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U.S. Small Business Administration Washington,
DC 20416 |
TESTIMONY
OF HERBERT L. MITCHELL
ASSOCIATE
ADMINISTRATOR
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.
Thank you.