SBA Will Mail New Letters on Quake Aid

On the heels of a survey that showed many quake victims did not understand Small Business Administration loan procedures, the federal agency announced Monday that 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. The application deadline is Oct. 17.

SBA officials said there is no connection between the announcement and the results of the agency’s survey that showed 17% of 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 that the new program was prompted by criticism from city leaders and newspaper editorials pointing 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 and 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, while only 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 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 did not know that the SBA would lend money to cover the earthquake insurance deductibles, they did not know that the original deadline had been extended, and they did not believe that they qualified for a loan.

Federal Emergency Management Agency spokesman Russ Edmonston urged that quake victims take advantage of the extension and apply for an SBA loan because victims cannot qualify for a state grant until they have been rejected by the SBA.