Lawmaker calls for review of SBA's Katrina response

Claiming that the Small Business Administration's response to small businesses ravaged by Hurricane Katrina has been insufficient, a key lawmaker is seeking an investigation into the agency's handling of the crisis.

Rep. Nydia Velazquez (D-N.Y.), ranking member of the House Committee on Small Business, asked the Government Accountability Office to probe SBA, with a particular focus on the agency's centralized disaster management center, to gauge its response to the crisis.

'By providing affordable financial assistance in a quick and efficient manner, the SBA's Disaster Assistance Program has enabled local communities to recover and regain their strength,' Velazquez wrote in a letter initiating the GAO investigation. 'In the wake of Hurricane Katrina, however, concerns have been raised that the SBA's response has been ineffective, leaving many business owners without the immediate assistance that they need.'

Earlier this month, SBA admitted its response to the hurricane was less than ideal but said the IT infrastructure in the Gulf Coast was heavily damaged, hampering the ability of its inspectors to process loan applications and upload data to its Disaster Credit Management System, a centralized data center that collects and processes small-business loan applications. DCMS went live last November

In her GAO letter, Velazquez questioned whether the DCMS 'helped or hindered' SBA's Katrina response and asked GAO to investigate whether DCMS is 'appropriately scalable to respond to super disasters like Hurricane Katrina.'

Velazquez also compared SBA's response with its reaction to the several hurricanes that hit Florida last year, claiming that the agency had processed more loan applications last year after six weeks than it has for Katrina.

But SBA said comparing the responses was misleading because Katrina was a much more damaging storm. The agency's response was 'a little protracted this time given the devastation of the area,' a spokeswoman said.

SBA received 10 times as many loan referrals for Katrina as it did last year, the spokeswoman said.

The spokeswoman is confident GAO will conclude the agency's response to the storm was sufficient.

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