WASHINGTON — In a draft report scheduled to be discussed at Senate oversight hearing today, the Small Business Administration's Office of the Inspector General criticizes the agency for canceling more than 7,700 "approved" disaster assistance loans to those business owners impacted by 2005′s deadly hurricanes.
The SBA said through its Accelerated Disaster Response Initiative, it tried to personally contact all 94,000 borrowers who were still in the system in September 2006. The OIG report focuses on the "Loan Triage" effort within the ADRI to reach 28,367 borrowers with approved loans that SBA had not heard from in several months and could not be disbursed because the borrowers had not submitted loan documents, according to SBA.
Last September, 28,367 approved disaster-assistance loans over 120 days old could not proceed because the applicants had not submitted closing documents, SBA said. Instead of canceling the loans, SBA's Buffalo Call Center was directed to contact every individual with an overdue loan application to determine how the agency could assist them.
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Of the applicants contacted, 16,705 received extensions or other assistance; another 3,910 indicated they were no longer interested and their loans were canceled at their request. SBA said it was unable to reach 7,752 approved loan applicants. Letters were sent to them indicating their loan approvals were canceled, but that they had an additional 180 days to reinstate their loans by submitting closing documents. On April 7, 2007, SBA extended the deadline to reinstate by another six months.
Disaster assistance managers directed the Buffalo Call Center to make another effort to reach the 7,752 loan applicants so they would not have to cancel loans without contacting the borrowers. Between Sept. 30 and Oct. 10, callers were able to reach 4,569 applicants, of whom 1,195 requested that their loans be reinstated, and they were, according to the agency.
The agency said it has given the 3,183 borrowers SBA never reached by phone and any borrower who canceled and wants to change his mind, the opportunity to reinstate by September 2007.
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