SBA Mailing to Provide Additional Loan Data : Disaster aid: 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 out 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.”

But the new letter campaign was a victory for City Controller Rick Tuttle, who has repeatedly urged federal disaster officials to try to reach the thousands of victims who failed to return applications.

“We just want to reach those people who are reaching that point of despair,” said Tuttle’s deputy, Tim Lynch.

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 Aug. 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.