SBA’s 2006 Forms Management Program, SOP 00  30 3, provides written operating procedures for the agency’s Paperwork  Reduction Act clearance process. Next, Records Management Division officials said  they solicit public comments and coordinate with the relevant program  offices as well as Office of General Counsel (OGC) and Office of  Inspector General (OIG) to evaluate the information collection. We also observed from a demonstration that the  Electronic Loan Application disaster business loan application forms  include the OMB control number, expiration date, and a disclaimer that if  the OMB control number is missing, an applicant is not required to  complete the forms. According to SBA officials, SBA  uses the surveys, both administered by phone, to solicit input and  suggestions for improvements. SBA Could Better Integrate Consistent Information about the Disaster Business Loan Process into Its Web Portal and More Fully Define Loan Terminology

			Disaster Loan-Related Information Is Not Easily Accessible

SBA has published several written and electronic resources about the  disaster loan process, but much of this information is not easily  accessible to loan applicants and SBA’s resource partners from the  disaster loan assistance web portal. 14 and 15) set out the three  steps of the loan process, required documents, and estimated time  frames. For example, according to SBDCs we interviewed as well as  responses to SBA and the ACSI surveys, some business loan applicants  found the loan process and required documentation confusing for the  following reasons:  Inconsistent information about loan application process. The Paperwork Reduction Act and OMB state that agencies should  explain the collection and use of personal information and promote  transparency with the public. Furthermore, according to  OMB’s directive on open government, transparency promotes  accountability by providing the public with information about government  activities. Some Business Loan Applicants Are Confused about Finance Terminology

Our SBDC interviews indicate that some business loan applicants are  confused about the finance terminology and financial forms required in  the application, particularly the requirement that they submit a personal  financial statement. Federal statute requires agencies to use clear and understandable  terminology. A more integrated,  consistent, and clear dissemination of information by SBA would help  business disaster victims better access information about the disaster  loan process, better understand the loan document requirements and  expected time frames, and better understand the definition of loan  terminology, thus helping to reduce victims’ burdens in recovering from  disasters. To help reduce confusion about the disaster loan process and the time  frames applicants may experience, the Administrator of the Small  Business Administration should ensure the consistency of content across  its disaster loan process resources by including in these written and  online resources, as appropriate, the following: (1) the three-step process;  (2) the types of documentation SBA may request and the general reasons  why such information may be requested; and (3) estimates of loan  processing time frames applicants might experience and external factors,  such as the severity of a disaster, that may affect these time frames  using, for example, estimates from its forecasting and related planning  tools. Appendix I: Objectives, Scope, and Methodology

The Recovery Improvements for Small Entities After Disaster Act of 2015  includes a provision for us to evaluate the steps that the Small Business  Administration (SBA) has taken to comply with the Paperwork Reduction  Act of 1995 in administering its Disaster Loan Program. Specifically, this  report examines (1) controls in SBA’s process for complying with the form  renewal requirements of the Paperwork Reduction Act in administering its  Disaster Loan Program, and (2) SBA’s recent and planned actions to  reduce the burden of business loan applicants for the Disaster Loan  Program. We also interviewed SBA  officials to understand SBA’s compliance with the act’s requirements and  the effectiveness of SBA’s controls. To examine the extent to which SBA has developed plans or  implemented actions to further reduce the paperwork burden of disaster  business loan applicants, we reviewed SBA’s 2015 Performance Report  and other SBA documentation that set out recent and planned actions  intended to reduce burden or enhance loan processes for disaster  business loan applicants. We selected a  nongeneralizable sample of eight SBDCs to interview, based on which  counties in each of the four Census regions had the highest number of  approved disaster business loans for calendar years 2012 through April 1,  2016.
Why GAO Did This Study

According to SBA, the agency received more than 40,000 disaster business loan applications from fiscal years 2010 through 2014, and estimates that applicants spent on average a total of more than 25,000 hours per year filling out disaster loan application forms. PRA requires agencies to minimize paperwork burden on individuals and small businesses. The Recovery Improvements for Small Entities After Disaster Act of 2015 includes a provision for GAO to evaluate SBA's compliance with PRA. This report examines (1) controls in SBA's process for complying with PRA form renewal requirements in administering its disaster business loans, and (2) SBA's recent and planned actions to reduce burden for business loan applicants.
GAO analyzed applicable laws and guidance, including PRA and OMB and SBA guidance and policies, relevant reports, and loan applicants' responses to SBA and other surveys. GAO also interviewed SBA officials and a nongeneralizable sample of eight SBA resource partners (Small Business Development Centers) that provided disaster-related assistance to businesses, based on county-level loan approvals for 2012 through April 1, 2016.

What GAO Found

The Small Business Administration (SBA) process for complying with the Paperwork Reduction Act (PRA) includes a number of controls to help disaster business loan forms comply with the act and Office of Management and Budget (OMB) requirements (see figure). For example, SBA has a standard operating procedure that documents its clearance process; a requirement to solicit public comments; and a requirement that offices of Disaster Assistance, General Counsel, and Inspector General review submission packages for PRA clearance. SBA surveys business loan applicants to solicit suggestions for improving the loan process. The disaster business loan forms also include a valid OMB control number, as required by PRA.
SBA has implemented and planned actions to streamline the disaster business loan process, but the agency has not made loan-related information and requirements easily accessible or consistent, or defined key terms, contributing to applicants' burden. SBA's 2015 Performance Report set out the agency's recent and planned actions, including streamlining the loan process and enhancing online loan application capabilities. SBA has published written and electronic materials about the disaster loan process, but applicants cannot easily access these materials from SBA's dedicated disaster loan web portal, contrary to federal guidelines for improving digital services. Also, SBA's materials provide inconsistent information on the process, required documents, and estimated processing time frames. Business loan applicants reported that they found the documentation requirements confusing and the application time frames unclear. PRA and an OMB directive on open government generally state that agencies should explain the collection and use of information and promote transparency by providing the public with information about government activities. Similarly, some Small Business Development Centers told GAO that loan applicants have expressed confusion over undefined financial terminology in SBA's loan application, particularly terminology in the required personal financial statement. Federal law requires agencies' forms be written using plain language that is appropriate for the intended audience. Improved integration of electronic resources and consistency of information in SBA's materials would help business disaster victims better access resources and understand the disaster loan process and expected time frames. Further, providing definitions of loan terminology can help reduce victims' confusion.

What GAO Recommends

SBA should (1) better integrate disaster-loan-related information on its web portal; (2) improve consistency of information, including the loan process, required documents, and estimated time frames, in paper and electronic resources; and (3) define financial terminology on disaster business loan application forms. SBA agreed with GAO's recommendations.