SBA Fully Addressed Half of the Act’s Provisions, but Has Not Yet Established Milestones for Implementation of Remaining Requirements

SBA has fully addressed requirements for 13 of 26 provisions of the Act,  partially addressed 8, and took no action on 5 that are not applicable at  this time. SBA officials told us  the agency did not fully address requirements for some provisions because  the agency has to make extensive changes to current programs or create  new programs in order to comply with the Act’s requirements. Individuals we interviewed and  results from SBA’s 2008 Disaster Loan Program Customer Satisfaction  Survey provided some positive feedback about SBA’s performance  following recent disasters. However, interviewees and these same survey  results indicated areas for improvement; in particular, these sources both  indicated that the application paperwork was burdensome and that the  application process needed improvement. SBA officials told us that they  intend to improve the application process, but did not provide  documentation of such plans and did not appear to take advantage of  feedback from applicants, such as that received from the customer survey. By taking such actions, SBA could leverage  the efforts and capacity of SBDCs, as well as state and local emergency  management agencies, and ensure that it and they will be better prepared  for future events, especially in disaster-prone areas. Failure to produce annual reports on schedule can lead to a lack  of transparency on the agency’s progress in reforming the program. Delays  in updates to the DRP also limit its ability to adequately prepare for and  respond to disasters. SBA’s initial response following the 2008 Midwest floods and Hurricane  Ike aligned with certain components of its DRP, and the affected  individuals we interviewed, as well as respondents to SBA’s 2008 Disaster  Loan Program Customer Satisfaction Survey were somewhat satisfied with  the agency’s performance after the major disasters of 2008. In addition, SBA should make this information and  other Disaster Loan Program information readily available to these  regional entities prior to the likely occurrence of a disaster;    complete the first annual report to Congress on disaster assistance, and  adhere to the required time frames for subsequent annual reports;    expeditiously issue an updated DRP that reflects recent changes resulting  from the Act’s requirements, as well as SBA’s own disaster reform efforts;    develop an implementation plan and report to Congress on the agency’s  progress in addressing all requirements within the Act––including creating  and implementing new programs, such as the Immediate and Expedited  Disaster Assistance Programs––and include milestone dates for  completing implementation and any major program, resource, or other  challenges the agency faces as its continues efforts to address  requirements and meet deadlines in the Act; and    develop and implement a process to address identified problems in the  disaster loan application process for future applicants. Appendix I: Objectives, Scope, and Methodology

Our objectives were to review (1) the extent to which the Small Business  Administration (SBA) addressed the requirements of the Small Business  Disaster Response and Loan Improvements Act of 2008 (Act), and (2) how  SBA’s response, following the major disasters of 2008, aligned with key  components of its June 2007 Disaster Recovery Plan (DRP).
Why GAO Did This Study

After the Small Business Administration (SBA) was widely criticized for its performance following the 2005 Gulf Coast hurricanes, the agency took steps to reform the Disaster Loan Program and Congress enacted the Small Business Disaster Response and Loan Improvements Act of 2008 (Act). GAO was asked to determine (1) the extent to which SBA addressed the Act's requirements, and (2) how SBA's response to major disasters in 2008 aligned with key components of its June 2007 Disaster Recovery Plan (DRP). GAO reviewed the Act, as well as SBA information on requirements addressed and steps taken, including the DRP, various reports to Congress, and policy memoranda. GAO also conducted site visits to areas affected by major 2008 disasters, reviewed SBA's customer satisfaction survey, and obtained the opinions of relevant stakeholders.

What GAO Found

As of June 2009, SBA met 13 of 26 requirements of the Act, partially addressed 8, and did not take action on 5 which are not applicable at this time. SBA officials told GAO the agency has not yet completely addressed some provisions that require new regulations because to do so, the agency must make extensive changes to current programs or implement new programs. For two requirements that will involve private lenders, SBA plans to implement pilots before finalizing regulations. SBA has not yet addressed the Act's requirements for region-specific marketing and outreach and ensured that Disaster Loan Program information is readily available to regional entities, such as Small Business Development Centers (SBDC). By doing so, SBA could leverage the efforts and capacity of local resources and emergency management groups, and ensure that it and they will be better prepared for future disasters. Also, as of June 2009, SBA had not met deadlines to issue an annual report to Congress or an updated DRP. Failure to do so can lead to a lack of transparency on the agency's progress in reforming the program and limit its ability to adequately prepare for and respond to disasters. Furthermore, SBA did not have an implementation plan for addressing the remaining requirements. SBA's initial response after the 2008 Midwest floods and Hurricane Ike aligned with certain components of its initial DRP, such as using technology and outreach efforts to ensure timely assistance. The individuals GAO interviewed and results from SBA's 2008 Disaster Loan Program Customer Satisfaction Survey provided some positive feedback about SBA's performance following recent disasters. However, interviewees and survey results indicated areas for improvement; in particular, both indicated that application paperwork was burdensome and that the application process needed improvement. SBA officials told GAO that they have been taking steps to improve the application process, but did not provide documentation of such efforts. As a result, it did not appear to have any formal process for identifying problems in the application process and making needed improvements.