Mailing to Provide Additional Data on SBA Loan Process : Disaster aid: Despite deadline extension, agency denies the action was prompted by a survey indicating confusion over application procedures.

On the heels of a survey that showed many quake victims did not understand Small Business Administration loan procedures, the federal agency announced Monday it will send out 313,000 letters offering additional data.

The letters, which will be sent to earthquake victims in Ventura and Los Angeles counties by the end of this month, will also include toll-free telephone information numbers and notice of the recent deadline extension to Oct. 17.

SBA officials denied there was a connection between the announcement and the results of the agency’s own survey that showed 17% of all those who did not return applications said they misunderstood the loan procedures and needed more information. That percentage represents 51,000 people.

The officials also denied the new program was prompted by criticism from city officials and newspaper editorials that pointed out that only 42% of all SBA loan applications have been returned.

“We are happy with this return rate,” said SBA spokeswoman Rebecca McKenzie. “We are constantly looking at ways to make this better. To say they are pressuring us is not accurate.”

Hank Carrillo, director of the Fillmore Chamber of Commerce, said he hopes the letter will help residents in the city, where 50 downtown buildings had to be demolished in the earthquake’s aftermath. Carrillo said he frequently talks to quake victims--including many Spanish speakers--who are bewildered by the SBA loan process.

“I think it’s a great idea to send out this letter,” Carrillo said. “But I hope they are going to send it out in Spanish as well as English.”

Carrillo himself applied for a SBA loan to help with $25,000 worth of quake damage to his mobile home, which was thrown off its foundation.

The SBA approved his loan, but instead of the 3.5% interest rate he and his wife thought they would be getting, SBA offered them 7.5% rate of interest, based on their income level.

“I’m sure it was on the paper somewhere and we were told about it,” Carrillo said. “But let’s face it, for two months people were in shock and if they told me stuff, it went right over my head.”

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Instead, Carrillo and his wife took out a $5,000 bank loan with a 5% interest rate, and made up the difference with a small FEMA grant, insurance payments and money from their own pockets.

Ventura County Supervisor Vicky Howard, who represents Simi Valley, Moorpark and other areas hard hit by the quake, said she understands how some people are confused by the forms.

“I’ve read over those loan documents, and there are some things that are very difficult for people to understand,” Howard said. “Ironically, we just scheduled a meeting with SBA in September to answer some of the questions that residents still have.”

And last week, the Simi Valley City Council approved use of $50,000 in relief funds to hire an earthquake assistance coordinator whose duties will include helping residents sort through federal earthquake assistance applications.

As of Aug. 10, nearly 506,000 disaster applications had been issued by the SBA, but only about 213,000 have been returned, leaving nearly 300,000 applications outstanding, according to SBA officials.

But SBA officials defended the return rate, saying it is comparable to the response they had after disasters such as Hurricane Hugo, the Loma Prieta quake and the Los Angeles riots.

The SBA survey, conducted by telephone Aug. 5 through 8, found that the 17% who did not return applications were mainly laboring under three misconceptions: they didn’t know the SBA would lend money to cover the earthquake insurance deductibles, they didn’t know the original deadline had been extended and they simply didn’t think they qualified for a loan.

Of the others who did not return applications:

* 26% said they did not want additional debt or did not need a loan.

* 25% said they were not interested and only had minor damage.

* 20% said they had money of their own or had other funding, such as insurance money, to pay for repairs.

* 6% said they had sufficient assistance from FEMA’s temporary housing program.

* 6% said they could not meet the applications filing requirements, such as providing evidence of a positive cash flow or copies of tax returns.

Federal Emergency Management Agency spokesman Russ Edmonston urged quake victims to take advantage of the extension and apply for an SBA loan, even if they do not want or need it, because victims cannot qualify for a state grant until they have been rejected by the SBA.

Times staff writer Mary F. Pols contributed to this report.