U.S. Small Business Administration
Washington, DC 20416
TESTIMONY OF HERBERT L. MITCHELL
FOR DISASTER ASSISTANCE
U. S. SMALL BUSINESS ADMINISTRATIONS
ROLE IN DISASTER ASSISTANCE IN NEW YORK CITY (NYC)
SENATE COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
NOVEMBER 1, 2001 2:00 PM
Mr. Chairman, Ranking Member, and distinguished members of the committee, my name is Herb Mitchell, and I am the Associate Administrator for Disaster Assistance for the U.S. Small Business Administration (SBA). Administrator Barreto asked that I represent the Agency today in his absence. We thank the committee for the opportunity to testify about the disaster assistance program, and our role in the economic recovery for New York City.
For the past 50 years, with any disaster that occurs in the United States, the SBA has played an immediate and major role in providing disaster assistance loans for businesses, homes, and personal property. This disaster, while different in scope, provides us the same opportunity to assist in the immediate recovery of the New York City region, and the Nation as a whole.
In a major disaster SBA participates with FEMA in conducting damage assessment surveys to determine the scope of the damage and the assistance needed. Once the declaration is made SBA co-locates with FEMA at the Disaster Field Office to coordinate assistance to individuals and businesses, thus ensuring that federal assistance is not duplicated. The FEMA telephone registration line serves as a one-stop shop for federal assistance, all businesses being referred to SBA for assistance. Additionally, SBA and FEMA will co-locate at disaster recovery centers to provide one-on-one assistance to disaster victims.
The afternoon of September 11th, our Niagara Falls, New York Disaster Area Office was dispatched to lower Manhattan, where they met with FEMA and the state emergency management officials to coordinate our response with the overall recovery effort. We also began working with Governor Pataki’s office to set up an SBA office in the NY State Business Resource Center in Manhattan, where we met with disaster victims, discussed SBA loan programs, issued applications, and provided direct assistance on the application process. The SBA has since deployed approximately 93 people in the New York City area to complement its Disaster Area 1 staff of over 200, and hundreds of additional SBA disaster trained employees are available and on call in New York and Nationwide if needed to supplement our efforts.
The SBA’s disaster assistance loan program is the primary Federal program for funding recovery for private-sector disaster victims. This program provides low interest rate loans (not to exceed 4 percent) to applicants without credit available elsewhere and a higher rate (not to exceed 8 percent) for those with credit available elsewhere. We offer real and personal property loans, physical disaster business loans, and economic injury disaster loans. Our real and personal property loans and physical disaster business loans are intended to assist people with their actual loss of property as a result of a disaster. The economic injury disaster loans are available to provide small businesses working-capital loans to help pay ordinary and necessary operating expenses that would have been payable absent the disaster. To complement these existing loan programs, the SBA, through its Disaster Area Office in New York, is working with New York’s Empire State Development Agency and several private financial institutions to provide “Bridge Loan” and “Gap Loan” financing for the NYC business community. “Bridge Loans” are short-term loans that may be repaid by the long-term SBA disaster loan, and “Gap Loans” offer financing to disaster victims who are unable to qualify for SBA loans.
In addition, Military Reservist Economic Injury Disaster loans are available to businesses that suffer an impact as a result of a key employee being called to duty as military reservists.
We are also focusing on getting information to the individuals and businesses that have been affected. Our staff has canvassed the neighborhoods to talk to small business owners suffering from this tragedy in order to inform them of SBA assistance, and distribute loan application packets personally. Administrator Barreto and I joined SBA disaster staff in New York City on September 17th, and saw first hand the empty restaurants and stores that normally would have been packed prior to the disaster. While in New York City, we met one notable small business owner, who told us that the “terrorists tried to declare a victory by destroying the World Trade Center buildings, but insisted they would not score a second victory by closing his (sic) business.” This is the patriotism and the true American entrepreneurial spirit that we have seen in New York and across the country. America will recover and thrive, and the SBA is proud to operate at the heart of that recovery, making whole again those businesses that have suffered.
As of October 31st, the SBA is proud to report its combined response to the New York disaster as follows:
· We have distributed almost 17,400 applications, some door to door, in Lower Manhattan and from 44 locations throughout the region;
· We have Directly Counseled and assisted over 17,000 individuals and businesses with loan applications or general information, incorporating Spanish, Mandarin Chinese, Croatian, Arabic, Hindu, Vietnamese, German, French, Korean and Japanese speaking counselors when necessary.
· We have received and processed 3,200 completed applications;
· We have approved nearly 1000 loans for $82,132,900.
· We have staffed six full Disaster Information Field Offices, conducted several workshops in multiple neighborhood locations, and placed trained disaster loan personnel in 4 additional Small Business Development Center (SBDC) offices in the region.
Under the agency’s historic disaster loan program parameters, businesses eligible for SBA disaster loan products are physically located in direct proximity to the declared disaster location. The September 11th attacks have presented a unique situation in regard to the scope of the Administration’s response.
In recognition of the widespread financial difficulties faced by a number of small businesses around the country as a result of the September 11th terrorist attacks, the SBA has worked through the Bush Administration to expand its Economic Injury Disaster Loan Program. Effective October 22, 2001, businesses located outside of the declared disaster areas in New York and Virginia that have suffered substantial economic injury as a direct result of the September 11th attacks, or as a direct result of a Federal action related to the September 11th disaster are now eligible to apply for assistance through SBA’s Economic Injury Disaster Loan program. These loans can help small businesses with working capital in order to meet its ongoing financial obligations.
Mindful of the nature of the businesses located in lower Manhattan, we have also submitted legislation to increase our size standard regulations for NY businesses to qualify for our loan programs, and have made them retroactive to the September 11th date; allow financial services organizations and non-profits to qualify for loans, and to increase the cap on aggregate loans.
SBA’s disaster programs have evolved over the years to meet the needs of small businesses. They work well, meet the needs of the nation’s affected small business communities, and the mechanisms are already in place to handle additional services as necessary. We are confident that utilizing existing disaster loan programs and resources to assist the NYC small business community, and the nation’s as a whole, is the most immediate and effective way to aid in its’ economic recovery from this disaster.
In addition to our disaster loan program, SBA provides numerous short and long-term loan programs to small businesses through our lending partners, such as Microloans, 7(a) guaranty loans, 504 loans and the Small Business Investment Company program. SBA’s technical assistance includes business counseling and training through our Business Information Centers, Service Corps of Retired Executives, One Stop Capital Shops, Women’s Business Centers and the SBDCs.
We look forward to working with all of you to help the citizens of New York, as well as those around our country that refuse to let terror destroy what we have collectively worked so hard to build.
I’m pleased to answer any questions.