SBA weathers storm of criticism over loan processing

Small Business Administration inspectors working in the hurricane-ravaged Gulf Coast have been hampered by a damaged regional IT infrastructure and a new centralized loan processing system that is still working out its kinks, agency officials said.

Herb Mitchell, SBA’s associate administrator of the Office of Disaster Assistance, said the agency’s Disaster Credit Management System, which went live in November 2004, has worked with modest success over the past few weeks, but as with any new system, there have been some setbacks.

“It is not ideal to introduce a new system at the same time that its most catastrophic event is going on,” Mitchell said.

SBA has come under congressional fire for its seemingly slow response in processing loans related to the Katrina and Rita hurricane disasters. The House Small Business Committee is holding a hearing on the agency’s response Friday. Rep. Nydia Velazquez (D-N.Y.), the ranking Democrat on the panel, has been questioning the readiness of the agency’s disaster management system.

Mitchell said there was some validity in the criticism, but that not everything that has gone wrong with the new system was SBA’s fault.

Under DCMS, SBA inspectors use tablet PCs at the scene to record damage and loan requests from small-business owners. They enter the data into the tablets and upload it to DCMS for processing.

One problem, Mitchell said, is that the IT infrastructure in the Gulf Coast is heavily damaged, and inspectors on the ground have had varying degrees of success and trouble submitting their data to the system. “We’re getting various responses in terms of the ability to synch up in places where access to the Internet is questionable,” Mitchell said.

And because the inspectors also receive their instructions electronically from DCMS, the unpredictable IT infrastructure has made this more difficult as well, Mitchell added.

Still, Mitchell said, DCMS has held up well overall in its first major disaster. According to SBA records, the agency has processed 6,623 of the 61,780 loan applications it has received as of Oct. 6. Of that number, SBA has approved 586 loans totaling $207,000; it has rejected 6,037.

Under the old paper system, loan applications would probably not even have been mailed out at this point, he said.

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