Red Tape Ties Riot Victims : Bureaucracy: Many applicants for SBA recovery loans are discouraged by the complicated paperwork. Few have received aid.

Of the thousands of riot victims who picked up applications for Small Business Administration loans, barely more than 10% have applied for help--and only one in four applicants have been approved for assistance, officials said Friday.

Echoing the complaints of protesting Korean-American merchants who have circled Los Angeles City Hall all week, Deputy Mayor Linda Griego said the problem is that the loan application process is too complicated and that not enough help and understanding are being given to riot victims.

After addressing a state Senate committee, Griego said it was her impression that many of the victims, finding the paperwork daunting, have not applied for loans.

“The SBA could do more. We need an outreach program that gets to these folks,” said Griego, who is trying to line up volunteers to call all who received applications and have not returned them.

“In the last month and a half, many have tried to apply but I think many people gave up,” said Jay Park, spokesman for the Assn. of Korean-American Victims of the Los Angeles Riot. According to Griego, about 50% of the people who obtained but have not completed applications were Asian-Americans and another 20% Latino, based on their surnames as listed in SBA records.

SBA spokeswoman Diane Brady said the agency has handed out more than 7,600 applications for reconstruction aid to business owners who suffered losses of buildings, equipment, inventory or machinery. Only 1,200 applications have been returned, she said.

Of those, 351 have been processed and 306 approved, she said. The loans awarded total $26.3 million--an average of about $85,900 per loan.

Additionally, the SBA handed out 6,700 applications for another type of disaster aid tied to cash-flow losses from the civil unrest. Only 572 of those applications have been returned, of which 99 were approved, she said. Those recipients have gotten loans totaling $3.2 million--an average of about $32,000 per loan.

Brady said all loans were at 4% interest, with repayment periods averaging 20 years.

The Korean-American victims group, however, has asked the SBA to amend its rules to address several key concerns, groups administrator Jin H. Lee said. The group wants loan payments delayed for the first five years and a guarantee that all loans be made for 30 years at 4% interest--rather than the shorter terms that Lee said some victims have been offered.

Brady acknowledged that the SBA has received many fewer completed applications than expected, but she predicted that many more would come in by the July 15 deadline for reconstruction loans. (Applications for cash-flow loans can be filed until Feb. 2.)

Another SBA official, speaking anonymously, said one reason some business owners have not returned applications is that they lack proper tax, payroll and inventory records because they were operating illegally. The official said that these owners have failed to file required tax returns, pay payroll taxes or obtain business licenses.

The official said it was impossible to know how many business owners fell into this category.

“I’m not saying we don’t have an underground economy, but to imply it’s a majority of these people is insulting,” Griego said. “There’s no way to quantify it. I don’t think you should assume it.”

“I think a lot of them are unsophisticated first-time business people. There are language problems. Their tax records may be inadequate. A lot started businesses in the last year and don’t have tax records yet.”

Brady said that the SBA has never received so many disaster applications from business owners as it has since the Los Angeles riots. After an earthquake, hurricane or tornado, the bulk of the agency’s applicants for emergency assistance typically are homeowners, Brady said.

She conceded that the application a business owner must complete to qualify for assistance is more complicated than the forms homeowners must submit for disaster aid.

Anna Kim, 28, whose children’s clothing store in Long Beach was destroyed in the rioting, said it took her “over a month to do the paperwork” required by the SBA.

“The process is hard,” Kim said while protesting outside Los Angeles City Hall on Friday. “Here your whole life has been destroyed, and they ask so many questions, so many things. They wanted a list of all the inventory, but everything had burned up so we were trying to figure out what was lost.”

Another requirement Kim found daunting was a three-year financial forecast. “That was a problem for me,” she said. “The business has been up and down with the recession.”

Kim said that she was able to complete the application with help from a volunteer group of Korean-American certified public accountants. In turn, Chinese-American victims have gone to the Chinatown Service Center for similar assistance and Latino shopkeepers to the Mexican Consulate near MacArthur Park.

Additionally, each Friday this month, graduate students and faculty from the USC School of Business Administration have been giving four-hour seminars to help people with their loan applications.

“I’m an accounting student, and I don’t understand these forms,” said Jennifer Robbins, who is volunteering in USC’s University-Community Outreach Program. “These are very small businesses. The SBA is asking for really complicated forecasting information and balance sheets.”

Brady said the agency is aware that some people are having problems with the forms. The U. S. Commerce Department’s Minority Business Development Centers also can help applicants with the forms, she said.

Chris Hyun, a counselor at one of the centers downtown, said 11 staffers each have about 130 clients and typically need three appointments with a client to complete the applications.

Griego said the city is obtaining a list of everyone who received SBA applications and plans to contact each to see if they can be helped. The city, she said, has $5 million in a special loan fund that many riot victims could use. But she said she doubts whether many know that the fund exists.

USC graduate student Nitin Bhatt, who also is advising victims, said there may be another reason some persons have not returned applications: their state of mind.

Eva Windsor--who shut down her 20-bed board-and-care facility in South Los Angeles after the furniture and equipment were looted during the riots--seems to be among that group.

Making initial inquiries about the loan process at USC on Friday, she said she was not in a hurry to apply because she was not sure she wanted to go back. “Even if they said you could have (the money), I’d be afraid,” said Windsor, 56, expressing concern for her clients’ safety. “Why should I be in such a hurry to put them back in a dangerous situation?”

Where to Apply for Riot Loans Applications for loans to rebuild businesses damaged in the Los Angeles riots are being taken at these eight disaster application centers through July 15:

* Harvard Recreation Center, 1535 W. 62nd St, Los Angeles.

* Hollywood Recreation Center, 1122 Cole Ave., Los Angeles.

* Compton Transit Center, back section of K-Mart, 307 N. Tamarind Ave., Compton.

* Department of Water and Power, 4030 Crenshaw Blvd., Los Angeles.

* Kedren Community Center, Gilbert Lindsay Park, 4211 S. Avalon Blvd., Los Angeles.

* Toberman Recreation Center, 1725 Toberman St., Los Angeles.

* Watts Senior Citizens Center, 1660 E. 99th St., Los Angeles.

* World Agape Mission Church, 933 S. Lake St., Los Angeles.

For information, call (800) 525-0321.