Korean-, Japanese-Americans Unite Against SBA Loan Measure : Riot aftermath: Merchants attack new law intended to keep businesses from moving out of disaster areas.

Korean-American and Japanese-American community leaders have joined forces to fight a recently adopted federal law that could prevent hundreds of merchants who lost their businesses in the Los Angeles riots from using Small Business Administration disaster relief loans to relocate their shops.

Korean-American leaders say the law--passed in September to prevent the flight of businesses from economically disadvantaged neighborhoods--is yet another blow to their battered community, which suffered huge business losses during the spring riots and now faces community opposition to its plans to rebuild.

“My immediate, gut reaction was shock,” attorney Pio Kim said. “There has been one blow after another to the Korean community. Their businesses were burned down and now, even for (business owners) willing to go back, people don’t want them.”

Sponsored by Rep. Neal Smith (D-Iowa) as an amendment to two federal appropriations bills, the law prohibits the use of SBA disaster relief loans to “relocate voluntarily outside the business area in which the disaster occurred.” The law was intended to keep businesses and their tax dollars, services and job opportunities in disaster-stricken areas, according to Smith.

But the law could hurt more than 1,000 Los Angeles business owners--many of them Korean-Americans--whose SBA loans have not yet been approved and who may want to relocate because the shops they rented have not been rebuilt or they cannot afford to wait for the lengthy public hearing process that the city requires for those seeking to rebuild liquor stores and swap meets.

Although the Smith amendment has already been passed, local Asian-American leaders are seeking wording in the regulations--which are still being drafted--that will exempt Los Angeles business owners.

The SBA neither requested nor endorsed the legislation, said Dan Eramian, an SBA spokesman. “We are reviewing the congressional language and it does recognize the need to be flexible. Our aim is to make sure there will be as little impact as possible on the (Los Angeles) business owners.”

The law is not retroactive and applies only to loan applications approved after Oct. 7, Eramian said. There are more than 1,330 Los Angeles disaster relief loan applications still under review and the SBA continues to accept applications, though the official deadline for riot-related loan applications was Sept. 15, Eramian said.

Although the Los Angeles riots were not the impetus for his amendment, Smith said he does not believe Los Angeles business owners should be exempted from the rule. “Los Angeles is no different from other places,” said Smith, who cited the example of an unidentified West Virginia town whose only grocer wanted to leave after a flood devastated the small community.

“If you give subsidized loans to people and they leave . . . you can’t rebuild the community.”

But many Korean-American business owners feel they are “caught between the city and the federal government,” Kim said. “They are required by the city to go through public hearings where there has been much community opposition, and at the same time the federal government is insisting these people go back to the community.”

Local activists say the Smith amendment illustrates the lack of Asian-American representation in Washington and the need for Asian-American groups to work more closely with one another.

Only three Asian-American organizations have offices in Washington--the Japanese-American Citizens’ League, the Organization of Chinese-Americans and the Asian Pacific American Labor Alliance, according to lobbyist Karen Narasaki, a lobbyist for the Japanese-American group.

It was Narasaki who first heard about the amendment last summer from SBA Administrator Pat Saiki, who was troubled by the law, Narasaki said.

“Probably no one would have known about it if Ms. Saiki hadn’t brought it to my attention,” said Narasaki, whose organization lobbied unsuccessfully to prevent passage of the law.