SBA’s Disaster Loan Program, which has been a part of the agency since its inception in 1953, is the primary federal program for funding long-term recovery assistance. SBA’s Office of Disaster Assistance (ODA) responds to disasters and administers the program––which provides affordable, timely and accessible financial assistance following a disaster to homeowners, renters, businesses of all sizes, and nonprofit organizations. SBA does not provide disaster grants; rather, this financial assistance generally is available in the form of direct, low-interest loans and is the only SBA program not limited to small businesses. A Presidential disaster declaration puts into motion long-term federal recovery programs, such as the Disaster Loan Program, but SBA is not a “first responder” after a disaster. Rather, local government emergency services assume the role of first responders, with help from state and volunteer agencies. For catastrophic disasters, and if a governor requests it, federal resources can be mobilized through the U.S. Department of Homeland Security’s Federal Emergency Management Agency (FEMA) for search and rescue, electrical power, food, water, shelter, and other basic human needs. SBA typically responds to a disaster within 3 days by sending ODA field staff to the affected area to begin providing public information about SBA’s services. Once a disaster is declared, SBA, by law, is authorized to make two types of disaster loans: (1) physical disaster loans, and (2) economic injury disaster loans. Physical disaster loans are for the permanent rebuilding and replacement of uninsured or underinsured disaster-damaged property. That is, SBA provides loans to cover repair costs that FEMA or other insurance has not already fully compensated or covered. The loans are intended for repair or replacement of the disaster victim’s damaged property to its pre-disaster condition. Interest rates are periodically adjusted and SBA calculates rates after each disaster. By law, the interest rates depend on whether each applicant has credit available elsewhere. If SBA determines the applicant is unable to borrow from non-government sources or does not have sufficient funds, then the applicant is considered to not have credit available elsewhere. SBA offers two levels of interest rates, a low rate for applicants who have no credit available elsewhere and a higher rate for applicants with credit available elsewhere. Economic injury disaster loans provide small businesses, including agricultural cooperatives and private nonprofit organizations, with necessary working capital until normal operations can resume after a disaster. Loan funds are intended to cover operating expenses small businesses could have paid had the disaster not occurred. The interest rates on an economic injury disaster loan cannot exceed 4 percent (see table 1). Immediately following a disaster, SBA public information officers are responsible for providing information and outreach to victims about SBA’s Disaster Loan Program and SBA customer service representatives are available to help home and business owners complete loan applications. However, certain restrictions and guidelines apply to SBA’s Disaster Loan Program. For example, individuals must first register with FEMA and obtain a registration number before SBA can issue an application. SBA has separate applications for home and business loans and offers these applications in both paper and electronic form. Furthermore, SBA only will make a disaster loan if there is reasonable expectation that the loan can be repaid—loan applicants must have a credit history acceptable to SBA and demonstrate their ability to repay all outstanding loans. They must also apply within certain time frames. Typically, loan applications for physical disaster loans must be received by SBA within 60 days from the date of the disaster declaration, while applications for economic injury disaster loans must be received within 9 months. In addition, SBA generally requires collateral for all loans greater than $14,000, recently increased from $10,000 pursuant to section 12065 of the Act. Once SBA receives a completed loan application, staff in its Loan Processing and Disbursement Center review eligibility, check credit, and calculate repayment ability. Applicants declined at this stage always receive notification in writing from SBA. The letter provides reasons for the declination and advises the applicant of its reconsideration rights. Applications that are not declined are assigned to an SBA loss verifier, who is responsible for contacting each applicant to make an appointment to verify the physical losses and estimate a dollar value for damaged real estate and personal property. Next, staff underwrite the application and review in greater depth the applicant’s credit history, repayment ability, and eligibility. Unless the application is withdrawn, SBA processes each loan application to an approved or declined status. SBA notifies approved applicants and makes arrangements to execute the loan closing. Before SBA can make any disbursements, the borrower must execute loan closing documents and return them to SBA within 60 days. Upon receipt of the closing documents, SBA issues the first disbursement of the unsecured portion of the loan––up to $14,000 for physical disaster loans. After SBA has verified that lien requirements on collateral property have been met, it can disburse the additional secured portion of the physical disaster loan based on need or construction progress. Because no physical repairs are associated with economic injury disaster loans, SBA generally makes full disbursement for these loans once collateral and insurance requirements are met. SBA monitors all disbursements to ensure that loan funds are used in accordance with the loan authorization and agreement. ODA and the newly created Executive Office of Disaster Strategic Planning and Operations (EODSPO), both headquartered in Washington, D.C., are responsible for responding to disasters, coordinating with other disaster recovery entities, and administering the agency’s Disaster Loan Program. ODA has four field offices, which are the Customer Service Center located in Buffalo, New York; two disaster Field Operations Centers located in Atlanta, Georgia and Sacramento, California; and a centralized Loan Processing and Disbursement Center located in Fort Worth, Texas. ODA also has a Personnel and Administrative Services Center and a DCMS Operations Center in Herndon, Virginia. Organizationally the associate administrator of ODA reports directly to the EODSPO chief; and the EODSPO chief reports to the SBA Administrator. In addition, ODA can utilize SBA district offices, SBDCs, and SCORE (formerly called Service Corps of Retired Executives) for local marketing and outreach efforts. Among the lessons learned from the 2005 Gulf Coast hurricanes was the need for a more organized, formal, and pre-planned approach for providing SBA services in response to a disaster. Members of Congress found that it was necessary for SBA to develop and implement a written, comprehensive disaster plan. Congress acted to signify the importance of an agency-wide plan that provided guidance and procedures governing preparations for, and response to, declarations of disasters of various dimensions, including catastrophic disasters, by including several related requirements in the Act. Thus, one section of the Act requires that SBA develop, implement, or maintain a comprehensive written disaster response plan and update the plan annually and following any major disaster when SBA declares eligibility for additional disaster assistance. Our prior work also revealed the need for SBA to conduct comprehensive disaster planning. For example, as we stated in our February 2007 report, SBA did not engage in or complete comprehensive disaster plans before the Gulf Coast hurricanes, and this limited logistical disaster planning likely contributed to the initial challenges the agency faced in responding. We recommended that SBA develop time frames for completing key elements of a disaster management plan and a long-term strategy for acquiring office space, and assess whether the use of disaster simulations or catastrophe models would enhance the disaster planning process. In August 2008, SBA provided information to us on how the agency had implemented our recommendation to use disaster simulations to enhance its disaster planning. Other GAO reports, reports by other investigative agencies, and disaster management experts long have stated that comprehensive planning can help organizations prepare for potential disasters and mitigate their effects. In the wake of the Gulf Coast hurricanes, SBA officials said that they recognized the importance of disaster planning—to improve planning, they created the agency’s first DRP and also conducted their first simulation. In creating the DRP, SBA acknowledged the need for a systematic approach to carry out the agency’s disaster assistance mission and ensure coordination, awareness, and support throughout the agency. The plan, which was issued on June 1, 2007, was designed to provide procedures to better handle future disasters of all sizes. Its major components–– infrastructure, human capital, information technology, and communications and outreach––are designed to help ensure that necessary resources are available, (including reserve corps, staff trained in disaster loan processing, office space, and information technology) and that SBA has established an enhanced approach for communicating with the public and coordinating with other disaster assistance groups. The Act comprises 26 provisions with substantive requirements for SBA; some with specific deadlines and some needing appropriations, and includes requirements that SBA must meet regarding disaster planning and response, disaster lending, and reporting. For instance, the Act includes provisions to improve SBA’s coordination with FEMA, require that the agency conduct biennial disaster simulations, create a comprehensive disaster response plan, and improve communication with the public when disaster assistance is made available. It includes requirements to improve ODA’s infrastructure, appoint an official to oversee the disaster planning and responsibilities of the agency, and establish reporting requirements for various reports to Congress. The Act also includes provisions to create new SBA disaster loan programs, such as the Immediate Disaster Assistance Program that would provide small dollar loans immediately following a disaster and the Expedited Disaster Assistance Loan Program that would provide expedited disaster assistance to businesses. The Act contains 9 provisions that establish deadlines for specific SBA actions that range from 30 days to 1 year after the Act’s enactment (see table 2).