Riot Aid Delayed by Paperwork : Rebuilding: Mix-up with Small Business Administration has stalled plans for ‘micro-loans,’ city official says.

A paperwork snafu has delayed by nearly three weeks the start of a city program to give “micro-loans” to riot victims whose loan applications have been rejected by the Small Business Administration, Los Angeles Deputy Mayor Linda Griego said Thursday.

Under the program, applicants rejected by the SBA--including some who could not prove losses because paperwork had been burned in the riots--were to be funneled to City Hall, where they could receive loans of up to $75,000 each.

However, Griego said she learned Thursday that federal officials could not send those rejected applications to the city, because the applicants had not signed forms waiving privacy regulations.

“There was just a misunderstanding,” Griego said. “We’re asking anyone rejected by the SBA to call the mayor’s office if they wish to apply for a micro-loan.”

Federal officials have given the mayor’s office the names and telephone numbers of about 700 applicants rejected by the SBA, she said. The city plans to begin calling the applicants Monday.

In the future, she said, she will request that applicants be given a waiver to sign at the time they apply for federal aid.

Griego also said that city officials plan to ask the SBA to extend its application deadline for business loans from Aug. 15 to Sept. 15 and to simplify forms where possible. The deadline already has been extended several times, in part to address riot victims’ difficulty in understanding SBA forms and because many applicants have been unable to provide proof of losses.

As of July 17, the SBA had distributed 16,839 applications, but only 3,728 had been returned completed. The SBA offers five kinds of loans, some as large as $500,000. The city has about $5 million available from three programs under which victims can apply for loans of up to $75,000.