Small Business Administration
Response to September 11 Victims and Performance Measures for Disaster Lending Gao ID: GAO-03-385 January 29, 2003The September 11 terrorist attacks and subsequent federal action had a substantial impact on businesses in both the declared disaster areas and around the nation. In the aftermath of the attacks, the Congress, among other actions, appropriated emergency supplemental funds to the Small Business Administration (SBA) to aid September 11 victims. Given the uniqueness of this disaster and changes in the program, GAO analyzed SBA's lending to September 11 victims, as well as the loan program's performance goals and measures.
As part of its response to the September 11 terrorist attacks, SBA modified several aspects of its Disaster Loan Program and its processes. For example, SBA increased the maximum loan amounts available and decreased the amount of documentation required for certain loans. By the end of fiscal year 2002, approximately $1 billion in loans had been approved for victims of the attacks. On average, SBA processed business loans to September 11 victims in an average 13 days compared with 16 days for business loans to other disaster victims in fiscal year 2001. Like other federal programs, SBA has developed a multiyear strategic goal for the Disaster Loan Program--helping families and businesses recover from disasters--and has developed annual goals and measures to assess its yearly progress toward attaining their strategic goals. GAO reviewed the measures and found that they have numerous limitations. For instance, these measures do not capture the notable progress the program has made in improving its loan processing--progress that ultimately affects disaster loan applicants and borrowers. The inadequacies of SBA's measures are especially evident when considered in light of the agency's performance in responding to the September 11 terrorist attacks. GAO attributes some of these limitations to the nature of the measures SBA uses to describe the performance of the Disaster Loan Program, while others can be attributed to the description of the program's performance. Without better performance measures and plans, the Congress does not have an accurate description of SBA's annual progress toward helping Americans recover from disasters.
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Report to the Chairman, Committee on Small Business, House of
Representatives:
January 2003:
Small Business Administration:
Response to September 11 Victims and Performance Measures for Disaster
Lending:
GAO-03-385:
GAO Highlights:
Highlights of GAO-03-385, a report to the Chairman, Committee on Small
Business, House of Representatives:
Why GAO Did This Study:
The September 11 terrorist attacks and subsequent federal action had
a substantial impact on businesses in both the declared disaster areas
and around the nation. In the aftermath of the attacks, the
Congress, among other actions, appropriated emergency supplemental
funds to the Small Business Administration (SBA) to aid September 11
victims. Given the uniqueness of this disaster and changes in the
program, GAO analyzed SBA‘s lending to September 11 victims, as well
as the loan program‘s performance goals and measures.
What GAO Found:
As part of its response to the September 11 terrorist attacks, SBA
modified several aspects of its Disaster Loan Program and its
processes. For example, SBA increased the maximum loan amounts
available and decreased the amount of documentation required for
certain loans. By the end of fiscal year 2002, approximately $1
billion in loans had been approved for victims of the attacks. On
average, SBA processed business loans to September 11 victims in an
average 13 days compared with 16 days for business loans to
other disaster victims in fiscal year 2001.
Like other federal programs, SBA has developed a multiyear strategic
goal for the Disaster Loan Program”helping families and businesses
recover from disasters”and has developed annual goals and measures to
assess its yearly progress toward attaining their strategic goals. GAO
reviewed the measures and found that they have numerous limitations.
For instance, these measures do not capture the notable progress the
program has made in improving its loan processing”progress that
ultimately affects disaster loan applicants and borrowers. The
inadequacies of SBA‘s measures are especially evident when considered
in light of the agency‘s performance in responding to the September 11
terrorist attacks. GAO attributes some of these limitations to the
nature of the measures SBA uses to describe the performance of the
Disaster Loan Program, while others can be attributed to the
description
of the program‘s performance. Without better performance measures and
plans, the Congress does not have an accurate description of SBA‘s
annual progress toward helping Americans recover from disasters.
What GAO Recommends:
SBA should:
* revise the performance measures for disaster lending,
* expand its current research to improve its measures and
evaluate program impact, and
* revise the disaster section of the performance plan.
SBA generally agreed with GAO‘s recommendations.
Contents:
Letter:
Results in Brief:
Background:
SBA and the Congress Responded to Small Businesses Affected by the
September 11 Attacks:
Disaster Loan Program Performance Measures and Plans Have Limitations:
Conclusions:
Recommendations:
Agency Comments:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: SBA Disaster Response, Loan Processing, and Loan
Disbursement Procedures:
Appendix III: Regulatory and Statutory Changes to SBA‘s Disaster Loan
and 7(a) Program in Response to the September 11 Terrorist Attacks:
Appendix IV: Data on SBA Disaster Loans Made to Victims of September 11
Terrorist Attacks:
SBA Responds to Multiple Disaster Areas:
Appendix V: Comments from the Small Business Administration:
Tables Tables:
Table 1: GPRA Requirements for Agency Strategic Plan, Performance Plan,
and Performance Report:
Table 2: Performance Measures for the Disaster Loan Program and
Percentage Achieved:
Table 3: Comparison of Selected Elements of Recent Disaster Loan
Program
Performance Plans and Reports:
Figures Figures:
Figure 1: Geographic Distribution of SBA September 11 Loan
Disbursement:
Figure 2: SBA September 11 Business Loan Disbursements, by Industry:
Figure 3: Timeline of SBA and Congressional Modifications to the
Disaster Loan Program:
Figure 4: Immediate and Contiguous Disaster Areas for September 11
Terrorist Attacks:
Figure 5: Distribution of SBA September 11 Loans, by Declaration Area:
Figure 6: September 11 Business Loan Disbursements, by Declaration and
by Industry:
Abbreviations:
ALCS: Automated Loan Control System:
DAO: Disaster Area Office:
EIDL: Economic Injury Disaster Loan:
FEMA: Federal Emergency Management Agency:
GPRA: Government Performance and Results Act:
HELOR: Home Expedited Loan Officer Report:
IRS: Internal Revenue Service:
ODA: Office of Disaster Assistance:
NAICS: North American Industry Classification System:
OMB: Office of Management and Budget:
SBA: Small Business Administration:
STAR: Supplemental Terrorist Activity Relief:
January 29, 2003:
The Honorable Donald A. Manzullo
Chairman, Committee on Small Business
House of Representatives:
Dear Mr. Chairman:
An important part of the mission of the Small Business Administration
(SBA) is to make loans to help individuals and small businesses recover
from disasters.[Footnote 1] In fiscal year 2002, SBA approved about
22,000 disaster assistance loans totaling $1.3 billion through its
Disaster Loan Program. Approximately $1 billion of that total was for
loans SBA made in response to the September 11 terrorist attacks. SBA
reports on its performance in fulfilling its mission, including the
performance of its Disaster Loan Program, through annual performance
reports, which measure performance toward achieving goals SBA sets for
its various programs. The documents and measures SBA includes can help
the Congress monitor and direct SBA‘s performance in responding to
disasters.
The needs of small businesses and SBA‘s response in the wake of the
September 11 disaster were the subject of hearings by your committee.
At your request, we previously provided your committee with a report on
overall assistance to small businesses in the Lower Manhattan area
after September 11.[Footnote 2] Subsequently, you asked us to provide
you with information specifically on disaster assistance SBA provided
after the terrorist attacks. This report responds to your request that
we review and analyze (1) SBA‘s response to the September 11 terrorist
attacks and (2) SBA‘s performance plans and measures for its Disaster
Loan Program.
In conducting our review, we obtained and analyzed SBA‘s data on
disaster assistance loans made through September 30, 2002, documents
related to disaster lending policy and procedures, and documents
related to Disaster Loan Program planning and performance measurement.
We also interviewed SBA officials from headquarters and each of the
four SBA Disaster Area Offices (DAO). See appendix I for a detailed
description of our scope and methodology. We conducted our work between
June 2002 and January 2003 in accordance with generally accepted
government auditing standards.
Results in Brief:
The needs of small businesses after the September 11 terrorist attacks
presented SBA‘s Disaster Loan Program with new and difficult
challenges. In the weeks following the attacks, government actions,
such as closing airports, and consumer responses, such as decreased
travel, caused widespread economic injury. Therefore, rather than being
concentrated in one affected area, small businesses needing assistance
were spread throughout the country. SBA responded to their needs by
extending eligibility for economic injury disaster loans nationwide. By
the end of fiscal year 2002, the agency worked with individuals and
businesses in all 50 states, the District of Columbia, and U.S.
Territories, approving 9,700 loans totaling $966 million. Throughout
this process, SBA tried to respond to the concerns of small businesses,
many of which were raised in congressional hearings, by modifying both
the terms of its Disaster Loan Program and its lending practices. For
example, SBA expedited loan disbursements by decreasing the amount of
documentation borrowers had to provide. The Congress also played a
pivotal role in responding to the needs of affected small businesses by
providing supplemental appropriations that allowed SBA to provide
larger loans to a broader population of September 11 victims. Our
analysis of SBA loan data revealed that the distribution of September
11 lending differed significantly from lending for previous disasters.
Not only were loans made nationwide, but also almost all were made to
address economic injuries to businesses rather than physical damage to
homes.
SBA‘s Disaster Loan Program performance measures do not fully reflect
the program‘s actual performance because of limitations in the agency‘s
performance measures and plans. We and SBA‘s Inspector General
previously identified a number of shortcomings in SBA‘s performance
plans and measures that have persisted since September 11.[Footnote 3]
First, two of SBA‘s six performance measures assess only one discrete
step in the loan application and disbursement processes. Second, some
output measures have not kept up with SBA‘s actual progress in
assisting
disaster victims.[Footnote 4] For example, the goal for timeliness in
processing disaster loans is 21 days, when the actual time required for
processing averaged 13 days in fiscal year 2001 and 12 days in fiscal
year 2002. Third, proxies SBA uses for two measures do not accurately
represent what is being measured. For example, SBA uses number of loans
approved for individuals and businesses (output measures) as proxies
for number of homes and businesses restored to predisaster condition
(an intended outcome measure). Fourth, we identified numerous features
in SBA‘s description of its Disaster Loan Program in the 2002 and 2003
performance plans that make assessing the agency‘s progress in
attaining its strategic goals difficult. For example, despite guidance
recommending that program goals be outcome-oriented, SBA changed its
2003 performance goal to an output-oriented one.
This report makes three recommendations to SBA to improve its
performance measures and the disaster section of its performance plan.
We obtained written comments on a draft of this report from SBA‘s
Associate Administrator for Disaster Assistance. SBA generally agreed
with our recommendations and said that it intends to review the
existing performance measures and research new ways to evaluate program
impact.
Background:
When disasters such as floods, tornadoes, or earthquakes strike,
federal, state, and local government agencies coordinate to provide
assistance to disaster victims. SBA, through its Disaster Loan Program,
is part of this concerted effort. In the event of a disaster, SBA, the
Federal Emergency Management Agency (FEMA), and other government
agencies join together to conduct a preliminary damage assessment to
estimate the physical damage of the disaster on the affected region.
Among other criteria, if there is extensive physical damage,[Footnote
5] the governor of the affected state can request that the U.S.
President declare that a major disaster or emergency situation exists,
in which case federal assistance is made available to disaster victims,
and FEMA takes the lead in coordinating response and recovery efforts.
The presidential disaster declaration specifies the area that is
eligible for federal assistance, referred to as the ’immediate“
disaster area in this report. In addition, SBA provides certain loans
to disaster victims in the counties adjacent to the immediate area; we
refer to these counties as the ’contiguous“ disaster area. In the
immediate area of the disaster, homeowners, renters, nonprofit
organizations, and nonfarm businesses of all sizes are eligible to
apply for SBA loans for the repair and replacement of uninsured
physically damaged property.[Footnote 6] In both the immediate and
contiguous areas of the disaster, small businesses with no credit
available elsewhere are eligible to apply for loans to cover economic
losses.
Once a declaration has been made, officials from one of SBA‘s four
Disaster Area Offices--located in California, Georgia, New York, and
Texas--arrive at the disaster site to begin making preparations to
serve disaster victims. According to SBA‘s procedures, disaster loan
officials secure office space--sometimes in FEMA-operated Disaster
Recovery Centers for presidential declarations--and begin meeting with
victims to explain the disaster loan process, issue loan applications,
and, if requested, assist victims in completing applications. Appendix
II summarizes the series of steps involved in accepting, reviewing,
approving or declining, and disbursing disaster loans.
SBA provides loans to households and businesses without credit
available elsewhere at a maximum rate of 4 percent and up to a 30-year
term. For households or businesses with credit available elsewhere, SBA
provides loans at a maximum rate of 8 percent and, for businesses, up
to a 3-year term. Business loans are available up to $1.5
million,[Footnote 7] loans for physical damage to homes are available
up to $200,000, and loans for the repair or replacement of personal
property are available up to $40,000.
Like other federal programs, the performance of SBA‘s Disaster Loan
Program is reported in accordance with the Government Performance and
Results Act (GPRA) of 1993.[Footnote 8] The purpose of GPRA is to shift
the focus of federal management and decisionmaking from a preoccupation
with the number of tasks completed or services provided to the real
differences the tasks or services make to the nation or individual
taxpayer. GPRA requires agencies to set multiyear strategic goals in
their strategic plans and corresponding annual goals in their
performance plans, measure performance toward the achievement of those
goals, and report on their progress in their annual performance
reports.[Footnote 9]
The strategic plans, which cover a period of at least 5 years, are the
starting point in setting annual goals for programs and in measuring
progress toward achieving those goals. Final annual performance plans,
first required for fiscal year 1999, are sent to the Congress soon
after the transmittal of the President‘s budget, and provide a direct
linkage between an agency‘s longer-term goals and mission and day-to-
day activities. Related annual performance reports describe the degree
to which performance goals were met. According to Office of Management
and Budget (OMB) guidance, strategic goals, and performance goals in
annual plans may be identical. According to GPRA, if a performance goal
becomes impractical or infeasible to achieve, the agency is to explain
in the performance reports why that is the case and what legislative,
regulatory, or other actions are needed to accomplish the goal, or
whether the goal ought to be modified or discontinued. Table 1 lists
GPRA requirements for each of these documents.
Table 1: GPRA Requirements for Agency Strategic Plan, Performance Plan,
and Performance Report:
5-year strategic plan: * Identify the agency‘s mission and long-term
strategic goals.
; * Describe how the agency will achieve the goals through its
activities and resources.
; * Describe how the agency‘s annual performance goals are related to
its long-term goals.
; * Identify factors external to the agency that could affect goal
achievement.
; * Describe program evaluations used in establishing or revising the
goals and include a schedule of future evaluations.; Annual performance
plan: * Specify annual performance goals for each program activity.
; * Identify the performance measures the agency will use to assess its
progress.
; * Describe the strategies and resources required to achieve the
performance goals.
; * Describe how the data will be verified to ensure accuracy and
validated to avoid significant bias.; Annual performance report: *
Compare performance data for the previous fiscal year with the goals in
the annual performance plan.
; * Describe plans for meeting unmet goals or explain why a goal should
be modified.
; * Summarize findings of program evaluations completed during the
fiscal year..
[End of table]
Source: GAO.
Both the strategic plan and the performance plan describe the
relationship between a program‘s goals, outputs, and outcomes. As noted
previously, according to OMB guidance, outputs are the level of
activity that can be produced or provided over a given period of time
or by a specific date. Outcomes are the intended results, effects, or
consequences that occur from carrying out program activities. In the
case of the Disaster Loan Program, SBA has described the outputs as
disaster loans to individuals and businesses, while program outcomes
include restored housing and increased survival of businesses. OMB
guidance allows agencies to divide outcomes into two categories: end
and intermediate outcomes. End outcomes are the results of programs and
activities compared to their intended purpose. Intermediate outcomes
show progress toward achieving end outcomes. These outcomes are often
required for programs when end outcomes are not immediately clear,
easily delivered, or quickly achieved.
OMB guidance indicates that performance plans should include measures
of outcomes when the outcomes can be achieved during the fiscal year
covered by the plan. Otherwise, the guidance recognizes that the
performance plans will predominantly include measures of outputs rather
than outcomes. In addition to OMB guidance, SBA program managers can
obtain guidance in the preparation of performance goals and measures
from GAO,[Footnote 10] and more recently, from an SBA primer.[Footnote
11]
SBA and the Congress Responded to Small Businesses Affected by the
September 11 Attacks:
In the weeks and months following the terrorist attacks, SBA and the
Congress faced the challenge of responding to the lingering effects of
the attacks and subsequent federal actions on small businesses
throughout the country. SBA responded first in Lower Manhattan, meeting
with potential borrowers within 2 days of the attacks. Its response
expanded as areas near the site of the attack on the Pentagon and more
of the New York City area were designated disaster areas. Ultimately,
SBA helped small businesses around the country with disaster lending.
After small businesses raised concerns about the Disaster Loan
Program‘s ability to help businesses recover from the attacks, SBA and
the Congress modified the program, raising loan limits and deferring
interest payments, expanding eligibility for economic injury loans to
small businesses around the country, modifying its size standards for
small businesses, expediting its loan approval and disbursement
processes, and providing translators for loan applicants. By the end of
fiscal year 2002, SBA approved more than 9,700 loans for a total of
$966 million to assist in the recovery efforts of September 11 victims
nationwide.
SBA‘s Response Covered Small Businesses Nationwide:
SBA‘s response to the terrorist attacks began September 11, when SBA
officials arrived in Lower Manhattan to begin coordinating the agency‘s
efforts. The President declared the attack on the World Trade Center a
major disaster area on September 11. Unlike most of the disasters SBA
had been involved in, the economic effects of the terrorist attacks
were felt throughout the country. SBA‘s initial disaster area in New
York City and New Jersey eventually expanded to include additional
counties in New York, New Jersey, Connecticut, Massachusetts, and
Pennsylvania. On September 21, the President declared the Pentagon
attack as a major disaster, establishing counties Maryland and Virginia
and parts of the District of Columbia as disaster areas. As the United
States began to deploy military personnel in response to the terrorist
attacks, small businesses nationwide affected by the loss of employees
called up as military reservists were eligible to apply for a disaster
loan under the Military Reservist Economic Injury Disaster Loan (EIDL)
program.[Footnote 12] As discussed later in this report, small
businesses across the nation that were adversely affected by the
lingering effects of the attacks and subsequent government action, such
as airport closings and the precipitous drop in tourism, were also
eligible to receive disaster loans under SBA‘s Expanded EIDL program.
In essence, the entire country was deemed a disaster area.
As shown in figure 1, more than half the loans went to small businesses
outside the area of the attack sites in New York City and at the
Pentagon, with businesses in Florida and California receiving the
second and third largest share of loans. In general, businesses beyond
the immediate sites of the attacks received slightly more than those
close by, in part because these businesses did not have the additional
resources available to them that were available in New York City. As
shown in figure 2, the loans were spread among industries, with no
single type of business accounting for most of the funds. The
manufacturing sector received the largest amount of funds. Other major
industries receiving the most loan funds were professional, scientific,
and technical services; transportation and warehousing; wholesale
trade; and accommodation and food services.
Figure 1: Geographic Distribution of SBA September 11 Loan
Disbursement:
[See PDF for image]
[End of figure]
Figure 2: SBA September 11 Business Loan Disbursements, by Industry:
[See PDF for image]
[End of figure]
By the end of fiscal year 2002, SBA approved more than 9,700 home and
business loans totaling $966 million for victims of the September 11
attacks. The agency expects to disburse $924 million--or 96 percent of
the amount approved--due to loan increases, decreases, and
cancellations. Individual loan disbursement amounts range from $300 to
$1.5 million. Eleven percent of September 11 loan disbursements were
for $50,000; the most frequently disbursed amount. Appendix IV presents
more details on SBA‘s September 11 disaster lending.
SBA and the Congress Modified the Disaster Loan Program in Response to
Complaints from Small Businesses:
In the weeks and months following the terrorist attacks, small business
owners complained to the Congress about SBA‘s Disaster Loan Program.
Small business owners‘ complaints, which SBA officials regarded as
valuable feedback, involved issues such as: (1) the effect of the
attacks on small businesses nationwide, (2) SBA‘s communication with
applicants with low English proficiency, (3) size standards for small
businesses, (4) the loan underwriting criteria, and (5) the time
required to receive loan approval. These complaints prompted SBA and
the Congress to make several modifications to the Disaster Loan Program
for September 11 victims, which we discuss in the following sections.
Figure 3 provides a timeline of those changes; see appendix III for a
summary of regulatory and statutory changes.
Figure 3: Timeline of SBA and Congressional Modifications to the
Disaster Loan Program:
[See PDF for image]
[End of figure]
Small businesses complained that eligibility for SBA loans was limited
to firms located within the declared disaster areas, yet the September
11 terrorist attacks had caused economic injury to small businesses
nationwide. Small business owners from across the nation, representing
small airports as well as aircraft maintenance, travel, and tourism
firms, reported losses in revenue as a result of the attacks, which
forced them to furlough and/or terminate numerous employees. These
small businesses identified SBA as a potential source of assistance to
help them recover from the economic injury caused by the attacks.
In response to these concerns, in October 2001, SBA issued regulations
to make economic injury disaster loans available to small businesses
nationwide, an unprecedented change to the Disaster Loan Program,
according to SBA officials. SBA‘s Expanded EIDL program enabled
businesses outside the declared disaster areas to apply for loans to
meet ordinary and necessary operating expenses that they were unable to
meet, due to the attacks or related action taken by the federal
government between September 11 and October 22, 2001.
Small businesses in New York City also complained that the application
process was particularly confusing and time-consuming for applicants
with low English proficiency. To address these concerns, SBA printed
informational packets in other languages, such as Spanish and Chinese,
and also provided multilingual staff on-site who could speak Mandarin
Chinese, Croatian, Arabic, and Spanish and was prepared to send
employees with additional language capabilities to New York City.
Small businesses, such as travel agencies, also argued that existing
size standards--guidelines used to determine whether a firm was a small
business on the basis of its annual revenue or number of employees--
were overly restrictive. In February 2002, SBA modified the size
standards for all September 11 loan applicants, allowing them to take
advantage of recent inflation-based adjustments.[Footnote 13] In
addition, in March 2002, SBA increased the threshold specifically for
travel agencies adversely affected by the attacks from $1 million to $3
million annual revenues. In July 2002, SBA began to apply this
increased size standard to all travel agencies, not just those affected
by the terrorist attacks. In commenting on a draft of this report, SBA
officials noted that the agency planned to increase the size standard
for travel agencies generally, but applied that change sooner for
travel agencies affected by the attacks.
Small businesses affected by the terrorist attacks also complained that
SBA‘s underwriting criteria were too restrictive. For example, two
small business owners objected to SBA‘s requirement for collateral for
their loans. They testified that SBA withdrew their applications
because they would not use their homes as collateral. They argued that
it was too risky to use their homes as collateral, especially since the
survival of their businesses was uncertain. A New York Small Business
Development Center[Footnote 14] official also questioned the
appropriateness of SBA‘s disaster loan underwriting criteria. He said
that SBA should account for the location of the businesses affected by
the attacks--New York City--where some factors relating to the high
cost of doing business fall outside the norms.
While SBA approved millions of dollars in loans, 52 percent of the loan
applications were withdrawn or declined. SBA officials said that the
agency makes every effort to approve each application by applying more
lenient credit standards than private lenders. However, the officials
said that they adhered to their credit standards to minimize losses and
program costs. SBA data indicate that the 52-percent rate for
withdrawing and declining September 11-related loan applications was
not out of line when compared with other disasters, or with private
lenders. By comparison, one bank in New York City reported a 42-percent
decline rate for September 11-related loans, while another bank
reported an 80-percent decline rate. The primary reasons SBA identified
for withdrawing September 11 loan applications was that no Internal
Revenue Service (IRS) record, which could provide independent
documentation of the applicants‘ income, was found, and the applicant
failed to furnish additional information requested by SBA. According to
SBA officials, the most common reasons for declining September 11 loan
applications were the applicant‘s inability to repay the loan and
unsatisfactory credit. According to SBA, these are also the primary
reasons that nearly two-thirds of all SBA disaster loan applications in
fiscal year 2001 were withdrawn or declined by SBA.
Applicants complained that the elapsed time between submitting an
application and loan approval was too long. SBA responded to these
complaints by implementing procedures in October 2001 to expedite two
stages of the process - loan application processing and disbursement of
loan funds. To expedite loan processing, loan officers calculated
economic injury loan amounts based on the applicant‘s annual sales and
gross margin, instead of conducting a more extensive needs analysis. As
of the end of fiscal year 2002, on average,SBA processed September 11
business loans in 13 days, compared with 16 days for disaster
assistance business loans processed in fiscal year 20.[Footnote 15] To
expedite disbursement of funds to September 11 victims in the World
Trade Center and Pentagon disaster areas, SBA decreased the amount of
documentation needed to disburse up to $50,000. Last, the Niagara Falls
DAO made extensive use of printing selected loan documents in the
field, enabling field staff to schedule loan closings within 1 or 2
days of the loan approval. SBA made initial September 11 loan
disbursements within about 2 days of receipt of closing documents,
compared with 3 days for initial disbursements for other disaster
assistance loans, according to agency officials. See appendix II for a
summary of the steps in processing SBA disaster loans.
Despite SBA‘s efforts to be responsive to the needs of small businesses
affected by the terrorist attacks, business owners testified that SBA‘s
existing disaster program did not have the ability to provide adequate
loans to small businesses within the declared disaster areas. In
January 2002, the Congress enacted supplemental appropriations to SBA
for $150 million and made several changes in the disaster loan program
specifically for small businesses affected by the September 11
attacks.[Footnote 16] The changes included raising the maximum loan
amount from $1.5 million to $10 million and deferring payments and
interest accrual for 2 years.
The Emergency Supplemental Act of 2002 also created the Supplemental
Terrorist Activity Relief (STAR) Program that provided assistance to
small businesses affected by the terrorist attacks through the 7(a)
loan guaranty program, which is not part of the Disaster Loan Program.
The 7(a) program is intended to serve small business borrowers who
cannot otherwise obtain financing under reasonable terms and conditions
from the private sector. Under this program, private-sector lenders
provide loans to small businesses, which are guaranteed by SBA. Under
the STAR program, SBA reduced the on-going fee charged to lenders on
new 7(a) loans from 0.50 percent of the outstanding balance of the
guaranteed portion of the loan to 0.25 percent. Although the fee
reduction for lenders is the key feature of the STAR program, SBA
officials anticipate that by making 7(a) loans more cost-effective for
lenders, lenders will, in turn, make more small business loans and
share the cost savings with their borrowers. As of the end of fiscal
year 2002, SBA guaranteed about 4,700 STAR loans for $1.8 billion. (See
app. III for a comprehensive list of modifications made to SBA‘s
Disaster Loan Program for September 11 victims.):
SBA officials believed that many of the complaints about the disaster
program resulted from the mismatch between victims‘ expectations of
SBA‘s disaster program and the nature of the program. For example, when
some victims were told that they could receive ’assistance“ from SBA,
they assumed that the assistance would be in the form of grants instead
of loans. SBA officials noted that the media usually does not draw
distinctions among FEMA grants, SBA loans, and other forms of
assistance available. SBA officials told us that they tried to minimize
the public confusion about the nature of the assistance available from
SBA by working closely with the media and public officials so that
disaster victims would receive accurate information about SBA
assistance.
Disaster Loan Program Performance Measures and Plans Have Limitations:
As stated earlier, the strategic plan describes the multiyear strategic
goals. The performance plans describe the corresponding annual
performance goals and the measures or indicators that will be used to
assess progress in meeting them. During the past several years,
we[Footnote 17] and SBA‘s Inspector General[Footnote 18] have reviewed
SBA‘s performance plans and found the plans had significant
limitations. Our review of the disaster lending portion of the 2003
performance plan found that the limitations identified in the previous
reviews remain. We attribute some of these limitations to the specific
nature of the measures SBA uses to describe the performance of the
disaster lending program, while other limitations can be attributed to
the description of program‘s performance in the plan itself.
Limitations in the Performance Measures:
In the past 5 years, SBA has used nine different measures to assess the
performance of the Disaster Loan Program. Both we and SBA‘s Inspector
General have raised numerous concerns about these various measures in
the past. The Inspector General found that SBA used inconsistent and
subjective measures, and we found that the document used to report
program performance to the Congress lacked key information that would
have provided a more accurate picture of both the Disaster Lending
Program‘s performance measures and the results. We observed in our June
2001 report that SBA needed to improve the quality of the measures that
it used to assess its performance.[Footnote 19]
On the basis of our review of the 2003 performance plan, we have found
that, as a group, the measures SBA currently uses to assess
performance--the current measures (table 2, measures 4 to 9) continue
to have numerous limitations, despite the guidance provided in SBA‘s
performance primer. First, the three output measures do not capture the
notable progress the program has made in improving its loan processing;
improvements that ultimately benefit disaster loan applicants and
borrowers, such as better staffing processes and management of staff
duties. Second, two of the three outcome measures are actually output
measures and the third--a customer survey--has an important limitation.
Third, other than the customer survey, SBA does not have measures to
assess the intermediate or end outcomes of its Disaster Lending
Program.
Table 2: Performance Measures for the Disaster Loan Program and
Percentage Achieved:
Performance measures: Past measures; FY 1998: [Empty]; [Empty]; FY
1999: [Empty]; [Empty]; FY 2000: [Empty]; [Empty]; FY 2001: [Empty];
[Empty]; FY 2002: [Empty].
Performance measures: 1. Disaster Home Loan Currency Rate; Target;
Actual; FY 1998: [A]; ; 94%; [Empty]; FY 1999: ; ; 95%; 95%; [Empty];
FY 2000: ; ; 88%; 87; [Empty]; FY 2001: [Empty]; [Empty]; FY 2002:
[Empty].
Performance measures: 2. Disaster Home Loan Delinquency Rate; Target;
Actual; FY 1998: ; ; [A]; 2%; [Empty]; FY 1999: ; ; 2%; 2%; [Empty]; FY
2000: ; ; 2%; [A]; [Empty]; FY 2001: [Empty]; [Empty]; FY 2002:
[Empty].
Performance measures: 3. Underwriting Compliance Rate; Target; Actual;
FY 1998: ; [A]; 97%; [Empty]; FY 1999: ; [A]; 97%; [Empty]; FY 2000: ;
97%; 97%; [Empty]; FY 2001: ; 97%; [A]; [Empty]; FY 2002: [Empty].
Performance measures: Current measures; FY 1998: [Empty]; [Empty]; FY
1999: [Empty]; [Empty]; FY 2000: [Empty]; [Empty]; FY 2001: [Empty];
[Empty]; FY 2002: [Empty].
Performance measures: 4. Field presence within 3 days of declaration;
Target; Actual; FY 1998: ; ; 97%; 100%; [Empty]; FY 1999: ; ; 98%;
100%; [Empty]; FY 2000: ; ; 98%; 100%; [Empty]; FY 2001: ; ; 98%; 100%;
[Empty]; FY 2002: ; ; 98%; 100%.
Performance measures: 5.Loans processed within 21 days; Target; Actual;
FY 1998: ; 90%; 77%; [Empty]; FY 1999: ; 80%; 60%; [Empty]; FY 2000: ;
70%; 91%; [Empty]; FY 2001: ; 80%; 94%; [Empty]; FY 2002: ; 80%; 94%.
Performance measures: 6. Customer Satisfaction Rate; Target; Actual; FY
1998: ; [A]; 97%; [Empty]; FY 1999: ; [A]; 97%; [Empty]; FY 2000: ;
81%[B]; 81%; [Empty]; FY 2001: ; 80%; [A]; [Empty]; FY 2002: ; 80%;
[A].
Performance measures: Homes restored to pre-disaster conditions;
(Actual measure: Number of home loans approved); Target; Actual; FY
1998: [Empty]; [Empty]; FY 1999: [Empty]; [Empty]; FY 2000: [Empty];
[Empty]; FY 2001: [Empty]; [Empty]; FY 2002: ; ; ; ; 31,853; [A].
Performance measures: Businesses restored to pre-disaster conditions;
(Actual measure: Number of business loans approved); Target; Actual; FY
1998: [Empty]; [Empty]; FY 1999: [Empty]; [Empty]; FY 2000: [Empty];
[Empty]; FY 2001: [Empty]; [Empty]; FY 2002: ; ; ; ; 7,011; [A].
Performance measures: 9. Initial loan disbursements within 5 days of
receiving the closing documents; Target; Actual; FY 1998: [Empty];
[Empty]; FY 1999: [Empty]; [Empty]; FY 2000: [Empty]; [Empty]; FY 2001:
[Empty]; [Empty]; FY 2002: ; ; ; 95%; 94%.
[End of table]
Sources: SBA performance plans and reports, SBA officials, and GAO
calculations.
[A] Information not reported in SBA documents.
[B] The 2001 Performance Plan did not list this measure, but the 2001
Performance Report indicated that the target was 81 percent.
Three Output Measures Do Not Capture Progress:
Officials from SBA‘s Disaster Area Offices questioned whether the three
output measures--field presence within 3 days of a disaster
declaration, processing loan applications within 21 days, and
disbursing initial loan amounts within 5 days of receiving the closing
documents--were appropriate indicators of timely service to disaster
victims since they did not, for example, capture recent program
improvements. SBA has had a 98-percent success rate in meeting the
target for establishing a field presence each fiscal year since 1998.
In light of this fact, one official characterized this measure as
artificial and noted that it does not drive staff to improve their
performance. Officials from the area offices said that improvements in
planning, interagency coordination, and technology now can enable them
to have staff onsite and preparing to assist disaster victims within 1
day of a disaster declaration. For example, field coordinators in two
offices recently developed a database that tracks the level of staffing
and other resources used to respond to various types of disasters. The
coordinators used this information to help them more efficiently
determine the resources required to respond to new disasters. Such
preparedness enabled SBA officials to be in Lower Manhattan preparing
to serve disaster victims the same day as the September 11 attacks.
According to DAO staff, if there are delays in establishing a field
presence, it is generally because SBA is waiting for decisions from
state officials.
SBA data and comments from DAO officials raise questions about the
appropriateness of the second output measure--processing loan
applications within 21 days of receipt (table 2, measure 5). One
official suggested that providing timely, or well-timed, assistance
does not always mean providing assistance in the shortest period of
time. Rather, providing timely assistance means providing it when the
disaster victims need it. While the 21-day measure does capture the
elapsed time for multiple loan processing steps, the current target for
this measure does not reflect improvements in past performance. The
target was set at 70 percent for fiscal year 2000 and 80 percent for
fiscal year 2001, and SBA‘s performance significantly exceeded this
target each year. Moreover, the actual time required for processing
averaged 13 days in fiscal year 2001 and 12 days in fiscal year 2002.
In fiscal year 2001, as indicated earlier, SBA‘s average processing
time for business loans was about 16 days. Home loans, which according
to DAO officials are less complex, were processed during this period in
an average of about 12 days. According to SBA data, the average
processing time for both business and home loans improved in fiscal
year 2002. The average loan processing time for business loans in
fiscal year 2002 was about 13 days. The average time required to
process the September 11 business loans was also about 13 days. The
average processing time for the simpler home loans in fiscal year 2002
was about 10 days. Thus, SBA exceeded its performance target for both
of these measures in fiscal year 2002.
DAO officials attributed their faster processing times to several
agencywide improvements that have expedited loan processing. For
example, in the past SBA relied on hiring new and previously employed
temporary staff to help permanent personnel to process loans. This
strategy required DAO staff to train significant numbers of new
temporary staff on SBA loan processing procedures, with each new
disaster. In 2000, SBA implemented the Disaster Personnel Reserve
Corps. Each DAO now has a list of reserve corps members who are already
trained in SBA procedures and potentially available to assist in
responding to disasters. According to DAO staff, utilizing the corps
members enables SBA to potentially expedite processing by allowing
temporary staff to begin processing loans immediately, because
reservists are recruited and trained prior to the occurrence of the
disaster. According to one DAO official, using the reserve corps helped
her office attain the 21-day processing goal in fiscal year 2001. DAO
staff also attributed faster loan processing to increased automation.
Although, according to DAO staff, calculations to determine an
appropriate loan amount are made electronically for all loans, some
steps in loan processing are conducted manually. In 2000, SBA
established the Home Expedited Loan Officer Report (HELOR) system so
that loan decisions for home and personal property loans under $25,000
can be made automatically, based primarily on credit scores, rather
than manually by the loan officer.[Footnote 20]
DAO staff also cited DAO-level strategies that have expedited
processing locally. For example, in the past, DAO staff who inspected a
victim‘s property to estimate the amount of property loss, referred to
as loss verifiers, manually completed report forms and submitted the
reports to the DAOs using a courier service. In 2002, one DAO pilot
tested having their loss verifiers complete their inspection reports in
the field using hand-held computers and submit their reports to DAO
using electronic mail. One DAO official estimated that this automated
approach reduced loan processing time and eliminated courier service
expenses.
In 2002, SBA began reporting data on the third output measure--ordering
initial disbursements within 5 days of receiving closing documents
(table 2, measure 9). Yet, DAO staff suggest that the target for this
measure also does not reflect past performance and was set at a low
threshold. According to DAO staff, before 2002, SBA had an internal
goal of ordering disbursements within 3 days of receiving closing
documents. When SBA included this measure in the performance plan, the
disbursement target was increased to 5 days. SBA headquarters officials
commented that the 5-day standard was set to accommodate counting
weekend and holidays because the data system SBA uses to track disaster
loan processing could not distinguish between workdays and non-
workdays. Nonetheless, DAO officials are accustomed to the stricter 3-
day standard, they indicated that the 5-day standard can be met with
ease. For example, SBA made the initial disbursements on all approved
September 11 loans in an average of about 2 days, and in fiscal year
2002, on average, SBA also made initial disbursements within an average
of 2 days of receipt of closing documents. Moreover, according to one
DAO official, the disbursement target was increased as DAOs were
expediting their disbursement process. For example, as part of its
response to September 11 borrowers, the Niagara Falls DAO reduced the
amount of documentation required for September 11 victims from the
World Trade Center and Pentagon disaster areas to receive disbursements
of between $25,000 and $50,000, so that the DAO could more quickly
disburse the remaining amounts. Since they found this strategy to be
successful, the DAO official will recommend to his supervisors that
this procedure be used for all future disasters. However, because the
5-day disbursement measure focuses only on the initial disbursement, it
cannot capture other improvements that have been made to the multistep
disbursement process.
In commenting on a draft of this report, SBA indicated that the output
measures were established based on what was determined to be a
reasonable level of service based on an average year taking into
account the amount of resources required. Because of the
unpredictability of disasters, officials did not think it would be
feasible to adjust production levels simply based on 1 year‘s
performance. In addition, they noted that large disasters could still
generate more volume than SBA could handle quickly, especially if the
pre-disaster staffing levels in all area offices were low and a large-
scale recruitment and training effort were necessary. Even with some of
the program improvements, they believed it would be very difficult and
costly to maintain such levels during periods of multiple major
disasters. Although SBA acknowledged that there may be a basis for
modifying the output measures mentioned (effective field presence,
processing loan applications in 21 days, and ordering initial
disbursements within 5 days of loan closing), the officials believed
that the modifications in the measures should be based on an average
level of projected activity taking into consideration some of the
permanent improvements they have made to the program.
Two Out of Three Outcome Measures Actually Assess Outputs:
SBA officials indicated that the remaining three measures--number of
homes restored to predisaster condition, number of businesses restored
to predisaster condition, and customer satisfaction (table 2, measures
7, 8, and 6)--are used to assess the effect, or outcomes from lending
to disaster victims. These outcome measures have limitations that are
similar to the output measures. First, while the restoration of homes
and businesses is a stated outcome in SBA‘s strategic and performance
plans, SBA does not actually measure the number of homes and businesses
restored. As indicated earlier, headquarters officials said that SBA
reports on the number of home loans approved as a proxy measure for the
number of homes restored to predisaster condition. The agency also uses
a proxy measure--the number of business loans approved--for the number
of businesses restored to pre-disaster condition.
The proxy measures that are used to report disaster loan outcomes have
several limitations. First, these measures assess program outputs,
loans approved, and not the stated outcomes--restoration of homes and
businesses. Second, this proxy measure likely overestimates the number
of homes and businesses restored. As SBA staff explained, even when
loans are approved, borrowers might cancel the loan or reduce the
amount of the loan to avoid using their homes as collateral. For
example, about 10 percent of the loans approved for September 11
victims were subsequently cancelled by borrowers.
Third, these indicators use annual numbers, which are not useful
standards since they are highly dependent on factors outside of SBA‘s
control, such as the number of disasters that occur during a given
fiscal year. A more useful indicator would be the percentage of homes
and businesses receiving loans that were restored each year to pre-
disaster conditions, which would enable a yearly comparison of
performance. However, various SBA officials indicated that it is not
easy to obtain evidence on the percentage of homes or businesses that
have been restored after a disaster. One DAO official pointed out that
though he supported conducting on-site progress inspections to measure
whether homes or businesses have been restored, they are currently able
to conduct on-site inspections for only a tiny fraction of the
properties due to their limited travel budget. He has had to
increasingly rely on the integrity of the applicants and SBA reviews of
the borrowers‘ receipts.[Footnote 21] Other staff indicated that some
alternative strategies, such as reviewing pre-and post-disaster
property tax assessments as a proxy measure for the restoration of
homes, would also be problematic because of different economic
conditions in different communities.
To measure another outcome--customer satisfaction (table 2, measure 9)-
-SBA uses the results of its survey of successful loan applicants. SBA
also uses this survey to evaluate the impact of the program. Yet, SBA‘s
method for conducting the survey has significant limitations. First,
the survey measures the satisfaction of only a portion of the customers
that the Disaster Loan Program serves. Every DAO director we
interviewed indicated that all disaster victims are SBA customers and
that a broader population should be surveyed. In 2001, we and SBA‘s
Inspector General made the same suggestion to SBA. As we indicated
then, the current survey method is likely to produce positively skewed
responses. SBA headquarters officials indicated that they are resistant
to surveying those who were denied loans because they presumed the
applicants‘ responses would be negative. Yet, as described earlier in
this report, it was the complaints from September 11 applicants that
informed SBA of problems in the existing loan program and led the
agency to revise the disaster program to better serve disaster victims.
SBA does not currently plan to expand its fiscal year 2002 survey to a
sample of all loan applicants. Second, the target set for this
indicator, 80 percent, is set below what the program has reportedly
achieved in the past; for example, 97 percent in 1998 and 1999, and 81
percent in 2000.
Measures Do Not Assess Intermediate or End Outcomes:
Our review of the 2003 performance plan found that five of the six
measures (table 2, measures 4, 5, 7, 8, and 9) that are currently used
to assess the performance of SBA‘s disaster lending focus on narrow
program outputs rather than intermediate or end outcomes. As mentioned
earlier, OMB guidance states that the plan should include outcomes when
their achievement is scheduled during the fiscal year. In addition,
recommendations from the Inspector General and guidance from us and
within SBA have encouraged the use of outcome measures for this
program. Only the customer satisfaction measure has the potential to
assess one of the stated end outcomes from the Disaster Loan Program.
The other intended outcomes from disaster lending, which might be
measured annually or bi-annually, such as jobs retained or housing
restored, are not measured. SBA may be able to measure, for those loans
that are fully disbursed by the first or second quarter of the fiscal
year, the percent of homes or businesses that have been fully restored
at year‘s end.
In addition, SBA does not measure potential intermediate or end
outcomes for the Disaster Loan Program. For example, as described
earlier, some September 11 loan applicants criticized SBA‘s
underwriting criteria as too restrictive. In the past, SBA used two
intermediate outcome measures, loan currency, and delinquency rates as
listed in table 2, to reflect the quality of disaster loans. Yet, these
measures were not included in the 2001 performance plan.[Footnote 22]
Another potential intermediate outcome from the underwriting process,
the retention of appropriate insurance, is not measured. As indicated
in appendix II, SBA requires loan applicants to obtain insurance
related to the nature of the disaster in order to receive a disaster
loan. As one DAO official suggested, having insurance, such as flood
insurance, potentially reduces the number of disaster loans required in
areas that experience recurring disasters. As we reported previously, a
greater reliance on insurance can reduce disaster assistance costs and
could reduce the effect of a disaster on its victims.[Footnote 23]
SBA headquarters staff said that, while they recognize that the proxy
measures for the restoration of homes and businesses are inadequate and
are aware that the customer survey only assesses the satisfaction of a
portion of their customers, they have a limited ability to develop and
use better outcome measures. The staff indicated that the very nature
of disaster lending is unpredictable, so it is difficult to set
performance targets for intermediate or end outcomes. A headquarters
SBA official said that they are reluctant to measure and report
intermediate or end outcomes that they cannot control. For example, one
DAO official suggested that SBA cannot ensure that businesses that
receive a disaster loan will survive. Other factors he suggested, such
as differences in the willingness of people from different regions to
acquire debt, will affect the borrower‘s decisions. Other DAO officials
indicated that conducting some end outcome measurement methodologies
would be expensive, such as conducting on-site inspections of a
sampling of homes and businesses to determine if they have been
restored.
Limitations in the Performance Plan:
We identified at least five features of the description of the Disaster
Loan Program in the 2002 and 2003 performance plans (see table 3) that
make it difficult to assess whether SBA is making progress in attaining
its strategic goal. First, as discussed earlier, strategic goals and
performance goals in annual plans may be identical, which is the
approach SBA uses for the strategic and performance goals for the
Disaster Loan Program. Between the 2002 and the 2003 performance plans,
the performance goal changed from an outcome-oriented goal--helping
families recover from disasters--to an output-oriented goal--
streamlining disaster lending, without the required explanation. GPRA
requires agencies to explain why they change performance goals, and OMB
generally recommends that agencies used goals that are outcome-
oriented.
Table 3: Comparison of Selected Elements of Recent Disaster Loan
Program Performance Plans and Reports:
Performance plan: 2002; Performance goal: Help families and businesses
recover from disasters; Outputs: * Loans to families and businesses;
Outcomes: * Restored housing; * Jobs retained; * Increased survival of
businesses; * Stabilized local economy; * Customer satisfaction;
Performance indicators: * Field presence within 3 days of declaration;
* Achieve high customer satisfaction rate; * Applications processed
within 21 days.
Performance plan: 2003; Performance goal: Streamline disaster lending;
Outputs: * Disaster loans to families and businesses; * Timely
response; * Reduced application & approval time; Outcomes: * Restored
housing & businesses; * Jobs retained; * Increased survival of
businesses; * Customer satisfaction; Performance indicators: * Homes
restored to pre-disaster condition; * Businesses restored to pre-
disaster condition; * Field presence within 3 days of declaration; *
Achieve high customer satisfaction rate; * Applications processed
within 21 days.
[End of table]
Source: GAO.
Second, the 2002 and 2003 performance plans do not define the linkages
between each program output and each intermediate or end outcome. The
plans do not explain how the outputs--disaster loans--are related to
the performance indicators--field presence, customer satisfaction, and
application processing timeframes. Third, the plans do not explain how
the performance measures or indicators are related to either program
outcomes or outputs. Fourth, the plans do not explain if the targets
for the performance measures are set in anticipation of performance
improving, regressing, or remaining the same. For example, some targets
are at or below the actual performance in previous years. Fifth,
performance indicators are added to the plans, or dropped--as shown in
table 2--without explanation. These omissions make it difficult to
understand how and if SBA expects to improve or sustain its loan
processing performance.
The performance plans also contain incomplete or inaccurate information
on some performance indicators. For example, despite OMB and SBA
guidance, validation and verification information on field presence and
loan processing measures is omitted, making it difficult to assess the
quality of performance data. In addition, the 2003 performance plan
indicates that data on the number of homes restored to pre-disaster
condition are based on-site inspections of homes. However, SBA
officials indicated that they use a proxy measure--the number of
original home loans approved--as the actual source of data for homes
restored to pre-disaster condition.
Conclusions:
The September 11 terrorist attacks presented SBA with challenges it had
never before faced. First, it had to provide loans to individuals and
businesses near the disaster site as well as to small businesses
located throughout the country. Rather than providing most of its loans
for the repair and replacement of physical structures, SBA found itself
dealing with large numbers of economic injury loans to businesses with
amended guidelines. Second, given the extent of the economic effects in
the wake of the attacks, SBA had to work with the Congress to modify
the Disaster Loan Program so that larger loans could be provided to a
broader population of disaster victims. Input from small business
owners and advocates at congressional hearings was key to the changes
that were made--changes that, whether temporary or permanent, will be
useful for SBA and other federal agencies to consider in responding to
future disasters.
In this and previous work, we found that SBA‘s Disaster Loan Program
performance measures do not fully or adequately reflect the program‘s
actual performance. Viewing the performance measures in light of SBA‘s
response to the September 11 attacks underscores this finding. First,
two current output measures describe only discrete steps of multistep
processes, and some output measures use performance targets that have
already been achieved or exceeded. Second, most of SBA‘s measures
assess program outputs instead of assessing measurable outcomes. We
recognize the challenge of identifying end outcome measures, such as
restoring a business to predisaster condition given the many factors
involved in a business‘ success. However, we note that intermediate
outcome measures can provide meaningful information about the effect of
SBA‘s program. But SBA‘s plan does not use intermediate outcome
measures to link its output measures to the intended outcomes of the
program. The one outcome measure SBA uses--a customer survey--is
directed only at disaster victims who received loans. SBA misses the
opportunity to get feedback from applicants who did not get loans. Yet
SBA‘s response to September 11 was modified partly as a result of the
concerns small businesses expressed. Moreover, the limitations in the
program‘s performance measures and plans mean that congressional
decisionmakers do not have an accurate description of SBA‘s progress to
help them make informed decisions in directing and funding the Disaster
Loan Program.
Recommendations:
In order to better demonstrate program performance, we recommend that
the Administrator of SBA direct the Office of Disaster Assistance to:
* revise the performance measures for disaster lending to (1) include
more outcome measures; (2) assess more significant outputs, such as
service to applicants or loan underwriting; (3) report achievements
that can be compared over several years, such as percentages; and (4)
include performance targets that encourage process improvement rather
than maintaining past levels of performance;
* revise and expand its current research to improve its measures and
evaluate program impact. To improve its current measures SBA should
conduct research, such as surveying DAO staff and reviewing the
disaster, lending, and performance literature, to identify and test new
outcome measures. To evaluate its program impact, SBA needs to revise
its survey approach to survey all disaster loan applicants and to
employ other methods, such as periodic analyses of regional statistics,
to assess the economic impact of the program on local communities; and:
* revise the disaster section of the performance plan to (1) establish
direct linkages between each output and outcome and the associated
performance measure; (2) accurately describe proxy measures as either
an outcome or output measures; (3) accurately describe the validation
and verification of performance measures; and (4) explain additions,
deletions, or changes in the current goals or measures used from the
previous year.
Agency Comments:
We requested SBA‘s comments on a draft of this report, and the
Associate Administrator for Disaster Assistance provided written
comments that are presented in appendix V. SBA generally agreed with
our recommendations and said that they intended to review the existing
performance measures and research new ways to evaluate program impact.
SBA also provided some technical corrections and comments, which we
incorporated as appropriate in this report.
We are sending copies of this report to the Ranking Minority Member of
the House Committee on Small Business, the Chairman and Ranking
Minority Member of the Senate Committee on Small Business and
Entrepreneurship, other appropriate congressional committees, and the
Administrator of the Small Business Administration. In addition, this
report will be available at no charge on GAO‘s Web site at http://
gao.gov.
If you have any questions about this report, please contact M. Kay
Harris, Assistant Director, or me at (202) 512-8678. Key contributors
to this report were Kristy Brown, Sharon Caudle, Patricia Farrell
Donahue, and John Mingus.
Sincerely yours,
Signed by Davi M. D‘Agostino:
Davi M. D‘Agostino
Director, Financial Markets and
Community Investment Issues:
[End of section]
Appendixes:
[End of section]
Appendix I: Scope and Methodology:
To review the Small Business Administration‘s (SBA) response to the
September 11 terrorist attacks, we interviewed officials from the
Office of Disaster Assistance (ODA) at SBA headquarters and officials
from each of the four SBA Disaster Area Offices. In addition, we
interviewed officials from SBA‘s Office of the Inspector General. We
also reviewed documents related to disaster lending policy and
procedures, the agency‘s response to the September 11 attacks, and
other program documentation. In addition, we reviewed congressional
testimony as well as regulatory actions taken by SBA, and legislative
action by the Congress, in response to the terrorist attacks.
To analyze SBA‘s lending to September 11 victims, we obtained data from
SBA‘s Automated Loan Control System (ALCS), the system used by SBA to
track disaster loan applications, approvals, and disbursements. We used
these data to calculate descriptive statistics on the numbers of
disaster loans, disbursement amounts, and other characteristics of the
disaster lending to September 11 victims. We limited our analysis to
loan funds approved through September 30, 2002. For our analysis of
type of industry, we used the North American Industry Classification
System (NAICS) code from the database and grouped the results by the
first two letters of the code, which designate the general industry
type. We determined the five industry types that received the largest
percentage of SBA September 11 loans nationwide, grouping the remaining
industries in the ’other“ category. We conducted similar analysis by
industry for each type of September 11-related declaration. We
ascertained how information for the ALCS database was collected and
maintained to determine its reliability, and we found the information
to be reliable for our purposes. We repeatedly consulted with SBA
headquarters officials, including those responsible for managing ALCS,
during our analyses to ensure our understanding of various data
elements was correct. We also obtained summary statistical reports from
SBA describing disaster lending during fiscal years 2001 and 2002.
To review and analyze SBA‘s performance plans and measures for its
Disaster Loan Program, we reviewed SBA‘s strategic plan for the 2001-
2006 period and performance plan for fiscal years 2002 and 2003. A
knowledgeable staff member from our Strategic Issues Team also reviewed
the plans for compliance with the Office of Management and Budget‘s
(OMB) guidance on the Government Performance and Results Act (GPRA) of
1993 guidance. We also reviewed SBA‘s Inspector General‘s recent review
of the disaster section of recent performance plans, SBA‘s primer on
performance measurement, and our recent reviews of SBA. Our overall
assessment of SBA‘s performance plans was generally based on our
knowledge of the Disaster Loan Program and OMB‘s guidance on developing
strategic and performance plans.
We conducted our work between June 2002 and January 2003 in Washington,
D.C.; Niagara Falls; Atlanta; and Fort Worth in accordance with
generally accepted government auditing standards.
[End of section]
Appendix II: SBA Disaster Response, Loan Processing, and Loan
Disbursement Procedures:
Disaster loan: process step: Damage assessment; Description: State and
federal officials conduct a preliminary damage assessment to estimate
the extent of the disaster and its impact on individuals and public
facilities. SBA participates in the damage assessment when the damages
include homes and businesses.
Disaster loan: process step: Declaration; Description: The President,
USDA, or SBA makes a disaster declaration.
Disaster loan: process step: Receipt of application; Description: * SBA
establishes field presence - SBA staff arrive at the disaster site and
take actions to initiate delivery of disaster assistance.; * SBA loan
officers meet with disaster victims, explain the loan process, and
issue applications at the Federal Emergency Management Agency (FEMA) or
SBA disaster offices.; * SBA screens the submitted applications for
completeness and to make sure all necessary documentation has been
provided.; -Home loan application package includes the application,
listing of property damage, and authorization for SBA to access
applicant‘s tax information.; -Business loan application package
includes the application, a schedule of liabilities, and personal
financial statements and tax information authorization for each
proprietor, partner, affiliate, or other type of owners.
Disaster loan: process step: Loss verification; Description: * Physical
loan applications are forwarded to loss verifiers who conduct on-site
appraisals of the damaged property to estimate the cost of restoring
the property to pre-disaster condition.; * Economic injury applications
may be sent directly to a Disaster Area Office (DAO) for processing.
Disaster loan: process step: Application processing; Description: *
Once the application arrives at the DAO, SBA staff review the
application, examining such issues as duplication of benefits; credit
history; criminal record; tax returns; history on other SBA loans; and
the history on other federal debt.; * The applicant‘s losses or
economic injury are calculated.; * The loan officer determines whether
the applicant has satisfactory credit and the ability to repay the
loan; the legal department determines whether there are any legal or
regulatory restrictions on receiving a disaster loan.; * If the
applicant meets SBA‘s underwriting criteria, then the loan is approved,
using the amount of verified losses as the basis for the loan amount.;
* Closing documents are prepared and mailed to the applicant.
Disaster loan: process step: Loan disbursement; Description: *
Applicants are required to obtain insurance. Hazard insurance is
required before disbursement over $10,000 for physical loans, and over
$5,000 for economic injury loans. Flood insurance is required for
properties located in Special Flood Hazard areas before any
disbursement can be made.; * Maximum initial disbursement without
collateral: physical loans - $10,000; economic injury loans - $5,000; *
Initial disbursement with collateral, preferably the applicant‘s home:
$25,000.; * Total disbursements with proof of ownership of the damaged
property: physical loans and economic injury loans - $25,000.; * Total
disbursements with proof of title insurance: physical loans and
economic injury loans - $250,000.[A].
[End of table]
Sources: SBA Disaster Loan Program Standard Operating Procedures and
interviews with disaster loan officials.
AIn cases when improper use of previous disbursements is suspected,
agency procedures indicate that loss verifiers may conduct on-site
progress inspections; however, this is rare according to some agency
officials.
[End of section]
Appendix III: Regulatory and Statutory Changes to SBA‘s Disaster Loan
and 7(a) Program in Response to the September 11 Terrorist Attacks:
[See PDF for image]
[End of figure]
[End of table]
Sources: Emergency Supplemental Act of 2002, P.L. No. 107-117; Federal
Register, Vol. 67 No. 10; Federal Register, Vol. 67 No, 15; Federal
Register, Vol. 67 No, 51; SBA documents.
[End of section]
Appendix IV: Data on SBA Disaster Loans Made to Victims of September 11
Terrorist Attacks:
SBA Responds to Multiple Disaster Areas:
SBA‘s response to the September 11 disaster commenced immediately after
the terrorist attacks occurred, when SBA disaster officials established
communication with FEMA and state emergency management officials. By
the afternoon of September 11, disaster officials from SBA‘s Niagara
Falls DAO were in Lower Manhattan coordinating the agency‘s recovery
efforts with the overall federal response. Once the President declared
the World Trade Center attack a major disaster, SBA designated the
immediate disaster area of the World Trade Center (’WTC Immediate“) as
the five boroughs of New York City, and the contiguous area of the
World Trade Center (’WTC Contiguous“) as including two other counties
in New York and four counties in New Jersey. SBA officials began
meeting with disaster victims on September 13.
Following the President‘s declaration of the Pentagon attack as a major
disaster on September 21, SBA established the immediate area of the
Pentagon, which was comprised of Arlington County, Virginia, and the
contiguous area of the Pentagon, which included additional counties in
Maryland, and Virginia (’Pentagon Contiguous“), and parts of the
District of Columbia. FEMA extended the declared disaster areas on
September 27 as the widespread impact of the terrorist attacks became
more apparent. The immediate area of WTC was extended to include 10
additional counties in New York, including the 2 counties initially
included in the WTC Contiguous area. The extension also added
additional counties in New York and New Jersey, as well as counties in
Connecticut, Massachusetts, and Pennsylvania to the existing WTC
Contiguous area. See figure 4 for a map of the disaster areas. As the
United States began to deploy military personnel in response to the
terrorist attacks, small businesses affected by the loss of employees
who serve as reserve military personnel were eligible to apply for a
disaster loan under the Military Reservist EIDL Program.
Figure 4: Immediate and Contiguous Disaster Areas for September 11
Terrorist Attacks:
[See PDF for image]
[End of figure]
SBA Has Provided September 11 Disaster Loans to a Range of Small
Businesses Nationwide:
We obtained and analyzed SBA data on the loans it approved in response
to September 11, 2001, through September 30, 2002. The distribution of
September 11 lending varied significantly by amount, geographic
location of recipients, and the types of loans. Nearly half of the
September 11 loan funds disbursed by the end of fiscal year 2002 was
distributed to disaster victims from New York. The balance was
disbursed across the country through the expanded EIDL Program. Unlike
other recent disasters, almost all of the disbursed loan funds went to
businesses rather than homeowners.
September 11 Lending Nationwide:
In just over 1 year, SBA approved more than 9,700 home and business
loans totaling $966 million for victims of the September 11 attacks,
disbursing about $895 million, or 93 percent, by the end of fiscal year
2002. The peak in monthly disbursement amounts for all September 11
loans was in January 2002 at $120 million. The agency expects to fully
disburse $924 million--or 96 percent of the amount approved--due to
loan increases, decreases, and cancellations. As of the end of fiscal
year 2002, about 10 percent of approved September 11 loans were
cancelled by borrowers, compared with 16 percent of approved disaster
loans in fiscal year 2001. The greatest percentage of loan
cancellations occurred in the immediate area of WTC, where 13 percent
of the loans in this area were cancelled. The contiguous area of the
Pentagon experienced the greatest percentage of loan increases, where
11 percent of September 11 loans were increased from their original
approved amount. Given the difference between the approved amounts and
the disbursed amounts--due to loan increases, decreases, and
cancellations--we have chosen to describe the distribution of September
11 loans in terms of the actual disbursed loan amounts.
September 11 loan disbursement amounts range from $300 to $1.5 million,
with a median amount of $50,000. Fifty percent of disbursements were
between $18,700 and $119,700. Eleven percent of September 11 loan
disbursements were for $50,000, the most frequently disbursed amount.
In commenting on our draft SBA, indicated that the agency applied the
expedited EIDL process for ’stand-alone“ EIDLs, that is, applicants
without any property damage. The loan amount was limited to the lesser
of 2 months gross margin or $50,000, which SBA described as the reason
why the most commonly disbursed amount was $50,000. The distribution of
September 11 loans also varied by state, type of loan, declaration
area, and by business industry.
September 11 Lending by Type of Loan:
Typically, about 80 percent of approved SBA disaster loans are home
loans to repair physical damage to homes and personal property.
However, about 97 percent of September 11 loans were disbursed to
businesses. Even in New York City, only 6 percent of loans were
disbursed to households. SBA officials attribute this difference from
the historic lending pattern to the fact that the physical damage
caused by the terrorist attacks was concentrated in the World Trade
Center business district and at the Pentagon. Seventy percent of the
businesses receiving September 11 loans had 10 or fewer employees,
while 50 percent had 5 or fewer employees. Businesses with more than
100 employees received less than 2 percent of disbursed loan funds.
Overall, only about 9 percent of September 11 loan applicants in the
declared disaster areas sustained physical losses compared with about
80 percent of disaster loan applicants in fiscal year 2001.
Consequently, 92 percent of September 11 loans went to small businesses
that suffered economic injury, but no physical damage, and about 5
percent of the loans were disbursed to businesses with physical damage
from the attacks.
September 11 Lending by State:
Although SBA provided loans to affected small businesses nationwide,
about 45 percent of all disbursed September 11 loan funds were
distributed to applicants in New York State. Of that 45 percent,
approximately 36 percent was disbursed to disaster victims in New York
City. As shown in figure 1, Florida received the second greatest
percentage of disbursed September 11 loans (11 percent), followed by
California (6 percent), New Jersey (4 percent), Texas (3 percent), and
Virginia (3 percent).
More than half of all September 11 loan funds were disbursed to small
businesses outside of the immediate and surrounding areas of the World
Trade Center and the Pentagon. SBA data indicate that, in general,
businesses located closest to the WTC disaster site received smaller
loans than businesses near the Pentagon and nationwide. For example,
the median disbursement in the immediate area of WTC, specifically New
York City, was about $40,000, while the median disbursements under the
expanded EIDL Program and in the area of the Pentagon were $50,000 and
$60,000, respectively. SBA disaster officials reasoned that firms near
WTC may have received smaller SBA loan disbursements because there were
other resources available to them,[Footnote 24] whereas SBA was the
sole source of assistance for affected small businesses outside of New
York City. In addition, SBA officials suggested that since many
September 11 loan recipients in New York City were service-oriented
firms, they had fewer operating expenses than the more capital-
intensive loan recipients nationwide.
Figure 5: Distribution of SBA September 11 Loans, by Declaration Area:
[See PDF for image]
[End of figure]
September 11 Lending by Industry:
SBA loan disbursement data appear to indicate that a wide variety of
businesses received September 11 loans. As shown in figure 2, no one
sector of the economy received a substantial portion of these loans. We
summarized SBA‘s loan data according to the type of business that
received the loan. The manufacturing sector received the greatest
percentage of September 11 loans, though this represents only about
one-sixth of these loans.[Footnote 25] We combined business types with
less than 7 percent of the loans into an ’other“ category, which
includes
such sectors as retail trade and waste management.
As shown in figure 6, the distribution of the loan disbursements by
industry for the expanded EIDL was similar to the distribution for all
September 11 loans, with the manufacturing sector receiving the second
largest portion of these loan disbursements. In contrast, to the
distribution of loan disbursements at the national level, the greatest
percentage of disaster loan funds in New York City, and the immediate
and contiguous areas of the Pentagon was disbursed to the professional,
scientific, and technical service industry.
Figure 6: September 11 Business Loan Disbursements, by Declaration and
by Industry:
[See PDF for image]
[End of figure]
[End of section]
Appendix V: Comments from the Small Business Administration:
JAN 23 2003:
U.S. SMALL BUSINESS ADMINISTRATION WASHINGTON, D.C. 20416:
Davi M. D‘Agostino Director:
Financial Markets and Community Investment United States General
Accounting Office:
441 G Street, N.W. Washington, DC 20548:
Dear Ms. D‘Agostino:
We appreciate the recognition, in this report, of the exceptional
performance of the U.S. Small Business Administration (SBA) in response
to the September 11, 2001, terrorist attacks and the overall
improvements made in the disaster loan program over the past few years.
This terrible disaster presented challenges never before faced in the
history of the SBA disaster loan program. Clearly, SBA welcomed the
opportunity to work with Congress on such challenges and to hear and
react to the concerns of affected individuals and businesses throughout
the recovery process. As part of SBA‘s unprecedented response, the SBA
Administrator and dedicated SBA staff from all programs within the
Agency canvassed affected neighborhoods to talk to small business
owners suffering from this tragedy in order to inform them of available
SBA assistance. SBA disaster program officials immediately coordinated
with other disaster relief programs to broaden the scope of relief for
September 1 1 th victims. For example, to complement our existing
disaster assistance programs, SBA‘s Disaster Area Office in New York
coordinated with New York State‘s Empire State Development Agency and
several private financial institutions to promote ’Bridge Loan and Gap
Loan“ financing for the business community in New York City and
subsequently launched our Supplemental Terrorist Activity Relief
Program.
Early on, it was apparent that the economic impact of this disaster was
significantly affecting businesses nationwide. SBA immediately
anticipated the enormity of this unique disaster situation and by mid-
October, 2001 had implemented new expedited loan processing as well as
expedited loan disbursement procedures. Within 1 week of implementation
of these new expedited loan and disbursement procedures, SBA issued new
regulations that extended economic injury disaster loan eligibility to
businesses outside of the declared disaster area (of New York and
Virginia) for the first time in our history. On January 10, 2002,
Congress passed P.L. 107-117 that appropriated $150 million to SBA and
increased the capacity of the disaster loan program in many important
ways to assist the Agency in meeting the unprecedented challenges of
this tragic situation. Similarly, SBA issued regulatory changes to
appropriately increase its business size standards so that a maximum
number of small businesses could avail themselves of SBA‘s disaster
loan program. In summary, SBA‘s response has been expeditious,
decisive,, and sympathetic to the plight of affected individuals, as
well as small businesses, the businesses which are most vulnerable to
the disruptions and dislocations caused by this tragedy.
We note that the comments in the ’Recommendations Section“ in the draft
report suggest several ways to better demonstrate and report program
performance by (1) revising performance measures; (2) revising and
expanding our current research to improve measures to evaluate program
impact; and, (3) revise the disaster section of the SBA performance
plan. We generally agree with these recommendations and intend to
review existing performance measures and research new ways to evaluate
program impact. We clearly recognize the need to identify better
outcome measures that fully reflect and capture the outstanding
assistance that the disaster loan program has provided in helping
families and businesses recover from disasters. We appreciate the
opportunity to provide clarifying comments and have included our
specific requests for clarification and/or changes within the
attachment herein.
Herbert L. Mitchell, Associate Administrator for Disaster Assistance:
Signed by Herbert L. Mitchell
Attachment:
[End of section]
FOOTNOTES
[1] SBA‘s other mission responsibilities are to maintain and strengthen
the nation‘s economy by aiding, counseling, assisting, and protecting
the interest of small businesses. As of September 30, 2001, SBA had a
total portfolio of about $44 billion, including $39 billion in direct
and guaranteed small business loans and other guarantees and $5 billion
in disaster loans.
[2] See U.S. General Accounting Office, September 11: Small Business
Assistance Provided in Lower Manhattan in Response to the Terrorist
Attacks, GAO-03-88 (Washington, D.C.: Nov. 1, 2002).
[3] See U.S. General Accounting Office, Managing for Results:
Opportunities for Continued Improvement in Agencies Performance Plans,
GAO/GGD-99-215 (Washington, D.C.: July 20, 1999); Small Business
Administration: Status of Achieving Key Outcomes and Addressing Major
Management Challenges, GAO-01-792 (Washington, D.C.: June 22, 2001);
and Final Audit Report - Results Act Performance Measurement for the
Disaster Assistance Program, Small Business Administration, Office of
the Inspector General, Audit Report Number: 1-06 (Feb. 15, 2001).
[4] According to Office of Management and Budget guidance, outputs are
the level of activity that can be produced or provided over a given
period of time or by a specific date. Outcomes are the intended
results, effects, or consequences that occur from carrying out program
activities. See the Office‘s Preparation and Submission of Strategic
Plans, Annual Performance Plans, and Annual Program Performance
Reports, Circular No. A-11, Part 6 (Washington, D.C: June 2002).
[5] If there is moderate physical damage, the governor of the affected
state can request a disaster declaration by the SBA Administrator,
making both physical damage and economic injury loans available to
disaster victims. If there is minor physical damage, the governor of
the affected state may certify the economic injury stemming from an
event and request an SBA disaster declaration. In the case of a natural
disaster such as a drought, the governor may request a disaster
declaration by the Secretary of the United States Department of
Agriculture based solely on the agricultural production losses, in
which case SBA‘s declaration limits the economic injury loans to the
economic effect of these agricultural losses. For governor-certified
and Agricultural declarations, SBA only provides economic injury loans.
[6] In this report, homeowners and renters will be referred to as
’households“ and nonprofit organizations and nonfarm businesses will be
referred to as ’businesses.“
[7] Even if a business receives a loan to cover both physical damage
and economic injury, the total loan amount generally cannot exceed $1.5
million.
[8] P.L. 103-62, GPRA 1993.
[9] The Office of Management and Budget provides guidance to federal
agencies on developing these plans in Preparation and Submission of
Strategic Plans, Annual Performance Plans, and Annual Program
Performance Reports, Circular No. A-11, Part 6 (Washington, D.C: June
2002).
[10] See, for example, U.S. General Accounting Office, Executive Guide:
Effectively Implementing the Government Performance and Results Act,
GAO/GGD-96-118 (Washington, D.C.: June 1, 1996) and Performance Plans:
Selected Approaches for Verification and Validation of Agency
Performance Information, GAO/GGD-99-139 (Washington, D.C.: July 30,
1999).
[11] Small Business Administration, Performance Indicators & Data
Quality--A Primer, (Washington, D.C.: July 2001).
[12] The Military Reservist EIDL program is available even in the
absence of a disaster declaration. The program is available to small
businesses anytime the government calls military reservists to duty.
[13] In January 2002, SBA increased the revenue-based thresholds for
determining the size of business by the rate of inflation. In February
2002, SBA retroactively applied the inflation-adjusted size standards
to all businesses applying for September 11 loans. Thus, more
businesses could apply for loans. See appendix III for details.
[14] SBA administers the Small Business Development Center program to
provide management assistance to current and prospective small business
owners. The Centers offer one-stop assistance to small businesses by
providing information and guidance in central branch locations. The
program is a cooperative effort of the private sector, the educational
community, and federal, state, and local governments. According to SBA,
the program enhances economic development by providing small businesses
with management and technical assistance.
[15] According to Niagara Falls DAO officials, other factors may have
also contributed to faster loan processing time for September 11 loans.
For example, in fiscal year 2001, at least 80 percent of loan
applicants sustained physical losses, and it took SBA an average of 6
days for the officials to verify the losses for each physical loan
application. In contrast, only about 9 percent of the September 11 loan
applications received by the area office required loss verifications.
Moreover, SBA could not conduct loss verifications for businesses
located in the World Trade Center since their place of business was
destroyed.
[16] Emergency Supplemental Appropriations for Recovery and Response to
Terrorist Attacks on the United States Act, 2002 P.L. 107-117
(Emergency Supplemental Act of 2002).
[17] GAO/GGD/AIMD-99-215 and GAO-01-792.
[18] SBA OIG, Audit Report Number: 1-06.
[19] GAO-01-792.
[20] The expedited procedure for processing home loans is used only to
approve loans. If this procedure indicates that the loan should be
denied, the loan officer must use the standard procedure for processing
home loans.
[21] In commenting on our draft, SBA indicated that many progress
inspections are performed via ’desk-top“ reviews instead of on-site
inspections. The Automated Loan Control System, which SBA uses to track
disaster loans, does not record if a progress inspection was conducted
using the on-site or desk-top method, so no specific measure of the use
of on-site versus desk-top progress inspections is available.
[22] The Inspector General‘s review of the 2000 performance plan
criticized the methodology SBA used to calculate the rate, but it did
not recommend that SBA eliminate the measure. Rather, the Inspector
General suggested a strategy to improve calculating the delinquency
rate, with which SBA concurred. Yet, in the 2001 performance plan the
delinquency and currency rate measures were omitted, without
explanation.
[23] U.S. General Accounting Office, Disaster Assistance: Information
on Federal Costs and Approaches for Reducing Them, GAO/T-RECD-98-139
(Washington, D.C.: Mar. 26, 1998).
[24] See U.S. General Accounting Office, September 11: Small Business
Assistance Provided in Lower Manhattan in Response to the Terrorist
Attacks, GAO-03-88 (Washington, D.C.: Nov. 1, 2002).
[25] Within the manufacturing sector, firms involved in printing
activities (3 of the 17 percent) and those making aircraft related
materials (2 of the 17 percent) received the largest portions of
September 11 loans distributed to manufacturers. Within the
professional, scientific, and technical sector, businesses providing
computer-related services received the largest portion of loan
disbursements to (5 of the 16 percent). Limousine and taxi services
received the greatest percentage of disbursements within the
transportation and warehousing sector (4 of the 12 percent). The
primary recipients of September 11 loans disbursed within the wholesale
trade sector were grocery wholesalers (2 of the 10 percent). Last,
restaurants and travel accommodation services received the greatest
percentage of disbursements to the accommodation and food service
sector (8 of the 9 percent).
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