Government Loan Approvals Slow for Katrina Victims

The government has slowed down in deciding whether to approve or deny hundreds of applications for federal loans to help small businesses recover from Hurricane Katrina, a senator said Monday.

Earlier this year, the government was resolving 355 cases daily; that figure has dropped to 99 cases daily. The slowdown came as 682 disaster assistance employees left the Small Business Administration, said Sen. Olympia Snowe, who chairs the Senate committee that oversees the agency.

In a letter to Small Business Administrator Hector Barreto, Snowe said she was troubled by the staff decrease "at a time when efficiency and production are of such high importance."

"I am deeply disturbed by the agency's reluctance to finish resolving all of the applications submitted by hurricane victims," Snowe, R-Maine, said in the March 23 letter, which was released Monday.

SBA spokeswoman Anne Marie Frawley did not have an immediate comment.

The agency has approved $6.7 billion in disaster loans to Gulf Coast businesses, homeowners and renters whose properties were damaged by Katrina and Hurricane Rita. But only $590 million has so far been distributed to applicants, said Snowe spokesman Chris Chichester.

For an 18-day period between Feb. 13 and March 3, the agency resolved 355 loan applications each day, clearing 90 percent of the pending requests, Snowe said. But in the 18 days that followed — between March 3 and March 21 — the agency approved 99 applications daily.

Meanwhile, the agency has lost 682 employees since March 1, Snowe said.

The SBA has been under fire from lawmakers since Katrina hit for not moving more quickly to help hurricane-ravaged companies. It has been working since November to speed delivery of loans.

The agency told Snowe's staff that the new delay was explained by "a shift in focus" from resolving business applications to considering loan requests by homeowners. However, "homeowner applications have not been resolved any faster," Snowe said. She said less than 9 percent of pending homeowner applications were resolved between March 3-21.