SBDCs we interviewed were aware that SBA was promoting online applications through the web portal and had assisted disaster victims in completing online applications. However, at least half of the SBDCs we interviewed were not aware of additional information resources. Among the eight SBDCs we interviewed, four SBDCs were not aware of SBA’s three-step process flier and five SBDCs were not aware of the Partner Training Portal. Additionally, the Partner Training Portal does not include the fact sheet, the reference guide, or the loan process flier. SBA officials said that SBDCs that have not experienced a declared disaster in recent years may not be aware of more recently developed information resources because those SBDCs would not have encountered the need for them. However, two of the four SBDCs we interviewed that were not aware of the three-step process flier experienced a disaster during or after 2014—which, according to SBA, was when the flier was created. Although SBA has created and posted key disaster loan information online, these efforts are not effectively integrated in a way that helps users efficiently find needed information following a disaster. According to SBA officials, SBA plans to incorporate updated information from the three-step process flier on the Electronic Loan Application, but it does not have a time frame for specific improvements. SBA officials also said that disaster-loan information and resources are not prominently located on SBA’s website because of the website’s layout and space constraints arising from the agency’s other programs and priorities. However, officials said that the website’s launch page includes a banner section that prominently features recent news, including information related to major disasters. But, SBA officials added that any information displayed on the banner is temporary. Absent better integration of disaster business loan- related resources into SBA’s web portal and streamlined access to business loan-related resources on SBA’s website and its Partner Training Portal, loan applicants—and SBDCs assisting disaster victims— may not be aware of key information for completing disaster business loan applications. The contents of SBA’s disaster-loan-related resources do not consistently feature key information about (1) the three-step loan process, (2) documentation requirements and reasons for requiring such information, and (3) estimated time frames for the loan process. Each resource includes some of the information; however, none of the resources provide all of the information and none include reasons or explanations for documentation requirements (see table 3). We found that business loan applicants reported confusion to SBDCs about the overall loan process, required documentation, and time frames, and inconsistent information from SBA may have contributed to these issues. For example, according to SBDCs we interviewed as well as responses to SBA and the ACSI surveys, some business loan applicants found the loan process and required documentation confusing for the following reasons: Inconsistent information about loan application process. According to the SBA 2015 Performance Report, SBA uses a “three- step process” communications strategy to provide a consistent message to the public in promoting the disaster loan application process. However, as previously mentioned, not all SBA disaster- related resources include information about the three-step process and the consistency of information varies among information resources (see table 3). Moreover, three SBDCs told us that business loan applicants felt SBA did not clearly communicate parts of the process involved in applying for disaster business loans. For example, according to two of the three SBDCs, there were instances when applicants who applied to SBA for a disaster business loan were told to first register with the Federal Emergency Management Agency to obtain a disaster number. The SBDCs stated that the applicants were confused by directions from SBA indicating that such registration was required. Based on our follow-up with SBA officials, SBA encourages business loan applicants to also register with the Federal Emergency Management Agency, but it is not required. However, the Partner Training Portal’s Disaster Assistance Video conveys an inconsistent message and seems to suggest that a disaster victim must first register with the Federal Emergency Management Agency before applying for a disaster loan. Unexpected requests for additional documentation. One of the three SBDCs told us of instances where applicants thought they had provided all the required documentation, but received subsequent requests from SBA for additional documentation. In a 2014 report on disaster assistance, we found in interviews with SBDCs and local business organizations that SBA’s follow-up requests for additional documentation prolonged the application process and loan decision. Furthermore, we observed that although the paper application form includes a list of additional information that may be requested, the Electronic Loan Application does not include a list of other information an applicant may have to provide SBA in addition to the required forms. Also, as of August 2016, the Electronic Loan Application did not contain two disaster business loan forms: (1) SBA Form 159D – Fee Disclosure and Compensation, and (2) SBA Form 1368 – Additional Filing Requirements Economic Injury Disaster Loan, and Military Reservist Economic Injury Disaster Loan. According to SBA officials, SBA includes links to these two forms in follow-up letters sent to disaster business loan applicants after they submit their loan applications. Lack of information about the reasons for required documents. According to responses from SBA’s survey of loan applicants provided by SBA, one survey respondent said that the loan process required too much information from applicants when SBA could access the same information elsewhere. The applicant cited that she should not have to locate copies of her tax return when SBA can use her signed tax transcript form to obtain tax information from the IRS. Further, according to one SBDC we interviewed, applicants it assisted did not understand why SBA requires applicants to submit both a current tax return and complete an IRS tax transcript authorization form. SBA officials said that tax transcripts do not provide all the information contained in a tax return. Therefore, they need information from transcripts and returns to make loan decisions. However, the reasons why are unclear to applicants because none of the available resources provide this explanation. Consistent with comments provided by SBDCs, the loan application process received the lowest satisfaction scores on the ACSI survey. According to the ACSI survey results for 2012 through 2015, the loan application process received business loan applicants’ and recipients’ lowest satisfaction scores of any SBA disaster loan program processes. The SBA Disaster Loan Program processes surveyed in the ACSI are application process, decision process, Customer Service Center, loan closing, inspection process, SBA staff, and recovery center. In response to questions about the application process, survey respondents were least satisfied with the “amount of paperwork required to complete the loan application” and “ease of attaining the information required to fill out the application.” Moreover, based on the survey results, ACSI recommended from 2012 to 2015 that SBA focus on improving the application process as a means of increasing business loan applicants’ and recipients’ satisfaction with the process. In addition, SBDCs reported and surveys found that applicants’ expectations about the time frames associated with the entire process were unmet and available resources do not consistently inform applicants about expected time frames. Unmet expectations about time frame to apply for and receive loans. Two SBDCs we interviewed told us that business applicants commonly complained about how long it took to go through the loan process and that it took too long to receive their loans. Two other SBDCs suggested that SBA could provide more information about the loan process to better manage applicants’ expectations. Specifically, one SBDC suggested SBA could provide more information about estimated time frames. Another SBDC said some of the applicants the SBDC assisted expected a faster loan process, and many business owners may start a loan application but never complete the application because they cannot spare time away from their business to collect all the required documents and to complete the loan application forms. In addition, according to responses from SBA’s survey of loan applicants provided by SBA, one survey respondent suggested that the business loan process should require fewer and shorter application forms. Another respondent said that the business loan process is too complicated and too time-consuming, and the respondent withdrew the loan application as a result. Information about time frames not included in all resources. The three-step process flier and the resource guide for businesses provide estimates of expected time frames for the processing and closing steps of the loan process. However, the Electronic Loan Application and some other resources do not provide an applicant with any estimated time frame of when the disaster business loan application will be processed. The Electronic Loan Application does provide the applicant with application status messages, such as “processing application.” See appendix V for application status messages and descriptions. According to SBA officials, SBA has updated its disaster forecasting model and planning documents that enable SBA to better estimate loan processing time frames based on the severity of a disaster, the volume of expected loan applications, and other factors. According to the ACSI survey results for 2012 through 2015, loan applicants and recipients surveyed consistently rated the loan decision process with the second-lowest satisfaction scores. In response to questions about the decision process, survey respondents were least satisfied with the “timeliness of the decision.” Based on the survey results, ACSI recommended from 2012-2015 that SBA focus on improving the loan decision process as a means of increasing applicants’ and recipients’ satisfaction with the process. The Paperwork Reduction Act and OMB state that agencies should explain the collection and use of personal information and promote transparency with the public. In particular, the Paperwork Reduction Act has a broad requirement that an agency explains to the person receiving an information collection the reasons for collecting the information and the agency’s use of the collected information. Furthermore, according to OMB’s directive on open government, transparency promotes accountability by providing the public with information about government activities. However, SBA’s paper and online resources do not provide consistent information about the three-step loan process, required documents and reasons for the requirements, and processing time frames, which could be contributing to applicants’ confusion. According to SBA officials, SBA’s customer service representatives working in disaster areas provide applicants information about the loan process, including explaining the three-step loan process and estimated time frames for completing the process. SBA officials also added that they refer business applicants to SBDCs for additional assistance in completing disaster loan applications. However, as previously mentioned, we found that SBDCs were not always well informed about information resources that explained the disaster loan process. Further, business applicants who apply without seeking assistance from SBA or SBDCs may see only SBA’s fact sheet, reference guide, loan-process flier, or application forms. Absent more consistent disaster loan-related information in each of the agency- produced paper and online resources, loan applicants and SBDCs may not understand the disaster loan process, documentation requirements, and time frames and may continue to find the loan process confusing. Our SBDC interviews indicate that some business loan applicants are confused about the finance terminology and financial forms required in the application, particularly the requirement that they submit a personal financial statement. According to three SBDCs we interviewed, they mentioned instances where business applicants had difficulty understanding the parts of the loan application dealing with financial statements and finance terminology; for example, there were applicants who were not familiar with financial statements, did not know how to access information contained in a financial statement, and did not know how to create a financial statement. Although the loan forms include instructions, the instructions do not define the financial terminology. According to SBA officials, when applicants do not know how to create a personal financial statement, the agency’s customer service representatives direct applicants to SBDCs for help. Two of the three SBDCs said these difficulties arise among business owners who do not have formal education or training in finance or related disciplines—and who are attempting applications during high-stress periods following disasters. Federal statute requires agencies to use clear and understandable terminology. Specifically, the Plain Writing Act of 2010 requires that federal agencies use plain writing in every document that they issue. Plain writing is defined as clear, well-organized writing that follows best practices appropriate for the intended audience. According to SBA officials, although the agency does not provide a glossary that defines finance terminology in loan application forms, the online application portal has a “contextual help” feature that incorporates information from application forms’ instructions to help applicants complete disaster loan forms. Additionally, as previously stated, SBA officials said that there are other resources, such as SBA customer service representatives and local SBDCs, available to assist business loan applicants and to explain the loan forms and key terms. As mentioned earlier, promoting disaster preparedness among businesses is one of the strategies in SBA’s 2015 performance report and actions SBA has taken include holding disaster preparedness webinars and conducting regional outreach. However, these efforts may not offer sufficient assistance or reach all applicants. Without explanations of finance terminology, loan applicants may not fully understand the disaster business loan application requirements, which may contribute to confusion in completing the financial forms. Generally, lack of integration of resources into the disaster loan assistance web portal, inconsistent information in written and online resources, and undefined finance terminology on the loan application have contributed to the burden of businesses applying for disaster loans. In particular, disaster business loan applicants and resource partners may not be aware of key information for completing disaster business loan applications because key resource materials such as SBA’s fact sheet, reference guide, and three-step process flier are not easily accessible from the web portal. In addition, without consistent information about the loan process, explanation of documentation requirements, and expected time frames in SBA’s resource materials, loan applicants and resource partners may continue to find the loan process confusing. Further, without defining financial terminology in loan forms some applicants may not fully understand the requirements of the application. A more integrated, consistent, and clear dissemination of information by SBA would help business disaster victims better access information about the disaster loan process, better understand the loan document requirements and expected time frames, and better understand the definition of loan terminology, thus helping to reduce victims’ burdens in recovering from disasters. We are recommending the following three actions: To help business disaster victims and resource partners better access information about the disaster loan process, the Administrator of the Small Business Administration should integrate information resources such as the fact sheet, reference guide, and three-step process flier into its disaster loan assistance web portal and Partner Training Portal in a way that is more accessible to users. To help reduce confusion about the disaster loan process and the time frames applicants may experience, the Administrator of the Small Business Administration should ensure the consistency of content across its disaster loan process resources by including in these written and online resources, as appropriate, the following: (1) the three-step process; (2) the types of documentation SBA may request and the general reasons why such information may be requested; and (3) estimates of loan processing time frames applicants might experience and external factors, such as the severity of a disaster, that may affect these time frames using, for example, estimates from its forecasting and related planning tools. To further assist disaster business loan applicants, the Administrator of the Small Business Administration should define technical terminology related to financial statements and other finance terminology on the disaster business loan application forms, in both electronic and paper format. For example, in the online application portal, SBA could incorporate a glossary in the “help” feature. Additionally, SBA could include a glossary in the paper application, so that business applicants who apply by mail can access the definitions as well as the general reasons why such information may be requested. We provided a draft of this report to SBA for review and comment. The SBA liaison—Program Manager, Office of Congressional and Legislative Affairs—stated in an e-mail that SBA’s Office of Disaster Assistance agreed with our recommendations. The SBA liaison also provided technical comments in an e-mail, which we incorporated where appropriate. We are sending copies of this report to appropriate committees and the Administrator of SBA. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-8678 or shearw@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VI. The Recovery Improvements for Small Entities After Disaster Act of 2015 includes a provision for us to evaluate the steps that the Small Business Administration (SBA) has taken to comply with the Paperwork Reduction Act of 1995 in administering its Disaster Loan Program. Specifically, this report examines (1) controls in SBA’s process for complying with the form renewal requirements of the Paperwork Reduction Act in administering its Disaster Loan Program, and (2) SBA’s recent and planned actions to reduce the burden of business loan applicants for the Disaster Loan Program. Although the processes we are evaluating apply to disaster loans for homeowners and businesses, this report focuses on disaster business loans for businesses. Additionally, SBA has divided the disaster loan process into three steps: application, verification and loan processing, and closing (see fig. 1). This report focuses on step 1, the loan application process. To examine the extent to which SBA has processes to implement and monitor compliance with the Paperwork Reduction Act’s requirements in administering its Disaster Loan Program and the effectiveness of the processes and controls in ensuring the requirements are met, we reviewed the act and Office of Management and Budget (OMB) regulations to identify relevant requirements. We also reviewed SBA’s policies and procedures, including the Forms Management Standard Operating Procedures, to identify its processes for meeting Paperwork Reduction Act requirements, and we assessed the processes against the act and applicable federal internal controls. We also interviewed SBA officials to understand SBA’s compliance with the act’s requirements and the effectiveness of SBA’s controls. Additionally, we reviewed each disaster business loan form to determine if SBA’s disaster business loan application forms satisfied the Paperwork Reduction Act requirements of having an OMB control number; valid expiration date; an estimate of how long it will take to complete the form; and a statement notifying applicants that if a form does not display a valid OMB control number then applicants do not have to complete that form. Specifically, we reviewed SBA Form 5 – Disaster Business Loan Application; SBA Form 159D – Fee Disclosure Form and Compensation Agreement; SBA Form 1368 – Additional Filing Requirements Economic Injury Disaster Loan, and Military Reservist Economic Injury Disaster Loan; and SBA Form 413D – Personal Financial Statement. For each form, we also reviewed the form renewal package—OMB Form 83-I; OMB Form 83-I supporting statement; and SBA Form 58—for SBA Form 5, Form 1368, and Form 413D, for years 2008, 2011, and 2014; and for SBA Form 159D, for years 2009, 2013, and 2014. For information on how an applicant would navigate the Electronic Loan Application portal to submit a disaster business loan application, we received an in-person demonstration of the Electronic Loan Application portal at SBA’s headquarters. To examine the extent to which SBA has developed plans or implemented actions to further reduce the paperwork burden of disaster business loan applicants, we reviewed SBA’s 2015 Performance Report and other SBA documentation that set out recent and planned actions intended to reduce burden or enhance loan processes for disaster business loan applicants. Moreover, we reviewed and identified leading practices intended to reduce paperwork burdens from the Hurricane Sandy Rebuilding Task Force Report (2013), an OMB memorandum to agency heads (June 2012), and the Small Business Paperwork Relief Task Force Reports (2003, 2004). We also interviewed Office of Disaster Assistance officials responsible for administering the Disaster Loan Program to discuss recent and planned actions to reduce the paperwork burden on disaster business loan applicants. In addition, we conducted semi-structured interviews with Small Business Development Centers (SBDC) to identify burdens faced by disaster loan applicants and suggestions to improve such issues. We selected a nongeneralizable sample of eight SBDCs to interview, based on which counties in each of the four Census regions had the highest number of approved disaster business loans for calendar years 2012 through April 1, 2016. Specifically, we associated each state within SBA’s 10 regions with one of the four Census regions—Northeast, Midwest, South, and West—which allowed us to have geographic diversity in the SBDCs we interviewed. Within each Census region, we identified two counties with the highest number of approved disaster business loans. In cases where more than one county tied for the highest number of approved disaster business loans, the county with the highest loan amount disbursed was selected. In instances where a county had the two highest number of loan approvals, the county with the third highest number of approved disaster business loans was selected. To select the eight SBDCs to interview, we used the city and zip code of the counties with the highest number of approved disaster business loans to identify the SBDCs located either within or nearby these counties. If a county with the highest number of approved disaster business loans did not have an SBDC located within it, we then selected the SBDC closest to the zip code receiving the highest number of disaster business loan approvals. If a county had multiple SBDCs located within it, we then looked at the zip code affected by the disaster in the county and selected the SBDC closest to the zip code receiving the highest number of disaster business loan approvals. Our selections do not represent the views of other SBDCs that were not included. We also reviewed both SBA’s and the American Customer Satisfaction Index’s (ACSI) customer satisfaction survey results. For analysis of SBA’s customer satisfaction survey results, we obtained survey suggestions submitted by disaster business loan applicants from June 2012 to March 2015. We selected this time period to be consistent with the time period used in the selection of SBDCs. The results comprised a list of 19 survey suggestions submitted by disaster business loan applicants and referred to the Continuous Improvement Process Board for review. For analysis of ACSI’s customer satisfaction survey results, we looked at ACSI’s 2012 through 2015 reports and identified the loan process areas that negatively and positively affected survey respondent’s satisfaction with SBA’s disaster business loan program and ACSI’s identified recommendations for improvements. We determined that these data were sufficiently reliable for the purpose of describing applicants’ experiences with the disaster business loan application process. We conducted this performance audit from February 2016 to November 2016 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. In addition to the contact named above, Jill Naamane (Assistant Director), Kun-Fang Lee (Analyst-in-Charge), Bethany Benitez, Tim Bober, William R. Chatlos, Camille Henley, Lindsay Maple, Marc Molino, and Tovah Rom made key contributions to this report.

Summary: According to SBA, the agency received more than 40,000 disaster business loan applications from fiscal years 2010 through 2014, and estimates that applicants spent on average a total of more than 25,000 hours per year filling out disaster loan application forms. PRA requires agencies to minimize paperwork burden on individuals and small businesses. The Recovery Improvements for Small Entities After Disaster Act of 2015 includes a provision for GAO to evaluate SBA's compliance with PRA. This report examines (1) controls in SBA's process for complying with PRA form renewal requirements in administering its disaster business loans, and (2) SBA's recent and planned actions to reduce burden for business loan applicants. GAO analyzed applicable laws and guidance, including PRA and OMB and SBA guidance and policies, relevant reports, and loan applicants' responses to SBA and other surveys. GAO also interviewed SBA officials and a nongeneralizable sample of eight SBA resource partners (Small Business Development Centers) that provided disaster-related assistance to businesses, based on county-level loan approvals for 2012 through April 1, 2016. The Small Business Administration (SBA) process for complying with the Paperwork Reduction Act (PRA) includes a number of controls to help disaster business loan forms comply with the act and Office of Management and Budget (OMB) requirements (see figure). For example, SBA has a standard operating procedure that documents its clearance process; a requirement to solicit public comments; and a requirement that offices of Disaster Assistance, General Counsel, and Inspector General review submission packages for PRA clearance. SBA surveys business loan applicants to solicit suggestions for improving the loan process. The disaster business loan forms also include a valid OMB control number, as required by PRA. SBA has implemented and planned actions to streamline the disaster business loan process, but the agency has not made loan-related information and requirements easily accessible or consistent, or defined key terms, contributing to applicants' burden. SBA's 2015 Performance Report set out the agency's recent and planned actions, including streamlining the loan process and enhancing online loan application capabilities. SBA has published written and electronic materials about the disaster loan process, but applicants cannot easily access these materials from SBA's dedicated disaster loan web portal, contrary to federal guidelines for improving digital services. Also, SBA's materials provide inconsistent information on the process, required documents, and estimated processing time frames. Business loan applicants reported that they found the documentation requirements confusing and the application time frames unclear. PRA and an OMB directive on open government generally state that agencies should explain the collection and use of information and promote transparency by providing the public with information about government activities. Similarly, some Small Business Development Centers told GAO that loan applicants have expressed confusion over undefined financial terminology in SBA's loan application, particularly terminology in the required personal financial statement. Federal law requires agencies' forms be written using plain language that is appropriate for the intended audience. Improved integration of electronic resources and consistency of information in SBA's materials would help business disaster victims better access resources and understand the disaster loan process and expected time frames. Further, providing definitions of loan terminology can help reduce victims' confusion. SBA should (1) better integrate disaster-loan-related information on its web portal; (2) improve consistency of information, including the loan process, required documents, and estimated time frames, in paper and electronic resources; and (3) define financial terminology on disaster business loan application forms. SBA agreed with GAO's recommendations.