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entitled 'Small Business Administration: Response to September 11 
Victims and Performance Measures for Disaster Lending' which was 
released on January 29, 2003.



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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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