[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


      SURVEYING STORMS: A DEEPER DIVE INTO SBA'S DISASTER RESPONSE

=======================================================================

                                 HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                           SEPTEMBER 5, 2018

                               __________

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                   Small Business Committee Document Number 115-088               
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            Small Business Committee Document Number 115-088
             Available via the GPO Website: www.govinfo.gov
                   
                   
                   
                   HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        TRENT KELLY, Mississippi
                             ROD BLUM, Iowa
                         JAMES COMER, Kentucky
                 JENNIFFER GONZALEZ-COLON, Puerto Rico
                    BRIAN FITZPATRICK, Pennsylvania
                         ROGER MARSHALL, Kansas
                      RALPH NORMAN, South Carolina
                           JOHN CURTIS, Utah
               NYDIA VELAZQUEZ, New York, Ranking Member
                       DWIGHT EVANS, Pennsylvania
                       STEPHANIE MURPHY, Florida
                        AL LAWSON, JR., Florida
                        YVETTE CLARKE, New York
                          JUDY CHU, California
                       ALMA ADAMS, North Carolina
                      ADRIANO ESPAILLAT, New York
                        BRAD SCHNEIDER, Illinois
                                 VACANT

               Kevin Fitzpatrick, Majority Staff Director
      Jan Oliver, Majority Deputy Staff Director and Chief Counsel
                     Adam Minehardt, Staff Director
                           
                           
                           
                           
                           C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Steve Chabot................................................     1
Hon. Nydia Velazquez.............................................     2

                                WITNESS

Mr. James Rivera, Associate Administrator, Office of Disaster 
  Assistance, United States Small Business Administration, 
  Washington, DC.................................................     4

                                APPENDIX

Prepared Statement:
    Mr. James Rivera, Associate Administrator, Office of Disaster 
      Assistance, United States Small Business Administration, 
      Washington, DC.............................................    26
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    Letter from Hon. Jennifer Gonzalez-Colon to Hon. Linda 
      McMahon, Administrator, Small Business Administration......    31

 
      SURVEYING STORMS: A DEEPER DIVE INTO SBA'S DISASTER RESPONSE

                              ----------                              


                      WEDNESDAY, SEPTEMBER 5, 2018

                  House of Representatives,
               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 11:00 a.m., in Room 
2360, Rayburn House Office Building. Hon. Steve Chabot 
[chairman of the Committee] presiding.
    Present: Representatives Chabot, Kelly, Blum, Gonzalez-
Colon, Fitzpatrick, Curtis, Velazquez, Evans, Clarke, Chu, 
Adams, Espaillat, and Schneider.
    Chairman CHABOT. The Committee will come to order.
    As you can see, there is no problem too big or too small 
that this Committee cannot deal with in a hurricane or anything 
else. So thank you all for being here.
    On April 5th last year, soon after being confirmed, 
Administrator McMahon provided testimony to this Committee. At 
that hearing, the Administrator said SBA's Disaster Relief 
Program is ``paramount''.
    Approximately 5 months after she testified at that hearing, 
Hurricane Harvey made landfall in Texas. A few days later 
Hurricane Irma hit Florida. And again, a few days later, 
Hurricane Maria devastated Puerto Rico and the U.S. Virgin 
Islands.
    The 2017 storm season, by all accounts, was historic. The 
nation was responding to three devastating hurricanes all at 
the same time. As we know, SBA plays a large role in the long-
term recovery needs for the United States. Its Disaster Loan 
Program, which provides fixed-term and low-interest direct 
loans to victims, is vital for businesses and homeowners as 
they begin to replace, repair, and rebuild.
    Given that we are roughly a year out from those massive and 
damaging storms making landfall, it is imperative that we spend 
time reviewing the SBA's response efforts. Going back many 
years, Hurricane Katrina and Hurricane Sandy proved extremely 
challenging for SBA at that time.
    We are here today to gain a better understanding of whether 
the changes made over the years at the SBA have made 
improvements in their disaster response. I look forward to 
hearing more about the outreach SBA made during the 2017 storm 
season to victims on the ground after these disasters. 
Additionally, I am interested in hearing how efficiently and 
quickly the SBA was able process loans to those impacted by the 
storms. And finally, I hope we will hear more about what SBA 
learned from the 2017 storm season and how they are preparing 
for future disasters, including Tropical Storm Gordon that is 
hitting the Gulf Coast and Mississippi as we speak.
    As rebuilding efforts are ongoing and continue even today, 
it is important we evaluate the 2017 response. Victims of 
storms count on the SBA and their response during their darkest 
days. I agree with Administrator McMahon, this program is 
paramount.
    I would now like to yield to the Ranking Member for her 
opening remarks.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman.
    A little less than a year ago, Hurricane Maria made 
landfall in my hometown of Yabucoa, Puerto Rico. In the 
following days, Puerto Rico and the U.S. Virgin Islands 
suffered historic devastation. Sustained winds exceeding 150 
miles per hour, ravaged bridges, roads, and seriously damaged 
more than 472,000 homes. Physical damage is estimated to be 
over $90 billion just for Puerto Rico.
    The entire Commonwealth, all 3.4 million American citizens 
lost power. Thousands of businesses and hundreds of thousands 
of residents would not regain electricity for 9 months, marking 
the longest blackout in American history. It will probably 
remain unknown the exact number of Puerto Ricans who lost their 
lives as a result of Hurricane Maria.
    Just last week, the Government of Puerto Rico finally 
acknowledged that Maria actually killed nearly 3,000 Puerto 
Ricans after 9 months of insisting that the official death 
count was 64. This would make Maria among the deadliest 
hurricanes to strike the U.S.
    FEMA's own After-Action Report acknowledged that the 
administration deployed resources that were inadequate in terms 
of the response. And while President Trump may believe his 
response to Maria was fantastic, I know the people of Puerto 
Rico viscerally disagree.
    While Maria was historic in scope, 2017 was a project year 
for natural disasters throughout our nation. Harvey devastated 
Southeastern Texas and caused an estimated $125 billion in 
damage. Irma, on the other hand, was one of the strongest 
hurricanes in recorded history. At the same time out west, 
California experienced the most destructive wildfire season on 
record.
    While it is certainly the subject of much debate, I believe 
that as our planet continues to warm, the intensity and 
frequency of natural disasters like these will increase. No 
matter the scope or the cost of a disaster, the first weeks are 
critical for small businesses. FEMA estimates that between 40 
and 60 percent of businesses impacted by natural disasters fail 
to fully recover.
    Recognizing this need, Congress created the SBA low-
interest Disaster Loan Program to serve as a lifeline to aid 
both businesses and homeowners. As such, it is critical that 
SBA process and disburse disaster loans quickly. I must 
acknowledge that responding to three major hurricanes in the 
span of just one month presents significant challenges.
    However, the three OIG reports evaluating SBA's response to 
each of the storms highlight ways SBA's response fell short. 
OIG identified several reasons for SBA's disaster response 
shortcomings. These included failing to quickly staff-up; 
underutilizing staffing management tools; not including 
performance standards in purchase agreements; and 
underestimating the extent to which Spanish language 
translation services would be needed to help hurricane victims 
in Puerto Rico.
    Given the shock, all disaster agencies failed during the 
2017 hurricane season. It is imperative that they all, 
including SBA, learn hard lessons from their shortcomings. SBA 
must work now to improve and optimize their system and 
procedures before the next Maria strikes. Should this require 
further legislative action, I am confident that this is an area 
where we can work together to ensure these programs operate 
efficiently and effectively, and that entrepreneurs and 
homeowners harmed by disaster receive the assistance they need.
    I want to thank the witness for his participation, and I 
yield back, Mr. Chairman.
    Chairman CHABOT. Thank you very much. The gentlelady yields 
back.
    And the chair would like to recognize and thank both the 
Ranking Member, Ms. Velazquez, as well as Ms. Gonzalez-Colon 
for their leadership and their hard work and their dedication 
in assisting the people of Puerto Rico through the devastation 
that they suffered as a result of Hurricane Maria.
    And I would now like to recognize Ms. Gonzalez-Colon for 2 
minutes for an opening statement.
    Ms. GONZALEZ-COLON. Thank you, Mr. Chairman.
    First of all, thank you for having this hearing and having 
SBA here.
    You all know about the landfall of Hurricane Maria, but the 
magnitude of the devastation of this hurricane includes the 
total collapse of the electrical system on the island, the 
total collapse of the telecoms on the island, and even 70 
percent of the drinking water treatment and distribution system 
even failed. Ninety-one percent of the cellular towers were 
lost, schools remained closed for about a month, and more than 
half a million housing units suffered major damages.
    Even the Small Business Administration recognized that they 
received from FEMA more than 468,000 referrals for home loans 
and 77,000 for business loans. Of them, when approved, $1.6 
billion for the home loan and $182 million for the business 
loan. We also know that thanks to the communities, our fellow 
Americans in the continental U.S. and, of course, the 
intervention of the Federal Government, without that kind of 
help we will never receive the water, the food, and the medical 
assistance for our communities, especially those in the center 
part of the island.
    We are still struggling for the complete recovery of the 
island. It has been identified by the fiscal, but more than 
$139 billion are going to be needed for the reconstruction of 
the island. Of those, just $45 billion have been allocated by 
the House and the Senate and the President, so we still have a 
long path to that recovery. And as the sole representative for 
the District of Puerto Rico here, I want to thank the Small 
Business Committee and all the members and the Ranking Member 
for allowing us to receive those allocation of funds that 
continues public hearings and oversight we are doing for a lot 
of those agencies. Without that kind of help, we do not have 
two senators. I cannot even vote on the floor. So you became my 
tools to help the island of Puerto Rico.
    So thank you, and with that I yield back. And I welcome the 
remarks of Mr. Rivera.
    Chairman CHABOT. Thank you very much. The gentlelady yields 
back.
    And if other members have opening statements, I ask they be 
submitted for the record.
    And I would like to take just a moment to explain our 
timing lights, Mr. Rivera, although you have testified before 
the Committee before so you are familiar with them. The green 
light will be on for 4 minutes. The yellow light lets you know 
you have a minute to wrap up, and then the red light will come 
on. And I request that you stay within those, but if you go 
over a little bit we will understand.
    And I would now like to introduce our witness. Mr. James 
Rivera is the associate administrator for the Office of 
Disaster Assistance at the Small Business Administration (SBA). 
In this capacity, Mr. Rivera directs the Disaster Loan Program. 
He began his SBA career on the ground in Texas in 1989 serving 
as a disaster loan specialist. Mr. Rivera then transitioned to 
the Washington office for the SBA in 1994. Over his nearly 30-
year SBA career there, he has also served as the associate 
administrator for the Office of Financial Assistance, and prior 
to his public service, Mr. Rivera was a commercial loan officer 
in the private sector. And you are an expert on the Disaster 
Loan Program, Mr. Rivera, and we are very anxious to hear what 
you have to say and answer our questions.
    And we welcome you back to the Committee, and you are 
recognized for 5 minutes.

 STATEMENT OF JAMES RIVERA, ASSOCIATE ADMINISTRATOR, OFFICE OF 
    DISASTER ASSISTANCE, U.S. SMALL BUSINESS ADMINISTRATION

    Mr. RIVERA. Good morning, Chairman Chabot, Ranking Member 
Velazquez, and members of the Committee. I appreciate the 
opportunity to testify about SBA's Disaster Assistance response 
to the 2017 hurricanes, and also to share the outlook for the 
2018 hurricanes.
    One year ago, the agency was in the early stages of 
responding to Hurricane Harvey. Little did we know that we were 
about to experience Hurricanes Irma and Maria and embark on a 
much broader agency effort.
    When I look back on last year, I am incredibly proud of the 
work done by our SBA staff. We went from a core staff of around 
800 employees to over 5,000 at the height of our hurricane 
response, accomplished in the span of 90 days. To date, we have 
received over 1.2 million calls for assistance from disaster 
survivors. We received over 339,000 applications, processed on 
average in 17 days. We approved over 140,000 loans to 
homeowners and businesses. For all three hurricanes combined, 
these loan approvals total over $7.5 billion. This marks the 
second largest disaster event in SBA history.
    At the same time, the agency experienced a very high volume 
of other disasters. In fiscal year 2017, SBA dealt with 23 
presidentially declared disasters. We also administered 53 
agency declarations. We would not be able to sustain this level 
of activity were it not for the oncoming support of the 
Committee. We want to thank you for the key initiative you 
sponsored as part of the RISE Act. Among those provisions were 
important measures for disaster survivors, such as increasing 
the unsecured threshold from $14,000 to $25,000 for the amount 
of money a disaster survivor can receive in their initial loan 
disbursement. This provision unfortunately sunsets in November, 
and we look forward to working with the Committee on a 
potential renewal.
    Other measures, like mitigation assistance and the creation 
of a Disaster Loan Assistance Portal have had very significant 
impact as well. The portal has provided disaster survivors with 
quick and easy access to filing requirements, their loan 
application status, and has enabled document uploads and 
electronic signature. This advancement has allowed us to more 
effectively and efficiently process applications, cutting in 
half the time it takes the agency to approve loans.
    In less than 45 days, SBA has approved over $1 billion for 
Hurricanes Harvey, Irma and Maria combined. This record time 
compares to past major disaster events such as Hurricanes 
Katrina, Rita and Wilma; Superstorm Sandy; and the Northridge 
Earthquake in 1994, which all took over 90 days to reach the $1 
billion milestone.
    While I have been part of the Disaster Assistance office 
for over 20 years, I have only had the opportunity to work for 
Administrator McMahon for the past year. During this time, I 
have appreciated her direction and how she has challenged SBA 
to be prepared for large-scale disasters, the magnitude of what 
we experienced with the 2017 hurricanes. In leading SBA, the 
administrator has pushed us to test our disaster response 
models and for our program to be proactive and not reactive.
    In the months leading to the 2017 hurricane season, we 
tested our system along the lines of Hurricane Katrina times 
three. That foresight played a large role in our agency's 
preparedness and subsequent response.
    At the administrator's direction, we also continue to 
review and evaluate lessons learned and best practices and 
apply them to our 2018 disaster response. Recently, we 
implemented a new Disaster Credit Management System, which will 
allow us to even further increase our loan processing cycle 
times. We have also conducted internal after-action reports and 
evaluated the inspector general inspection reports. These are 
areas in which we may not have performed as effectively as 
desired, and we continue to work to address them.
    Over the past year, the agency has communicated with the 
Committee to share data and inform you on the disaster response 
to the hurricanes. We hope that the information has been of 
value to the Committee members and staff in understanding our 
programs and activities, and we continue to communicate with 
you throughout the 2018 season.
    So far this year, the agency is dealing with 10 
presidential disaster declarations and 33 agency declarations. 
We are providing disaster assistance across 22 states in 
response to severe storms, tornados, wildfires, floods, and 
even lava flows. We have also just approved an agency 
declaration for toxic algae bloom and red tide.
    With Hurricane Elaine, and as Tropical Storm Gordon reaches 
the Gulf Coast states, we stand ready on these and other 
potential disasters that might impact states across the 
country.
    Mr. Chairman and Committee members, thank you again for the 
opportunity to testify, and I look forward to your questions.
    Chairman CHABOT. Thank you very much.
    And I will begin with myself for 5 minutes. And I will 
begin with a general question.
    By all accounts, the 2017 storm season was monumental. 
Broadly speaking, how do you think the SBA responded to 
Hurricanes Harvey, Irma, and Maria?
    Mr. RIVERA. As you mentioned, I have been with the Small 
Business Administration for 30 years. We have never been 
faster. We have never provided assistance quicker. So 
generally, you know, at the 50,000 foot level, we were as quick 
as we possibly could. We did the best possible job we could. 
And there is room for improvement. But at the same time, I am 
proud of what we have been able to do overall.
    We have cut times from 70 days in Katrina to 40 days in 
Sandy to 25 days for businesses in Harvey, Irma, and Maria. And 
on the home side it is much quicker.
    Chairman CHABOT. Thank you very much.
    And as you know, significant reforms were instituted at the 
SBA after Hurricane Katrina in 2005 and Hurricane Sandy in 
2012. You mentioned the time, that we are doing it more quickly 
than we did before. Are there any other reforms that helped 
that you could specifically point out to and say, yeah, we 
changed this and this made a difference to these.
    Mr. RIVERA. So two thoughts come to mind immediately. You 
gave us the ability, or actually, required us to go out and get 
an electronic disaster portal. So in the past, we would get 
stressed at the call center because a lot of people would call 
the call center for status, where now you can go online through 
the Disaster Loan Application Portal. Ninety-seven percent of 
our applications come through the electronic loan application 
portal. You can find out your status. You can do an electronic 
upload for your tax transcript request. There is just a host of 
opportunities. We give you the status of where you are at as 
far as if you are in the approval que, and then disbursement 
que, what you need to do. You can upload, download documents, 
so forth and so on.
    The one that I am hoping that we can work together on is 
the sunset of the RISE. As a result of the RISE Act, the 
unsecured threshold of $14,000 to $25,000, if it sunsets--it 
does sunset in November of this year and the unsecured 
threshold would go back to $14,000. So we would prefer to be 
consistent and stay at that $25,000 level because that initial 
disbursement, as all of you have mentioned before, is very 
important for that initial cash infusion for the disaster 
borrower.
    Chairman CHABOT. Thank you very much.
    And although the response efforts continue, what did you 
learn from 2017, this past year, the storm season, and how is 
the SBA preparing for the next big one? And obviously, we have 
something occurring currently. Hopefully, it is not going to be 
to the magnitude of the ones that we are discussing here this 
morning, but what preparations are you looking at down the road 
to improve?
    Mr. RIVERA. So I have to give a lot of credit to 
Administrator McMahon. I have worked for several 
Administrators. I have never had an Administrator that actually 
has challenged me to the level that she has challenged me. In 
her first couple of months in the agency, we ran a scenario of 
100,000 application disaster. It was pretty much cookie-cutter 
from our perspective. That is within our sweet spot. And she 
says, well, that is nice, but I want you to look at Katrina 
times three on your models, and what does that do to the 
agency? And then she also said, you need to make your jobs 
simpler by doing, you know, leaning forward and preparing more 
and stop being so reactive from that perspective. So it is true 
criticism that I took, you know, head on. We are much more 
prepared now.
    We have still 2,200 employees onboard. We are still in 
Puerto Rico. We have 350 staff on the ground in 50 locations. 
But from my perspective, we are much better prepared.
    And then we are taking advantage of technology like we have 
never taken before. We are trying to simplify our processes 
internally, and on the flip side, making the process for the 
disaster survivors as simple as possible.
    Chairman CHABOT. Okay. Thank you.
    And then one final point. I represent Ohio, and Ohioans 
sometimes spend half the time or more in Ohio and they are 
retired now and they maybe have some property down in Florida. 
And I was discussing last weekend or the weekend before with 
some folk in that circumstance, they were talking about the red 
tide and what a disaster it has been this year recently. Could 
you discuss that just a little bit? It is a little bit 
different from what we were talking here but for them it is 
clear disaster.
    Mr. RIVERA. Absolutely. So we declared two disaster 
declarations yesterday for Florida. One is for Lake Okeechobee, 
and it is the toxic algae bloom. It is that green-bluish stuff. 
There is a strong odor to it and it keeps fishermen away. It 
keeps tourist industry away. And then along the gulf side on 
the southern part of Florida is this red tide. So toxic algae 
bloom is freshwater and red tide is salt water. And what that 
does is, you know, the tourism industry, the supply side of a 
restaurant, you know, who supplies the restaurant, so forth and 
so on. And so we are providing the working capital loan for 
those businesses that are impacted by that specific event.
    Chairman CHABOT. Thank you very much. My time has expired.
    The Ranking Member is recognized for 5 minutes.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman.
    As you know, Maria caused an island-wide blackout that took 
almost a year completely to fix. Do you think that the blackout 
negatively impacted the ability of Puerto Rican survivors of 
Maria to apply for SBA disaster loans?
    Mr. RIVERA. The blackout did stress our ability to respond 
from a technology perspective. We did have a lot of----
    Ms. VELAZQUEZ. Yes, for the administration. But in terms of 
survivors not having access to internet or electricity, my 
question is, do you have the numbers as far as how many 
businesses applied for Hurricane Hugo and Georges compared to 
now where this was an epic, monumental destruction of Puerto 
Rico?
    Mr. RIVERA. I do not have the numbers of Hugo with me but I 
can get back to you for the record.
    Ms. VELAZQUEZ. So only 10,000 businesses have applied for 
disaster loans. I found that very, very, very small. You 
mentioned the RISE Act, legislation that I introduced and was 
enacted into law. Given those dynamics, I intend to reintroduce 
similar language and hopefully work with the administration to 
open up the program so that we provide the ability for 
survivors, businesses and homeowners, to be able to apply for 
disaster loans.
    Any comments on that?
    Mr. RIVERA. We welcome working with you on the RISE Act. I 
think that is----
    Ms. VELAZQUEZ. So in the last 2 weeks after the deadline 
expired and we worked with FEMA to extend the deadline, 400 
businesses in Puerto Rico applied only in 2 weeks. What does 
that tell you?
    Mr. RIVERA. Well, so, a lot of businesses are usually, they 
wait to see what kind of insurance recovery they have. They 
wait to see what resources are available from that perspective. 
So historically, the businesses do apply later. But as I 
mentioned earlier, we are still co-located with FEMA, 50 
different locations. We have 350 people on the ground and we 
will be there for the long term.
    Ms. VELAZQUEZ. So as I mentioned to you, the number of 
applications is low, very low, and then the fact that only in 2 
weeks, the last 2 weeks, 400 had applied shows the need for 
extending the program.
    Mr. Rivera, the OIG also found that as of the end of March 
2018, only 22 percent of the loans approved for Hurricane Maria 
victims have been disbursed. That is over 6 months after the 
storm. Why is it that it is taking this long to disburse these 
approved loans?
    Mr. RIVERA. So that was a snapshot that was done when they 
did the audit, I am sorry, the inspection back several months 
ago. We are currently at about 80 percent of the numbers, and 
about 60 percent of the dollars have been disbursed. So we do 
not do one disbursement for the full amount. We disburse up to 
that unsecured threshold, $25,000, and we follow the building 
project, like the private sector does. So the IG is factual. At 
the time they did the snapshot, they were in that process.
    Ms. VELAZQUEZ. And after the end of March, do you have any 
data?
    Mr. RIVERA. I do not have as of the end of March but I can 
get back to you.
    Ms. VELAZQUEZ. I would like to get that data.
    Mr. RIVERA. Okay. Sure.
    Ms. VELAZQUEZ. The OIG reports for Hurricane Harvey and 
Irma do not contain similar data on loan disbursement; yet this 
information is critical for evaluating disbursement rates 
across the hurricanes. What are the disbursement rates for 
Hurricanes Harvey and Irma, and why was the data not shared 
with OIG?
    Mr. RIVERA. Oh, I believe the data was shared with OIG. I 
am shocked that they would say that if that is what they are 
saying. We are very transparent with respect to----
    Ms. VELAZQUEZ. Well, what I am saying, it is not in the 
report.
    Mr. RIVERA. Well, I do not write the report.
    Ms. VELAZQUEZ. I understand that. So I would like for me 
and for the Committee to have the ability to assess whether or 
not the disbursement rates regarding Puerto Rico compare to the 
disbursement rates for Hurricanes Harvey and Irma.
    Mr. RIVERA. Okay. Absolutely.
    Ms. VELAZQUEZ. According to the IG, there were serious 
problems with Spanish translation services that resulted in 
many disaster survivors having their calls to SBA dropped. In 
other cases, wait times exceeded 45 minutes, which is simply 
unacceptable. What did SBA do to keep track of dropped calls?
    Mr. RIVERA. So what happened is Harvey hit? There is a 
pretty big Hispanic population in Texas. Irma hit. There is a 
pretty big population in Florida. And then Maria hit. And 
obviously, there is a big Spanish-speaking population in Puerto 
Rico. So we had one contract at the time. It was small. It had 
worked for the last 10 years. What we did not realize is that 
we got stressed based on that. What we have done since then----
    Ms. VELAZQUEZ. And you terminated that contract?
    Mr. RIVERA. Yes, ma'am.
    Ms. VELAZQUEZ. Yeah? What was the reason?
    Mr. RIVERA. Performance.
    Ms. VELAZQUEZ. Performance?
    Mr. RIVERA. Yes, ma'am.
    Ms. VELAZQUEZ. So that is what I am saying. You know, it is 
important that we have a disaster preparedness plan that is 
comprehensive, that you have a list of potential vendors that 
provide Spanish translation services.
    Mr. RIVERA. Yeah, I agree.
    Ms. VELAZQUEZ. Or bilingual services.
    Mr. RIVERA. So we have gone from a $50,000 contract----
    Chairman CHABOT. The gentlelady's time has expired but you 
can go ahead and answer.
    Mr. RIVERA. We spent $2 million on language services, and 
we have taken 600,000 calls. I mean, so absolutely, it was a 
stress point for us. I do not disagree with what you are saying 
from that perspective.
    Chairman CHABOT. And the Ranking Member's time has expired.
    Ms. VELAZQUEZ. Thank you.
    Chairman CHABOT. And the gentleman from Mississippi,
    Mr. Kelly, who is the Chairman of the Subcommittee on 
Investigations, Oversight, and Regulations, is recognized for 5 
minutes.
    Mr. KELLY. Thank you, Mr. Chairman.
    Mr. Rivera, thank you for being here.
    Kind of going back and touching on the last question, I 
have spent a lot of time in the military in my life and you 
constantly get lessons learned and refine plans to make sure 
that you can respond. And also, going from that same strategy 
thing, you know, we are prepared to respond to different levels 
of threats throughout the world in the military.
    So prior to this you had never seen the Spanish-speaking 
requirements that you had in this one? The last 10 years it was 
fine and all of a sudden you have a new requirement that is 
there that you were not prepared for. And I totally understand 
that. And you also did not have this many major disasters in 
this quick of a time frame as you did in this one.
    So what is the SBA prepared to respond to now? Did you 
change what you are prepare? Can you respond to two 
simultaneous disasters at the same time, two and a half, 1.5? 
Have you started planning in that way? And how many are you 
prepared, the SBA, to respond right now simultaneously or in 
close proximity.
    Mr. RIVERA. That is a great question, and thank you for 
that question.
    So we have a Disaster Preparedness and Response Plan. As I 
mentioned earlier, the Spanish language line did trip us up. 
The contract was 10,000. It worked for the last 10 years. We 
get stressed with the Spanish line. We did a new contract. We 
have three contracts now. We have segmented out. I mean, we 
have exercised this a couple of months ago at the national 
level exercise. We can handle up to X number amount. It just 
depends based on the funding level. So we did do 360,000 
applications in 18 days--17-18 days overall. Our response time 
was pretty quick. It was the quickest we have ever had. 
Technology is a big asset for us, and we continue to exercise 
from that perspective. The administrator flipped it on us. She 
said Katrina times three, so that is a million two. So that is 
what our charge is, a million two in 90 days.
    Mr. KELLY. You know, I represent the northern part of 
Mississippi, so I do not have the Mississippi Gulf Coast where 
hurricanes hit, but I feel a deep obligation to my friends and 
neighbors and state, people in the south. What organizations 
does SBA use to get out the good word of what you can provide 
and what services you can provide? Because there are a lot of 
other organizations, and a lot of times people are not aware of 
what products or what services are available. So what other 
organizations, whether that be FEMA, the National Guard of that 
State, or any other thing, what resources do you use? What 
other resources do you use to get out word of what is 
available?
    Mr. RIVERA. So we start with the SBA resources, our Small 
Business Development Centers, SCORE, Women's Business Centers. 
We also just recently signed a memorandum of understanding with 
the Institute for Business and Home Safety (IBHS), who is a big 
industry player when it comes to disaster assistance. We also 
work closely with FEMA. Wherever FEMA is at, SBA is at. 
Obviously, the President gives FEMA the opportunity to be the 
lead, but we are not far behind from that perspective. And we 
work with state and local governments. We are reaching out to 
counties and mayors and trying to cascade as much as we can. On 
the preparedness side, and that is back to the Administrator's 
message. Let's talk about preparedness before it happens so we 
can all understand what we need to do versus being reactive as 
we have been historically.
    Mr. KELLY. You must have been reading my mind. That is kind 
of in the realm of my next question or suggestion or a 
combination of both. Mississippi responded well to Katrina, and 
that was based on our National Guard response and years and 
years of rehearsals for a hurricane that we hoped and prayed 
would never happen, but it did happen. And so every year since 
I have been in for almost 33 years, and every year I can 
remember being in the Mississippi National Guard, around March 
or April, non-hurricane season, we do a statewide rehearsal of 
how we are going to respond to not only hurricanes but to 
earthquake on the fault line near Memphis and those things, or 
tornados or other disasters. Does SBA get involved in those 
rehearsals? Because most states, whether it is wildfires in 
California, or earthquakes in California, or hurricanes or 
tornadoes in Mississippi or Oklahoma, do you get involved in 
the planning process and meet all those key people early in the 
rehearsal process so that you are more prepared?
    Mr. RIVERA. Yes, sir, we do. We participate in all the 
national level exercises under the national disaster recovery 
framework. With Department of Homeland Security, FEMA, we are 
on the recovery side, but we participate on the response and 
the recovery.
    Mr. KELLY. I would just maybe make a suggestion; look at 
the state level organizations because that is who bears the 
brunt of those things. And rehearsing with those National 
Guards and their disaster response, I think you would get a lot 
of value and meet a lot of people up front.
    My time has expired, Mr. Chairman.
    Chairman CHABOT. Thank you very much. The gentleman's time 
has expired.
    The gentlelady from California, Ms. Chu, is recognized for 
5 minutes.
    Ms. CHU. Thank you.
    Mr. Rivera, I know that the primary topic of this hearing 
is hurricane disaster response, but I would like to talk about 
an issue that is severely impacting the small businesses and 
the communities in my state of California, and that is 
wildfires.
    Wildfires have devastated California in recent years, but 
in particular, in 2017, nearly 1.2 million acres of land were 
burned and 10,800 structures and 46 people were killed. So this 
is extremely devastating. And SBA was active in responding to 
some of the disasters at the request of Governor Brown, but 
could you tell us SBA's timeline for processing disaster loan 
applications for the California wildfires and whether SBA has 
met those goals?
    Mr. RIVERA. So to answer your question, on average, we do 
it in 18 days; 14 days for homes and 18 days for businesses.
    When we respond to disasters, we intentionally focus on 
different disasters that may be occurring at the same time we 
are responding to larger disasters. So we make sure that we 
take care of, from my perspective, it does not matter where the 
disaster is. If you are a disaster survivor, that is the most 
important thing to your business or your home, so we spread out 
teams that focus on, for example, the California wildfires, the 
lava flows in Hawaii, the flooding up in the Midwest. So we 
make sure that we are servicing the entire country as best we 
can at the same time.
    So generally speaking, I can get the exact specific turn 
times on that, and I can get that for the record, but 
generally, we are in that 14 to 18 day timeframe for an 
approval, withdrawal, or decline.
    Ms. CHU. Yeah. I would like to know how many have applied 
and how many of the applications have been processed and by 
what kind of timeline.
    Mr. RIVERA. Okay. Absolutely.
    Ms. CHU. And do you know, you said an 18-day framework, but 
what are the biggest challenges to ensuring this short 
processing time for the loan applicants?
    Mr. RIVERA. Usually it is data that we request. Now, we 
have streamlined our application and we streamlined the data 
request that we have. So from our perspective, fires are 
horrific, especially when everything is burned down. So we have 
to rely on third-party resources. So for repayment ability, we 
rely on the Internal Revenue Service and whatever they provide 
from a tax perspective. We get an electronic feed from the IRS 
once we get the access from the disaster survivor. We used to 
go on the ground and do field inspections and send somebody out 
to a pad that was completely burned down. We now have changed. 
This was a result of Harvey, Irma, Maria, since then. We do a 
desktop verification. And what we do is we get a footprint of 
the home and then we call the disaster survivor. We can tell 
from what they are talking about and what the estimate is. We 
have models that say based on the footprint of the home. We can 
do that for floods or for fires from that perspective. So that 
is a process improvement.
    And if I can just spend one more second. Superstorm Sandy, 
it took us 10 days to be on the ground to do a field 
inspection. We cut it to 6 days in Harvey, Irma, Maria because 
we did a desktop verification. So those are some of the small 
things we do internally to try to speed up the timeframe.
    Ms. CHU. I understand that through California, 3,527 SBA 
loan applications were received from those affected by separate 
fires in eight counties last year. How many of these were home 
loans and how many of these were business loans, and 
ultimately, how many were approved?
    Mr. RIVERA. I will have to get back to you for the record. 
I apologize; I do not have the California numbers. But the 
general rule of thumb is 80/20. It is 80 percent homeowners to 
20 percent businesses, and the dollars are 50/50. Fifty percent 
of what we approve across board. I really apologize; I have my 
sheet here but I do not want to waste time flipping through it.
    Ms. CHU. Yeah, again, I would appreciate that information.
    So the wildfires are caused largely by weather changes, 
which means that wildfires are an ongoing problem in California 
and will likely continue. Right now there are 21 wildfires over 
500 acres in California that are burning. Given the constant 
nature of this disaster, is the SBA ready to take steps to 
ensure that California businesses and homes are ready to access 
SBA assistance in the future?
    Mr. RIVERA. Oh, absolutely. I mean, as soon as the governor 
says that they have been overwhelmed and they need the request 
and they need the financial assistance from a Federal 
perspective, we are ready and prepared.
    Ms. CHU. Okay, thank you.
    Mr. RIVERA. Thank you.
    Chairman CHABOT. Thank you. The gentlelady's time has 
expired.
    The gentlelady from Puerto Rico, Ms. Gonzalez-Colon, is 
recognized for 5 minutes.
    Ms. GONZALEZ-COLON. Thank you, Mr. Chairman. And thank you, 
Mr. Rivera.
    I was reviewing how long it took for SBA to process the 
business loan and the home loan, taking the experience of 
Sandy, Katrina, and Maria. And you say that in Katrina it was 
60 days for business and 74 for home; Sandy, 45 days for 
business, 38 for home; and in the case of Maria, it is in the 
high 20s and in the low, 30 days in home assistance. That is 
correct?
    Mr. RIVERA. Yes, ma'am, overall.
    Ms. GONZALEZ-COLON. Overall. Then my main problem will be 
is that most of the cases that we are receiving in my office 
from small businesses is that once their loan is approved, it 
takes from 2 to 6 months to get a disbursement. So why, if you 
are taking less than 20 days or 30 days in making that 
application reviewed and approved, why then is it taking up to 
6 months for the small businesses on the island to get the 
disbursement?
    Mr. RIVERA. So it is a partnership. Once we make the loan 
as a lender, we need the disaster borrower to sign the loan 
closing documents. We give them 60 days to sign the loan 
closing documents. We do not push them to close the loan. We 
are patient with them. We let them figure out what insurance 
they have, what other personal resources they have. We could 
take the opposite approach though. We could drive them to a 
disbursement, but we take kind of a very passive approach. When 
they need the money, we call them. We assign a case manager and 
we serially disburse based on that.
    Ms. GONZALEZ-COLON. My question with that is that we do not 
have as many banks on the island as we used to have before, so 
the lenders that we do have on the island, this continues to be 
the main source of controversy by the small businesses on the 
island because of the time of the waiting. What can SBA do to 
rectify or help us out to get new steps on how to make this 
process a more streamlined process?
    Mr. RIVERA. Well, if there is a lender out there that wants 
to make a bridge loan, we are glad to take a look at that and 
take out that bridge loan. I mean, that has always been the 
practice from the Disaster Loan Program. If a bank is out there 
and can make a temporary loan in the interim for us, I mean, we 
are glad to do that.
    But the disbursement process, I just need to be really 
clear. We just need to get the documents we requested and then 
we just need to provide the disbursement. It is pretty clear-
cut. Some of the wait times are based on they are waiting for a 
contractor to start the rebuilding process. I mean, there is a 
host of issues that result in that. It is not because we are 
sitting back and doing nothing. In most instances it is we are 
just waiting for the disaster survivor to start the rebuilding 
from that perspective.
    Ms. GONZALEZ-COLON. One of the main problems we have got is 
that in order to get some of the assistance from FEMA, you need 
to go through the SBA application to know if you are going to 
get a loan by SBA or if you do not qualify to have a loan being 
approved, even business or home by SBA. Then you will get the 
assistance from FEMA. So the whole process, I mean, we have got 
more than 50 percent of the applications coming from FEMA being 
denied. Most of them, they need to wait through the processing 
SBA.
    So I was in a briefing last week, and we were wondering why 
it takes so long for the SBA to review that application, then 
going again back to FEMA, how is the interaction between SBA 
and FEMA in order to let the people know? I, even myself, 
submitted the application. It was so complicated to the regular 
citizen on the island that I decided to see how many papers 
they needed to sign. And when we saw that, the process is so 
long, so difficult, it is not a clear path to getting a loan 
being approved. It is not a clear path to get FEMA assistance 
being approved. And I think that process should be streamlined 
between SBA and FEMA, and I want to know if you already got 
meetings to get something done in that regard.
    Mr. RIVERA. We are continuously working with FEMA. I am a 
little bit confused on the comment of why it takes so long. I 
mean, we are processing these loans in 18 days for a home--17, 
18 days for a home, and 20-something for a business.
    Ms. GONZALEZ-COLON. But people need to wait 6 months to get 
it.
    Mr. RIVERA. Yeah, but again, I mean, in all due respect, it 
is a partnership. We cannot make a disbursement. We have our 
own internal controls. We have responsibility to the taxpayer.
    Ms. GONZALEZ-COLON. Then let us know how we can help to 
streamline that process. And that is the question I am doing 
today. It is not about that it is your fault; it is how we can 
make that process to be a streamlined one so the people can get 
the resources that I provided for them. Because you are doing 
the whole process in less than 20 days but, you know, you do 
not have power. You do not have water. You do not have telecoms 
on the island. The whole business community gets affected. But 
then you need to wait 6 months to get the money. So most of 
these small businesses are still closed because of that. Thank 
God this Congress approved a reimbursement for all the 
employers that still paid their payroll during that time. And 
with that kind of money, some of those small businesses are 
opening their workshops.
    I know my time has expired, but thank you, Chairman.
    Chairman CHABOT. Thank you very much. The gentlelady's time 
has expired.
    The gentleman from Illinois, Mr. Schneider, who is the 
Ranking Member of the Subcommittee on Agriculture, Energy, and 
Trade, is recognized for 5 minutes.
    Mr. SCHNEIDER. Thank you very much. And Mr. Rivera, thank 
you for your time here today for the work you are doing.
    I have a lot of questions, but you touched on something you 
were talking about specifically right now, the red wave and the 
algae blooms in Florida. We, this summer, have seen the 
horrific fires on the West Coast, record-setting fires. We 
talked about last year record-setting pace between Harvey, 
Irma, Maria, and other crises. And the charges that you were 
given by the administrator was let's figure out how to do 
Katrina times three. And you talked about achieving that. But 
it still seems from where I am sitting that we are running 
faster and barely keeping on pace. In fact, running times three 
may even be leaving us behind. And it seems the common thread 
through all of these is climate change.
    So my question to you is, how is the SBA adapting to the 
expected increase in incidents that next year is probably going 
to be worse than last year? We are going to see increasing 
impact, higher intensity, more frequency. How do we make sure 
that we have the resources and are able to provide the services 
to small businesses dealing with the impacts of these storms 
and other aspects of climate change?
    Mr. RIVERA. So I have been with the Small Business 
Administration for 30 years. I mean, I do not know. I am not in 
a position to talk about climate change. I am in a position 
from SBA to, as the head of the----
    Mr. SCHNEIDER. I appreciate that, but we are seeing this 
increasing pace. The fires----
    Mr. RIVERA. It has always been like this.
    Mr. SCHNEIDER. No, the fires we have seen have never been 
like this. We have had earlier and longer and more intense, 
ever record-setting. We are seeing an increase. Am I am not 
talking about--I am not trying to debate with you the causes of 
climate change. What I am saying is our communities, our 
nation, our small businesses are seeing more severe impacts 
from natural disasters, and how do we make sure that we have 
the resources available to them?
    Mr. RIVERA. So they are in place. I mean, we had a Disaster 
Preparedness and Recovery Plan. I have 1,000 core employees. I 
have 4,000 reservists. We can service up to 350,000 
applications within 20 days, 18 days. We just experienced that 
in 2017. So we are at that point there. I cannot predict what 
is going to happen next year. This year we are off to a slow 
start with the hurricane season. We just had our first 
experience in Mississippi. Hurricane Layne was 100 miles south 
of Hawaii. There is just minimal damage from that perspective. 
So I can tell you we are prepared. The overarching goal is a 
good stretch goal. I think we can meet it with technology and 
ability to use third-party independent verifications. I think 
we can move faster, and we can provide the best service that we 
can from that perspective.
    Mr. SCHNEIDER. Are there any steps we can take to help 
small businesses prepare better for disasters to mitigate the 
impact after the event by taking steps now to prevent? As my 
colleague from Mississippi mentioned, working to help National 
Guard and other agencies respond more quickly?
    Mr. RIVERA. Part of our outreach plan is to reach out to 
the local communities, so forth and so on. My experience has 
been we teach everybody to get a business plan; right? But we 
do not teach them what happens in a disaster. I mean, so from a 
social media perspective, when are you going to reopen? From a 
supply chain, you know, where is your list of your vendors and 
what happens if your primary vendor is impacted, so forth and 
so on. So those are the kind of things that we are pushing out 
now. We have a really good partnership with Institute for 
Business and Home Safety. I think that is going to launch us, 
and then we are going to continue to push forward on the 
preparedness side.
    Mr. SCHNEIDER. Shifting gears a little bit but still 
related, last summer in my district we had record-setting 
floods, and the floods caused devastating damage. It was a one-
two punch. We had direct rainfall that caused unprecedented 
damage. And then from rains further north, as the rivers rose, 
we had a second flooding event. It did not qualify for FEMA 
relief. The SBA, because there is a lower threshold for 
disaster assistance, the SBA did provide help. But can you talk 
about how SBA's assistance helps fill the gap by disasters that 
have a serious economic impact on a community but are not large 
enough for FEMA assistance?
    Mr. RIVERA. Yes, I can. We have, the SBA, in our Code of 
Federal Regulations, we have by regulation what the thresholds 
are for disaster declaration. So it is really easy from our 
perspective--easy, I say, going out and doing a survey and 
estimating what it costs to repair or replace a property. But 
FEMA's guidance is much broader. It is based on the economic 
impact that it has to the GDP of that state, so forth and so 
on. So ours is more focused and more scoped. I should not say 
focused, more scoped, and it is very clear. It is pretty black 
and white. Twenty-five homes or businesses which sustain 40 
percent or more uninsured loss. That is for an agency. Five 
businesses the governor needs to certify for just an economic 
injury disaster threshold. So it is pretty clear-cut from our 
perspective. And I am glad we are able to provide the support 
and that is the purpose of it. Not everything meets the 
threshold of a presidential declaration, but we are there to 
serve. Because all disasters are local from that perspective.
    Mr. SCHNEIDER. Absolutely. And I am out of time, but thank 
you again. I yield back.
    Mr. KELLY. [Presiding] The gentleman's time has expired.
    I now recognize Mr. Curtis from Utah.
    Mr. CURTIS. Thank you, Mr. Chairman, and the Ranking Member 
for holding this important hearing. And thank you, Mr. Rivera, 
for being here to help us better understand the Small Business 
Administration's disaster relief operation.
    In Utah, we are no stranger to natural disasters, but I can 
only remember one hurricane in 60 years. But this summer, 
almost every morning we wake up to the news of a new fire, 
mostly caused by nature. This year we are looking at 875 
different fires.
    I recently drove by one of these fires, the Dollar Ridge 
Fire in Duchesne and Wasatch County that consumed 70,000 acres. 
It is almost out thankfully, but we actually predict that we 
will see smoke from that fire until the snow falls later this 
year.
    My understanding is SBA's disaster response has not been 
involved in the Utah fires. And can you walk me through a 
scenario where you would be involved in the fires and help me 
understand what triggers that decision.
    Mr. RIVERA. Yes, sir, thank you.
    From SBA's perspective, as I mentioned earlier, we have 
regulatory guidance. Fires, generally there is insurance 
involved, and most homeowners do have homeowner's, a hazard 
policy that includes if their home gets burned they are covered 
by hazard insurance from that perspective. One of the things 
that we do is when we go out and do an assessment, we need to 
find a population that shows sufficient damage to meet the 
threshold for us to meet from that perspective. There are some 
fires where it is just an open area and there is not any 
damages to any businesses or any homeowners, but when there is 
a pocket of businesses or homes in a general area we can go in 
and step in.
    Mr. CURTIS. We face this problem in rural Utah where 
numbers do not add up. They would in a more dense area. And so 
while it can be extremely devastating to a rancher or even the 
tourist business, they are few and far between out in these 
rural areas. And I guess one of my questions is, is that a 
policy that can be visited to see even though we do not have 
thousands of businesses being impacted, the only ones that care 
are those that are being impacted and that may be one.
    Mr. RIVERA. No, I agree. I agree with you.
    So the threshold for an economic injury disaster loan is 
for the governor to find 5 small businesses that have sustained 
substantial economic injury. I do not know if we can move that. 
We can definitely continue the conversation offline as far as 
if there are pockets in your state that are not being 
identified, we would be glad to reach out and figure out how to 
make this work.
    Mr. CURTIS. Terrific. Thank you.
    Can you help me identify the difficulties of responding to 
a fire versus some of these other natural disasters?
    Mr. RIVERA. Fires are challenging from the perspective of 
there is just no documentation. No tax records, no paperwork. 
So we have leaned on technology. I mean, we get a copy of a tax 
transcript. Part of our application you can submit a request 
for us to get a copy of a tax transcript from the IRS. So that 
eliminates that need for that additional paperwork. We do a 
footprint of a home or a business, and we estimate based on 
that footprint of that home and the structure and the makeup of 
the facilities what we can make for a loan and estimate based 
on that.
    The biggest challenge we have in fires is most people do 
not want to borrow even though it is at a low-interest rate. 
They want to collect from their insurance claim. But we will 
work. We encourage everybody to go and apply. It does not cost 
anything, and we can make a commitment up front, a loan 
commitment up front, and we can work with the insurance company 
on the backside.
    Mr. CURTIS. Thank you.
    Mr. Chairman, I would like to yield the balance of my time 
to my colleague, Ms. Gonzalez-Colon.
    Mr. KELLY. Without objection.
    Ms. GONZALEZ-COLON. Thank you, Mr. Chairman. And thank you, 
Congressman Curtis, for letting us that time.
    Some of the people that are presenting cases in my office 
regarding the SBA is the issue of doing business as or the 
DBAs. Most of the people that are filing for an application to 
get a loan are filing those using the model of doing business, 
the DBA model, but those cases are not being approved. Is there 
any reason why SBA is not managing the DBA business structure 
in order to get the loans being approved?
    Mr. RIVERA. I am not quite clear on why you would be 
hearing that. A sole proprietor, doing business as a sole 
proprietor. So for example, if it is me, I am doing business as 
something else, we would look at my individual tax return and 
it would be a Schedule C or Schedule E or Schedule, you know.
    Ms. GONZALEZ-COLON. Yeah. It is the personal tax----
    Mr. RIVERA. Right. But I would like to reach out to you and 
see if there are specific issues, because I am not aware of any 
DBA issues as a sole proprietor.
    Ms. GONZALEZ-COLON. We have plenty of cases of DBAs 
applying and not getting their application being approved.
    Mr. RIVERA. Okay.
    Ms. GONZALEZ-COLON. Thank you, Mr. Chairman.
    Mr. KELLY. The gentleman's time has expired.
    I now recognize the gentleman from Pennsylvania, Mr. Evans, 
the Ranking Member on the Subcommittee of Economic Growth, Tax, 
and Capital Access.
    Mr. EVANS. Thank you, Mr. Chair.
    Mr. Rivera, do you have any statistics on the number of 
small businesses who have requested and received $25,000 under 
the new revised, unsecured loan limits?
    Mr. RIVERA. So we do not make a loan based on the unsecured 
threshold; we make a loan based on the amount of damage that 
they have. So if you have $50,000 worth of damage, the loan 
commitment will be at $50,000. If the individual homeowner or 
business opts to only borrow $25,000 and they have means for 
the additional $25,000, we will go ahead and move forward with 
that loan commitment.
    Mr. EVANS. So you do not keep track of number?
    Mr. RIVERA. Well, for the record, I can get back to you the 
breakdown between unsecured and secured between that $25,000.
    Mr. EVANS. Okay. Because you said that is going to be 
sunset.
    Mr. RIVERA. Yes, sir. So the initial disbursement currently 
allows us to go up to $25,000, but it used to be $14,000, but 
because of the RISE Act we are able to maintain that $25,000 
threshold. But I can provide you that information.
    Mr. EVANS. Okay.
    Mr. Chairman, for the balance of time, I would like to 
yield my time to the Ranking Member so she can follow up.
    Mr. KELLY. Without objection.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman. And thank you, Mr. 
Evans.
    Mr. Rivera, the OIG reports show the same disaster loan 
process applied for Hurricanes Harvey and Irma. However, the 
OIG found a much longer and burdensome process applied to 
victims in Puerto Rico. Can you explain to me why they have to 
go through all this burdensome, complex process compared to 
those who were victims in the mainland that applied for 
disaster loans during Harvey and Irma?
    Mr. RIVERA. I do not have a copy of the report. I cannot 
see what you are pointing to.
    Ms. VELAZQUEZ. But do you know that the process for the 
people of Puerto Rico to apply for a disaster loan was much 
longer?
    Mr. RIVERA. It is the same process.
    Ms. VELAZQUEZ. And many more complex requirements?
    Mr. RIVERA. It is the same process. The only difference is 
that we----
    Ms. VELAZQUEZ. So the OIG is wrong?
    Mr. RIVERA. I am not saying the OIG is wrong. All I am 
saying is that it is the same process as if you are in the 
island of Puerto Rico as if you are in any of the islands, 
Guam, American Samoa. The Hacienda Taxing Authority is the 
equivalent of the IRS and we just need to get a copy of the 
taxing authority as far as for a primary source of repayment.
    Ms. VELAZQUEZ. So you are telling me that the OIG is wrong 
in his----
    Mr. RIVERA. No, I am not.
    Ms. VELAZQUEZ.--in his assertion----
    Mr. RIVERA. No, ma'am. That is absolutely incorrect.
    Ms. VELAZQUEZ.--that the process to apply for disaster 
loans in Puerto Rico was more burdensome and complex?
    Mr. RIVERA. I disagree. The IG is just simply stating that 
there are more steps in that process because of the Taxing 
Authority.
    Ms. VELAZQUEZ. I yield back, Mr. Chairman.
    Mr. KELLY. Mr. Evans, do you yield back?
    Mr. EVANS. As of 6 months following Hurricane Maria, only 
about 20 percent of all approved loans have been disbursed. Why 
is that rate so low? Can you speak to that?
    Mr. RIVERA. Yes. That is a snapshot of when the inspector 
general did the inspection. We are currently at 80 percent of 
loans are disbursed and 50 percent of the dollars. So, I mean, 
that was early on in the disaster and it is more mature at this 
point.
    Mr. EVANS. I yield back the balance of my time.
    Mr. KELLY. The gentleman yields back.
    I now recognize Mr. Fitzpatrick from Pennsylvania for 5 
minutes.
    Mr. FITZPATRICK. Thank you, Mr. Chairman. Thank you, Mr. 
Rivera for being here.
    I want to focus on Puerto Rico, specifically. I had the 
opportunity to be there with my friend and colleague, Ms. 
Gonzalez-Colon, over Thanksgiving to inspect what at the time 
was the Convention Center in San Juan and all the different 
components to the recovery operation.
    Did SBA have a presence there initially?
    Mr. RIVERA. Yes, sir. We have been co-located with FEMA 
since the very beginning.
    Mr. FITZPATRICK. So I guess my question is what has the 
interface been? Because I also, in addition to this Committee, 
I sit on the Committee on Homeland Security. We have oversight 
over FEMA. What has the interface been? What is working? What 
is not working? And I know it was originally centered in the 
Convention Center. It has since been disbursed to various sites 
and locations across the island.
    Mr. RIVERA. On the technology side, we have a computer 
matching agreement with FEMA. SBA and FEMA do. So we share data 
constantly back and forth. When we approve a loan, when they 
approve a grant, so that information flows freely back and 
forth between the agencies.
    We are co-located with FEMA in all their centers. They 
started the disaster recovery centers. We have our own business 
recovery centers, and we invite FEMA to join us at the business 
recovery centers. We are now transitioning into community 
recovery centers. We still have 350 people there in 50 centers, 
so we are there for the long term.
    Mr. FITZPATRICK. Thank you.
    So has this Committee given SBA what it needs to fully 
effectuate the mission on the island? Is there anything more 
that you need?
    Mr. RIVERA. I believe this Committee has been really 
helpful throughout this process. I mean, I have given examples 
about the RISE Act. I have given examples about the Disaster 
Loan Application Portal. There is a lot of positive coming from 
the Committee to the program. It is very helpful for the 
disaster survivors.
    Mr. FITZPATRICK. Mr. Chairman, I am going to yield the 
balance of my time to my colleague from Puerto Rico, Ms. 
Gonzalez-Colon.
    Mr. KELLY. Without objection.
    Ms. GONZALEZ-COLON. Thank you, Mr. Chairman. And thank you, 
Mr. Fitzpatrick, not just for lending us the time now but your 
visit to the island during the difficult process and all the 
help for the different bills we have been approving here.
    One of the issues that I just want you to tell me, you got 
51,000 loans approved to the island. How many of them are still 
waiting for disbursement?
    Mr. RIVERA. I can get back to you for the record or I can 
look real quick.
    Ms. GONZALEZ-COLON. Please get back with the information 
for the record.
    And we sent a letter to the SBA Administrator because I 
know the new goals for the small business technology 
development centers and the one in Puerto Rico just increased a 
lot of the requirements for business start. One hundred seventy 
new businesses, an increase of 57 percent from the last year, 
and capital information, an increase of 85 percent. And when 
you compare those numbers with the numbers of 2017 for the 
island, we are still recovering in an economy that a lot of 
those businesses closed because of the hurricane. So I am 
asking SBA to review the goals imposed, in this case to Puerto 
Rico after the hurricane because we are not going to meet all 
those new goals and provisions and that will affect directly 
the amount of money and funds that small business technology 
centers on the island will receive as part of that. And that 
includes the jobs supported when you are losing a lot of those 
small businesses. I do not know if you are aware about that.
    Mr. RIVERA. That is a different division, but we will go 
back and we will communicate this to them.
    Ms. GONZALEZ-COLON. The other area that I was telling you 
before was how the process between FEMA and Small Business are 
managing up with the centers that you have still got on the 
island? There are still many centers and you still got 
personnel in those centers. Many of the people that applied for 
the first assistance from FEMA were denied. A lot of them were 
denied. We were managing to have different codels to the 
island, and FEMA are just accepting again all the applications 
and reviewing them, and that means that the SBA process is 
getting involved again in that. So having that information, do 
SBA have enough resources to face not just the 2017 hurricane, 
but another hurricane in this season? Or do we need to fund 
again SBA?
    Mr. RIVERA. I think we have plenty of resources currently. 
And when there is a FEMA appeal with the disaster survivor, 
that does not have to come back through SBA. If somebody is 
with FEMA, they stay with FEMA. If they are referred to SBA, 
they have to get declined to get back to FEMA. That is the 
federal process. But if they ask for an appeal through FEMA, 
that does not need to come back to SBA. So I can reach back and 
we can clarify on that.
    Ms. GONZALEZ-COLON. Yes. Because the information, I mean, 
we are having the revenue from the centers. And even the FEMA 
directors on the island it is different.
    Mr. RIVERA. Okay. Thank you.
    Ms. GONZALEZ-COLON. I yield back.
    Mr. KELLY. The gentlelady's time has expired.
    I now recognize the gentlelady from New York, Ms. Clarke, 
for 5 minutes.
    Ms. CLARKE. I thank you, Mr. Chairman. I thank our Ranking 
Member. I thank you, Mr. Rivera, for your testimony here today.
    The SBA's Disaster Loan Program is an essential component 
to the Federal Government's efforts in providing relief to 
American citizens in the wake of natural disasters. Nearly 75 
percent of small businesses lack disaster relief plans, and 
despite 70 percent of small businesses feeling vulnerable to 
natural disasters, when natural disasters do hit, as was the 
case with Hurricanes Harvey, Irma, Maria, which ravaged 
Houston, the U.S. Virgin Islands, and Puerto Rico, they can 
lead to damage that permanently shutters 40 to 60 percent of 
small businesses. When businesses are not forced to close, they 
can expect to pay between $100,000 to $250,000 on average, as 
was the case with many businesses in my district of Central 
Brooklyn in the wake of Superstorm Sandy.
    The SBA's Disaster Loan Program helps address these 
challenges by providing personal loans of up to $200,000 in 
small business loans, of up to $2 million in the wake of 
disasters. While these loans are essential to helping small 
businesses in the wake of crises, a series of SBA OIG reports 
recently highlighted ways in which the SBA could improve its 
functioning.
    So Mr. Rivera, the Inspector General Report for Hurricane 
Harvey concluded that a significant percentage of calls went 
unanswered, despite the increasing number of available agents. 
While I understand that three hurricanes can overwhelm an 
agency, it is still alarming that the 90 percent goal of 
incoming calls was never achieved. What are the primary 
challenges in answering calls? And was it staffing levels? Was 
it funding?
    Mr. RIVERA. So we were stressed, obviously. So we received 
1.2 million calls. As the calls come in, often what happens is 
there is a wait time associated with it, but from our 
perspective, we learned a lot from that. We are retooling the 
way we handle calls. We are using technology as much as we can. 
One of the things, for example, we have a callback feature now. 
So instead of calling and waiting 30 minutes, you can call and 
you can do the callback feature and then we can queue you up 
for a conversation later on. Some of the times we call and then 
they are not available, the survivor is not available from the 
call center to tell them to apply with an SBA loan and they 
push the callback number. So that self-imposed a lot of calls 
from that perspective.
    The IG's report just basically highlighted. In week four, 
we have two sister offices, one in Atlanta, one in Sacramento 
that back up the call center in Buffalo, New York. And what 
happened is we deployed for Harvey and Irma and we dropped the 
number of agents. In hindsight----
    Ms. CLARKE. But ironically, the wait times, nor the option 
to return phone calls was available to customers following the 
recent hurricanes.
    Mr. RIVERA. So 65 percent of the calls were answered. Let 
me just be really clear. Sixty-five percent of the calls were 
answered, so only 35 percent were not answered on a million 
two.
    Ms. CLARKE. Listen, if you want to believe that and you 
think that is great, that is fine. What I am saying to you 
today is that we got to find a way to make sure that the agency 
has the resources it needs to answer calls of distress and be 
able to make sure that we are reaching everyone in need of your 
services. So it is not about being defensive about what the 
agency does; it is how we can be helpful in making sure that 
you have what you need to answer these calls when they come in 
and that we are communicating effectively with the public about 
what they need to do. Because I can tell you that every single 
day that a small business is shuttered and unable to access 
you, it is a hardship. Not only are you stressed, our 
communities become stressed.
    Let me also add to this that we are going to be seeing more 
and more simultaneous events, so that is only going to add even 
more stress to your agency. So my hope is that we can recognize 
the efforts of the agency while simultaneously recognizing that 
we either need to build redundancy somewhere else. We need to 
have a contingency plan in place. Because when you have 
wildfires, you have hurricane season, you have volcano 
eruptions all happening at the same time, everyone can 
recognize an agency becoming stressed.
    Mr. RIVERA. We agree.
    Ms. CLARKE. All right. That is what I needed.
    With that, Mr. Chairman, I yield back.
    Mr. KELLY. The gentlelady's time has expired.
    I now recognize the gentleman from Mr. York, Mr. Espaillat, 
for 5 minutes.
    Mr. ESPAILLAT. Thank you, Mr. Chairman, Madam Ranking 
Member.
    First, I would like to, Mr. Rivera, I know that with FEMA 
and the grants that they provided for home relief, there was a 
persistent and serious problem with regard to applicants having 
their deeds or documentation that establish ownership or 
residency of those homes. Was that a prevalent problem for 
these businesses that apply for loans?
    Mr. RIVERA. No, sir. We use a third-party contract where we 
independently verify, based on a contract, the owner of the 
property. So we do not ask for a copy of the deed anymore. We 
used to back in the old days but we do not anymore. That is a 
process improvement. So we look at a contract that they tell us 
who the property owner is.
    Mr. ESPAILLAT. And was there any issue with that at all?
    Mr. RIVERA. No, sir. Not to my knowledge.
    Mr. ESPAILLAT. And what percentage again of the loan 
applications are granted?
    Mr. RIVERA. In Puerto Rico, 63 percent; Virgin Islands, 65 
percent; it was in the mid-40s in Harvey and about close to 50 
percent in Florida.
    Mr. ESPAILLAT. And you found that one of these stumbling 
blocks for these applicants to get their loans was translation 
services? Is that one of the major----
    Mr. RIVERA. Well, it is one of the stress points we had is 
that at first we did not have--the contract we had in place was 
not sufficient to handle the throughput because of Harvey, 
Irma, and Maria, and the Spanish speakers in Texas, Florida, 
and then in Puerto Rico. But we went from a $50,000 contract to 
up to a $2 million contract now. We have three separate 
contracts that can service and handle this type of volume.
    Mr. ESPAILLAT. That is troubling that an agency as 
important as the SBA that deals with small businesses and many 
of the small businesses across the country are run or owned by 
folks who speak other languages, new immigrants that are 
entrepreneurs, that you do not have the infrastructure to 
respond to language needs of your clients. Google has like 
translation services. We are not splicing atoms here. I cannot 
believe that you do not have access to technologies that are 
available right now on your phone to provide immediate and 
efficient translation of documents, of any type of interaction 
that you may have with your customers which are small 
businesses. Have you looked at the possibility of utilizing 
modern technology that is available right now? So if you like, 
I will go over and sit with you and I will show you what I can 
get on my phone----
    Mr. RIVERA. Thank you.
    Mr. ESPAILLAT.--to translate, not just to Spanish but to 
any other language in the world.
    Mr. RIVERA. Thank you.
    Mr. ESPAILLAT. So how is it that a Federal agency that 
addresses business needs does not even--and is supposed to be 
at the cutting edge of technology, you do not have that 
availability for your customers?
    Mr. RIVERA. We do. We do.
    Mr. ESPAILLAT. That is unreal. So why did you not use it?
    Mr. RIVERA. Well, back at the very beginning of the 
hurricanes we pivoted. We learned from what happened. We were 
stressed by the calls and by the Spanish speaking. And now we 
spend $2 million a year. We have three separate contracts.
    Mr. ESPAILLAT. Mr. Chairman and Madam Rank, we sit here on 
an ongoing basis all the time addressing the need of small 
business owners. And very often what we discuss here is the 
need for them to have access to new and modern technology that 
will give them a real advantage to do business. And yet, the 
agency that is supposed to provide that opportunity to them 
does not have it itself. And in the middle of a storm where we 
saw thousands of people die and thousands of businesses 
destroyed, you have to go into like, you have to think about 
it? Unacceptable, Mr. Chairman. Unacceptable.
    Ms. VELAZQUEZ. Will the gentleman yield?
    Mr. ESPAILLAT. Yes, I will.
    Ms. VELAZQUEZ. Mr. Rivera, I would like to hear from you, 
what do you say or how did you respond to Mr. Espaillat's 
assertion that what happened to those businesses or homeowners 
that did not have a deed? What was your response to that?
    Mr. RIVERA. We have a contract that goes and identifies who 
the property owner is. We do not ask individuals for copies of 
their deeds.
    Ms. VELAZQUEZ. But here in the disaster loan process it 
says that a Puerto Rico borrower has to submit title report to 
SBA to proceed with second closing appointment.
    Mr. RIVERA. Right. That is in the event we cannot identify 
the property. So if we can identify the property, it is not a 
requirement.
    Ms. VELAZQUEZ. Okay. Thank you.
    Mr. ESPAILLAT. Mr. Chairman, I yield back the remaining 
part of my time. Thank you so much.
    Mr. KELLY. The gentleman's time has expired.
    I now recognize the gentlelady from North Carolina and the 
Ranking Member of the Subcommittee on Investigations, 
Oversight, and Regulations, for 5 minutes.
    Ms. ADAMS. Thank you, Mr. Chairman. Thank you, Ranking 
Member Velazquez. Mr. Rivera, thank you for being here.
    Today's hearing is primarily focused on the agency's 
response to last year's hurricane season, but I would like to 
get a sense of how SBA's response efforts have improved over 
the past 15 years. Looking back on some of our major disasters 
starting with Hurricane Katrina, then Superstorm Sandy, and 
then in my state of North Carolina, Hurricane Matthew, was the 
most powerful storm of the 2016 Atlantic Hurricane Season. 
Matthew brought devastating flooding, strong winds and storm 
surge to the Eastern Coast, and finally, going through last 
year's historic and destructive hurricane season. So in 
addition to what you have said, what has SBA's greatest 
challenges and lessons learned been?
    Mr. RIVERA. We have taken advantage of technology. And as I 
mentioned earlier, we are trying to streamline wherever 
processes are and use technology. I go back to the example of 
we now do desktop verifications. Our field inspectors no longer 
go on the ground. And Sandy took us 10 days for a field 
inspector to do an inspection on a home. Now, on average, we 
can do it in 6 days by somebody doing a desktop verification. 
They get a copy, for example, like a Zillow or Realtor.com, a 
footprint of the home. And then what we can do is we can have a 
discussion over the phone with the disaster survivor which cuts 
some time.
    Ms. ADAMS. Thank you.
    How has SBA insured the facilitation of more contracting 
opportunities for small businesses, particularly minority, 
women, and veteran-owned from all Federal agencies through your 
procurement center representatives in the rebuilding and debris 
removal process after the disasters?
    Mr. RIVERA. So FEMA has done a really good job. I mean, 
they are tasked with doing mission assignments and in the 
category of debris removal, they went from national contracts 
to now where they go to local small businesses, have an 
opportunity to compete for those type of contracts. If you have 
a trucking company that can support debris removal, they will 
now allow those trucking companies to step in.
    Ms. ADAMS. Thank you.
    What specific steps has SBA taken through your PCRs to 
advocate that disaster contracting actions benefit small 
businesses local to the disaster to the maximum extent 
possible?
    Mr. RIVERA. So we do focus with our government contracting 
team. In the disaster, the PCRs are well aware of the disaster 
contracting opportunities, and we do connect them with FEMA and 
with all the other Federal agencies that need to provide 
contractor support.
    Ms. ADAMS. Okay. Thank you.
    And can you speak generally on the approval and decline 
rates of loans received for each hurricane? For example, 
following Matthew, 19,816 applications were processed, and of 
those only 7,374 were approved.
    Mr. RIVERA. Yes, ma'am. It is the footprint of the 
disaster. Like, when I was in the private sector, I could pick 
who came in to my office. We do not get that opportunity. We 
service all disaster survivors coming in. Sometimes the 
disaster footprint hits higher income areas. Sometimes it hits 
lower income areas. We try to do our best to try to approve 
every possible loan that comes through the door.
    Ms. ADAMS. Thank you. Thank you, Mr. Chair. I yield back.
    Mr. KELLY. The gentlelady yields back.
    I would like to thank you, Mr. Rivera, for being here 
today.
    The 2017 storm season was clearly----
    For what purpose does the gentlelady from Puerto Rico seek 
recognition?
    Ms. GONZALEZ-COLON. Mr. Chairman, I just want to--sorry 
about the interruption--to provide for the record and make part 
of this hearing, a letter that I submitted to SBA Administrator 
Linda McMahon, regarding the Small Business Administration----
    Mr. KELLY. Without objection.
    Ms. GONZALEZ-COLON. Thank you.
    Mr. KELLY. As we continue to examine the Federal 
Government's response, today's hearing will help us better 
understand SBA's efforts in helping victims replace and rebuild 
their businesses and homes. This Committee will continue to 
look at ways to ensure the Disaster Loan Program is operating 
efficiently and effectively. This discussion today will help us 
in this endeavor.
    I ask unanimous consent that members have 5 legislative 
days to submit statements and supporting materials for the 
record.
    Without objection, so ordered.
    This hearing is now adjourned.
    [Whereupon, at 12:22 p.m., the Committee was adjourned.]
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