SBA Help for Quake Victims

* Re your editorial, six months after the Northridge earthquake, “The Numbers Tell a Story,” July 19:

The Clinton Administration and the Small Business Administration (SBA) will not be satisfied that enough has been done for Northridge earthquake victims until we are satisfied that we have taken all reasonable steps to provide all the assistance we can under the laws that govern our program.

Statistics reflect the sheer magnitude of the Northridge earthquake damage, which we know was the most destructive disaster in American history. The SBA has already issued 501,997 disaster loan applications, compared with a combined total of 435,354 for all the major disasters in recent years: Hurricane Hugo (1989), the Loma Prieta earthquake (1989), the Los Angeles civil disorders (1992), Hurricane Andrew (1992), Hurricane Iniki (1992), Typhoon Omar (1992) and the great Midwest floods (1993). Similarly, the SBA has already received 211,598 disaster loan applications from Northridge victims, compared with a combined total of 173,296 of the seven mega-disasters.

I have made Northridge quake disaster assistance a priority and we have committed major resources, including more than 3,200 employees, to the effort. The amount of SBA disaster loan approvals for Northridge (about $3 billion) has surpassed the combined totals for the seven mega-disasters.

With the application filing period for federal assistance still open, the Northridge response is still under way. Currently, the SBA receives more than 1,000 loan requests each week and approves nearly 2,500 loans for more than $110 million weekly.

Although the editorial states that the gap between the number of applications distributed and the number completed and filed with SBA is too large, the percent of applications filed (the return rate) is larger than our experience with previous disasters since we began to work with teleregistration. In Northridge, 211,598, or 42.2%, of the applications distributed have been completed and returned to SBA thus far. The average return rates for the seven major disasters cited above was 40%.

We have made considerable effort to lessen our paperwork burden for a disaster loan. We have simplified both our home and business loan applications, and are continuing the process of trying to simplify further. We do agree that the process is discouraging because it has not always been properly explained and because of the long time factor. We are currently addressing both of these problem. We are present in 10 emergency service centers maintained by FEMA and have 15 loan-closing centers in the area. These addresses can be received by calling our toll-free number, 1 (800) 488-5323. This number has sufficient operators and technical personnel on call to provide answers to applicant’s questions and status reports.

We do not believe that language barriers have been a significant factor in disaster victims not applying for loans or completing their loan applications. We have multilingual employees in both Los Angles and Sacramento and have made considerable use of the AT&T; language line service.

The downturn in the economy is certainly a major factor in disqualifying applicants who otherwise might have qualified for aid. However, we do not feel that we would be good stewards of our taxpayer dollars if we were to significantly relax our loan standards. Our loss rate since the beginning of the program now stands at 10% and this may increase when the loans made in the past four high-volume years start to mature.

Before a loan can be approved, we must determine that there is repayment ability. Our standards are considerably more liberal than those of Fannie Mae for home loans and any commercial lender for business loans.

ERSKINE B. BOWLES

Administrator, SBA, Washington