Red Hook

Report: Government still ill-equipped to aid small businesses after natural disasters

October 27, 2014 By Matthew Taub Special to Brooklyn Daily Eagle from Brooklyn Brief
Mark Snyder faced endless paperwork and repetitive requests for the same information when he sought assistance for his Red Hook winery after Superstorm Sandy.  He ultimately withdrew his application and sought assistance elsewhere — but not before the federal government threatened him with tax consequences. Photo by Matthew Taub
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The federal government not only failed to effectively and timely provide assistance in the wake of Superstorm Sandy, but also remains ill-equipped to assist distressed business owners in another natural disaster despite reforms that were passed and should have been implemented, according to a new report.

Additional Steps Needed to Help Ensure More Timely Disaster Assistance,” released by the Government Accountability Office (GAO), details how the Small Business Administration (SBA) did not meet its timelines for processing business loan applications after the super storm.  The report also warns that a continuing lack of reforms leave the agency vulnerable to a new surge of requests in the wake of the next hurricane, storm or other similar threat.

The report was championed by Congresswoman Nydia Velazquez, from New York’s 7th Congressional District, and includes the Red Hook waterfront where a many businesses suffered devastating property losses. As ranking member of the House Small Business Committee, Velazquez requested the GAO report in May after issuing her own investigation and report six months prior. According to GAO, the SBA was not ready for the spike of applications it received after the storm and continues to be unprepared for such a surge in the future.

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“Inexplicably, the SBA’s own readiness plan has not been updated to reflect the potential for a sharp increase in application volume,” Velazquez said. “This must be fixed because we will continue to see catastrophic disaster strike major urban areas.”

Velazquez convened a press conference to announce the findings of the GAO report Thursday morning at the Red Hook Winery, whose owner, Mark Snyder, was on hand to recount his experience.

Nearly two years ago, the winery was under 5 feet of water after the storm and sustained up to $2 million in losses. For financial assistance, Snyder turned to the SBA, but after eight months of being handed off to six different loan officers, he withdrew his application and sought assistance elsewhere.

“Every time I would submit my paperwork, I would [get] a letter from a different case manager, saying that I needed to provide further information,” Snyder said. “I kept submitting the information and in the end, after eight or nine months, I just gave up.”

Snyder eventually received assistance elsewhere, from a combination of city-based loans and grants totaling $40,000 — but not before he received a letter from SBA, threatening to report him to the IRS for withdrawing his application and supposedly failing to report information that he claims he had provided more than 15 times.

“The amount of hours I spent trying to manage this loan made my recovery less effective,” Snyder said. “The federal government needs to manage a better system to process requests. I was left completely on my own to assess the damage and get back on my feet.”

“He had had enough with the SBA,” Velazquez added. “Mark’s story is emblematic of what the GAO found. The SBA’s lack of preparation failed to bring this community and these businesses the help that they so much needed at that time.”

Zhi Chao Li, of Chinatown, faced a similar ordeal with his business, 47 Division St. Trading Inc., and was also on hand to relay his experience.

But Snyder and Lee may be some of the lucky ones — Velazuez noted how many are still struggling to get back on track, and some have simply shut down their doors. The SBA denied loans to more than 60 percent of Sandy-affected businesses, Velazquez said, and that amount that does not include those like Snyder, who walked away.

“While we are working to rebuild, it is critical that we prepare for the next disaster — and the findings of the Government Accountability Office can help us achieve this goal,” Velazquez said.

Velazquez mentioned a series of reforms, passed in 2008 after Hurricane Katrina but still not adopted, that would allow for immediate cash infusions and bridge loans to distressed businesses, while also allowing private lenders to step in and provide additional capital.

“Businesses need assistance in days, not months,” Velazquez said, advising that she would call on the SBA to reopen its Sandy-related disaster loan program after the upcoming elections.

 


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