SBA Continues to Make Progress in Addressing the Act’s Provisions, but Has Not Yet Established Milestones for Implementing Remaining Requirements

As of May 2010, SBA fully addressed requirements for 15 of 26 provisions  of the Act; partially addressed 6; and took no action on 5 that are not  applicable at this time (see fig. Since then, SBA has fully addressed two additional  provisions. As we recommended and the Act requires, SBA issued an  updated DRP. SBA also issued regulations on coordinating with FEMA to  ensure that disaster assistance applications are submitted in a timely manner. For example, SBA officials told us that the agency has taken additional  steps to address the marketing and outreach provision, including that they (1) began an ongoing dialogue with the SBDC state directors in the Gulf  Coast about disseminating disaster planning and preparation informatio 2)  in the five most hurricane-prone states before the hurricane season, ( detailed an SBA employee who works with the SBDCs to the Offic Entrepreneurial Development to help the agency develop a strategic approach for its disaster role, and (3) issued some public service  announcements tailored to specific regions. In our 2009 report, we  recommended that SBA should fulfill the region-specific marketing and  outreach requirement, including making this information readily av to regional entities prior to the likely occurrence of a disaster. However,  the steps recently taken by SBA have not been discussed in public  documents or venues, such as in the DRP or on the SBA Web site, which  would make the information more transparent and easily accessible to public and Congress. According to SBA officials, the agency has not yet completely addressed  some provisions because to do so, the agency would have to make  extensive changes to current programs or implement new programs––suc as the Immediate and Expedited Disaster Assistance Programs––to satisf y  requirements of the Act. A s we  reported in 2009, SBA plans to conduct pilots of these programs before  fully implementing them. For example, as required by the Act and as we recommended,  the agency issued its first annual report on disaster assistance in  November 2009 but the report was due in November 2008. Not having an implementation  plan in place for addressing the remaining requirements can lead to a lac of transparency about the agency’s Disaster Loan Program, capacity to  reform the program and program improvements, as well as its ability to  e  adequately prepare for and respond to disasters. Recently, SBA officials told us th would provide a plan or report that  addressing the Act’s requirements. SBA’s Response Followi 2008 Disasters Aligned with Some DRP Components, but Its Responses to Disaster Victims’ Feedback on the Application Pr Be Improved

SBA’s initial response following the 2008 Midwest floods and Hurricane Ike aligned with major components of its DRP, such as infrastructu human capital, information technology, and communications. In addition, our review of SBA’s 2008 Disaste r  Loan Program Customer Satisfaction Survey also showed that respond were somewhat satisfied with the assistance SBA provided during othe recent disasters. However, both the individuals we interviewed and survey results indicated  areas for improvement and opportunities to increase satisfaction. Furthermore, SBA does not appear to have a formal process for  addressing identified problem areas and using the information gained to  improve the experience of future applicants. By establishing such a  process to address identified problem areas, SBA could better  demonstrate its commitment to improving the Disaster Loan Prog Because the agency has missed opportunities to further improve its  Disaster Loan Program, and in particular improve the application p for future applicants, we recommended in our July 2009 report that SBA  develop and implement a process to address identified problems in the  disaster loan application process. However, SBA has not  provided information to us on how it would implement a formal process to  address identified problem areas in the disaster loan application process.
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 its Disaster Loan Program. Congress also enacted the Small Business Disaster Response and Loan Improvements Act of 2008 (Act), which places new requirements on SBA to ensure it is prepared for catastrophic disasters. This testimony discusses (1) the extent to which SBA has 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). In completing this statement, GAO reviewed and updated, as appropriate, the July 2009 report, Small Business Administration: Additional Steps Should Be Taken to Address Reforms to the Disaster Loan Program and Improve the Application Process for Future Disasters (GAO-09-755). In that report, GAO recommended that SBA should fulfill the Act's region-specific marketing and outreach requirements; complete its annual report to Congress; issue an updated DRP; develop an implementation plan for remaining requirements; and develop procedures to further improve the application process for the Disaster Loan Program.

What GAO Found

SBA has made some progress since GAO's July 2009 report in addressing provisions of the Act and continued attention to certain provisions will be important for sustained progress. As of May 2010, SBA met requirements for 15 of 26 provisions of the Act and partially addressed 6. Five provisions do not require any action at this time. Since July 2009 SBA has taken a number of actions. For example, SBA issued an updated DRP in November 2009. In addition, SBA issued regulations on coordinating with the Federal Emergency Management Agency on timely submission of disaster assistance applications. SBA also has taken steps to address the Act's requirements for region-specific marketing and outreach. For example, SBA has begun a dialogue with the Small Business Development Center state directors in the Gulf Coast about disseminating disaster planning information in the five most hurricane-prone states before the hurricane season. However, these steps have not been discussed in public documents or venues, such as in the DRP or on the SBA Web site, which would make the information more transparent and easily accessible to the public and Congress. SBA officials told GAO the agency has not yet completely addressed some provisions because the agency must make extensive changes to current programs or implement new programs. In particular, for two requirements that will involve private lenders, SBA plans to implement pilots before finalizing regulations. SBA officials recently said that they had formed a cross-functional work group and began reaching out to lenders about the planned pilots. SBA has not yet developed an implementation plan with milestone dates for addressing the remaining requirements, but recently said it would provide a plan or report that included milestone dates for addressing the Act's 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 better ensure timely assistance. The individuals GAO interviewed and results from SBA's 2008 Disaster Loan Program Customer Satisfaction Survey provided somewhat positive feedback about SBA's performance following the 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. The agency did not appear to have a formal process for identifying problems in the application process and making needed improvements. SBA officials told GAO that they have been taking steps to improve the application process. However, SBA has not provided information to GAO on how it would implement a formal process to address identified problem areas in the disaster loan application process.