Watchdogs Claim SBA’s Disaster Loan Response Padded by Bad Credit Loan Applications
In the aftermath of Hurricane Sandy, the US Small Business Administration was widely criticized for what many saw to be a sluggish response to the natural disaster, where many businesses that needed aid in the form of SBA backed loans were not able to have their applications processed within 30 day, with the average of 51 days turnaround for disaster loans. Now, watchdogs tasked with monitoring the Federal organization claim that the numbers posted by the SBA were padded by a large number of fast redirections of applicants for bad credit business loans. As reported by App.com, 40% of the total disaster loan requests processed were bad credit loan requests which are typically diverted out of the main application channel within 3 days.
Bad credit business loan applicants would significantly effect average processing time. If 40% of the reported applications processed were quickly diverted to other relief channels, removing them from the average processing time would have major implications regarding the average processing time of the SBA in regards to these disaster loans, and in fact, that seems to be the case, the same app.com piece going on to state that while the SBA had claimed 2/5 loans for physical damages were completed within 30 days, while in reality the number was closer to 1/5. While wait is something that is typically associated with governmental programs, in the case of captial that small businesses need in order to keep their doors open, each day of wait can be one step closer to failure.
Continuous need for improvement within the SBA. While the SBA responded faster to Sandy than past major disasters, there is a need for constant improvement within the organization, in particular in order to prepare for sudden influxes of applications in the aftermath of devastation. As disasters have been a feature of the paste few years, the protocols in place for ensuring that residents of affected areas are able to quickly recover should be a focus not only of scrutiny but also of efforts at careful revision and optimization.
Photo Credit to EUMETSAT on Flickr