AP Investigation Shows SBA Failed in Disaster Response

An investigation into the Small Business Association’s (SBA) disaster response for hurricane Katrina was recently carried out by the Associated Press (AP). Investigation results show that the SBA failed miserably in its response to overwhelming loan applications after Katrina.

Flood Response Was Income and Race Biased

Faced with over 300,000 SBA loan applications due to the ravages of Katrina, 55 percent of applicants were subsequently denied disaster response. The AP results show that not only did the agency falsely deny thousands of loan applications, but those that were approved showed evidence of bias based on income and race. Former SBA loan officers admitted that applicants with a higher income and better credit scores were processed first because their applications could be closed more quickly.

On the other end, applicants with lower income and less desirable credit scores were automatically denied to avoid the complexity of the loan process. Those in greater need of disaster response were ignored, forced to submit unnecessary documentation, subjected to shorter deadlines and ultimately declined so that loan officers could clear the queues of pending applications. Of the billions in loans approved, only 65% of loans were actually disbursed, often because by the time the SBA offered a final approval, the applicant had already given up with the process.

The SBA is the federal agency charged with helping small business and individuals recover from disaster events. The demand for organizations such as Microgiving begins to grow when SBA-like organizations fail to provide much-needed relief to victims.  Many victims of Katrina still require suitable disaster response, and many more are seeking financial aid due to the recent BP oil spill – donate online today and see what a difference you can make.

Tags: act of kindness, charitable giving, Disaster Response, give online, giving online, MicroGiving, recipients