Will emergency loans be the next mess in Texas?

The SBA Seeks to Help Homeowners with Hurricane Harvey Emergency Loans

Texas has suffered massive devastation due to the arrival of Hurricane Harvey. The human misery inflicted by the severe weather event is like nothing the Lone Star state ever previously experienced. The personal tragedies of the natural disaster are joined by the economic troubles that follow. Billions upon billions of dollars in property and other damage has been inflicted. Homes and businesses suffered destruction. Several different entities such as insurance companies and private charities intend to contribute financial support. One other venue of financial support may come as a surprise to many. The Small Business Administration (SBA) has emergency lending programs set up to support the directing of funds to qualified applicants.

Unfortunately, the SBA’s internal workings do not guarantee the smooth issuance of funds. In fact, many economic experts and government analysts assume the SBA’s emergency loan programs will frustrate applicants.

The SBA’S Unique Office

Within the Small Business Administration, there is a unique division known as the Office of Disaster Assistance. Interestingly, this division does not only issue loans to businesses. Homeowners can receive loans as well. During Hurricane Katrina and Superstorm Sandy, billions of dollars in loans were issued to homeowners. Of course, specific criteria must be let in order to apply and receive funds.

The main problem with the issuance of emergency loans would be the long delays approved applicants must wait for receiving their funds. Applicants end up waiting weeks to receive funds. Again, these are emergency loans. That indicates the borrowers need the money right away. The overwhelming number of applications combined with the heavy bureaucracy of the SBA leads to delays. The delays add to the tremendous stress borrowers feel. They assume the processing moves smoothly and funds release without stumbling blocks. Sad to say, this was not the case during Katrina and Sandy. Likely, it won’t be the case with Harvey.

Or will the situation be better this time?

The Post-Disaster Process

The SBA has issued official word that the agency is prepared to handle applications for emergency loans. Supposedly, processing improvements have been instituted. The improvements were based on trial and error discoveries made after the previous two major storms. The following weeks should reveal whether the improvements truly are sufficient.

The agency likely cannot predict how many people will submit loan applications. Nor can the agency completely predict what the final dollar amount. Once the storm calms and normal weather returns, homeowners return to their devastated properties to make an assessment of the losses. Considering the massive devastation Hurricane Harvey delivered, the losses should be huge. The SBA’s ability to meet the monetary requests in forthcoming applications truly will be tested.

The Core Mission of the SBA

As the name reveals, the Small Business Administration deals with providing economic support to entrepreneurs and business entities. The SBA’s primary mission doesn’t focus on lending money to homeowners. However, the agency has been tasked with doing so in order to help address the financial aspect of natural disaster devastation.

Requesting the SBA to handle duties outside of its primary mission clearly is problematic. The staff and management did not possess the necessary experience or resources to timely handle new duties during previous disasters. Soon, all will be revealed if the SBA now is capable of doing so.

Unavoidable Problems

Massive hurricanes and other natural disasters strain federal and state resources. Any locality suffering from a weather incident relies heavily on government support to address the crippling problems in the aftermath. The SBA’s emergency loan system has to deliver much more than just promises of efficiency. Untold numbers of people in need rely upon the agency following through on its promises.