[Senate Hearing 116-111]
[From the U.S. Government Publishing Office]
S. Hrg. 116-111
EXAMINING SBA'S OFFICE OF DISASTER
ASSISTANCE AND THE RESPONSE TO RECENT
CATASTROPHIC FLOODS
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HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
UNITED STATES SENATE
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
JUNE 19, 2019
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Printed for the use of the Committee on Small Business and
Entrepreneurship
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
38-343 PDF WASHINGTON : 2021
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED SIXTEENTH CONGRESS
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MARCO RUBIO, Florida, Chairman
BENJAMIN L. CARDIN, Maryland, Ranking Member
JAMES E. RISCH, Idaho MARIA CANTWELL, Washington
RAND PAUL, Kentucky JEANNE SHAHEEN, New Hampshire
TIM SCOTT, South Carolina EDWARD J. MARKEY, Massachusetts
JONI ERNST, Iowa CORY A. BOOKER, New Jersey
JAMES M. INHOFE, Oklahoma CHRISTOPHER A. COONS, Delaware
TODD YOUNG, Indiana MAZIE K. HIRONO, Hawaii
JOHN KENNEDY, Louisiana TAMMY DUCKWORTH, Illinois
MITT ROMNEY, Utah JACKY ROSEN, Nevada
JOSH HAWLEY, Missouri
Michael A. Needham, Republican Staff Director
Sean Moore, Democratic Staff Director
C O N T E N T S
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Opening Statements
Page
Ernst, Hon. Joni, a U.S. Senator from Iowa....................... 1
Cardin, Hon. Benjamin L., Ranking Member, a U.S. Senator from
Maryland....................................................... 3
Witnesses
Panel 1
Rivera, Mr. James, Associate Administrator, Office of Disaster
Assistance, U.S. Small Business Administration, Washington, DC. 5
Panel 2
Shimkat, Ms. Lisa, State Director, America's SBDC Iowa, Ames, IA. 16
Barnes, Ms. Robin, Executive Vice President and Chief Operating
Officer, Greater New Orleans, Inc., New Orleans, LA............ 31
Barnes, Mr. Jason, Owner, All Time Toys, Eldersburg, MD.......... 40
Alphabetical Listing
Barnes, Mr. Jason
Testimony.................................................... 40
Prepared statement........................................... 42
Barnes, Ms. Robin
Testimony.................................................... 31
Prepared statement........................................... 33
Responses to questions submitted by Senator Kennedy.......... 67
Cardin, Hon. Benjamin L.
Opening statement............................................ 3
Ernst, Hon. Joni
Opening statement............................................ 1
Rivera, Mr. James
Testimony.................................................... 5
Prepared statement........................................... 7
Responses to questions submitted by Senators Inhofe, Hirono,
Kennedy, Rosen, and Duckworth.............................. 52
Shimkat, Ms. Lisa
Testimony.................................................... 16
Prepared statement........................................... 19
EXAMINING SBA'S OFFICE OF DISASTER
ASSISTANCE AND THE RESPONSE TO RECENT
CATASTROPHIC FLOODS
----------
WEDNESDAY, JUNE 19, 2019
United States Senate,
Committee on Small Business
and Entrepreneurship,
Washington, DC.
The Committee met, pursuant to notice, at 3:00 p.m., in
Room 428A, Russell Senate Office Building, Hon. Joni Ernst,
presiding.
Present: Senators Rubio, Ernst, Hawley, Cardin, Cantwell,
Shaheen, and Duckworth.
OPENING STATEMENT OF HON. JONI ERNST, A U.S. SENATOR FROM IOWA
Senator Ernst. Good afternoon. Today's hearing of the
Senate Committee on Small Business and Entrepreneurship will
come to order. Thank you all for being here and welcome to our
witnesses. I also want to thank Chairman Rubio for letting me
take the gavel today.
Today's hearing is titled Examining SBA's Office of
Disaster Assistance and the Response to Recent Catastrophic
Floods. It will discuss SBA's disaster programs and their
footprint in response to the recent flooding in the Midwest. We
will also continue our work to reauthorize the Small Business
Act, focusing today on the critical role SBA's Office of
Disaster Assistance plays in helping individuals and businesses
recover after a disaster strikes.
In my home State of Iowa, widespread flooding has had a
devastating impact, causing an estimated $1.6 billion in damage
in Iowa alone, with even more damage reported across the
Midwest. Although the flooding began in March, this is an
ongoing disaster, as a wet spring has led to further flooding
in areas where the water was beginning to recede.
To make matters worse, the flooding throughout much of
western Iowa is deja vu for many of the victims, as some of
these same communities were affected by widespread flooding in
2011.
Thankfully, as folks begin to rebuild their homes and
neighborhoods they will be aided by the Disaster Supplemental
Package that was signed into law earlier this month, which
included my amendment for USDA to cover the loss of on-farm
stored grain. While this is just one step in the recovery, it
will help victims of the flooding to get back on their feet.
During my visits to the disaster areas, I have seen
firsthand the devastating impact the flooding had on our small
businesses and have met with a number of business owners about
the challenges they are facing. Many of these folks were just
recovering from flooding this spring before finding their
businesses under water yet again this month.
The SBA's Office of Disaster Assistance has played an
essential role in the recovery effort by providing services and
counseling to our small business owners, but it is important
that we continually assess these programs to ensure they are
providing effective and timely assistance to the victims.
The disaster assistance programs provided by the SBA allow
victims of a disaster to receive direct loans and working
capital for physical damage or economic injury. Homeowners,
renters, and businesses of all sizes can apply for SBA disaster
assistance in presidentially declared or SBA-declared disaster
areas.
There are three types of loans that are offered by the
Office of Disaster Assistance. These are home and personal
property disaster loans, business physical disaster loans, and
economic injury disaster loans. Many are unaware that the SBA
gives loans to not just businesses but also to homeowners and
physical property owners after disasters.
In fact, over 80 percent of SBA's disaster loans are given
to individuals and homeowners through home and personal
property disaster loans, which contain two categories of loans.
The first is personal property loans, which provide up to
$40,000 to uninsured or underinsured individuals to repair or
replace their property at their primary residence for items
such as appliances and furniture. The second is real property
loans, which allow homeowners who are uninsured to obtain up to
$200,000 to restore their primary property to its pre-disaster
status.
Next, business physical disaster loans can provide loans up
to $2 million to businesses of all sizes to repair or replace
damaged property, equipment, or inventory. Finally, small
businesses can receive up to $2 million in working capital
through SBA's economic injury disaster loans to aid small
businesses that have suffered economic losses from the
disaster.
These programs have helped homeowners and small businesses
alike. However, according to the SBA Inspector General, SBA has
continued to have issues delivering expedited relief to
disaster victims while mitigating fraud and improper payments.
It is important that as we look to reauthorize the Small
Business Act we remain focused on ensuring we are protecting
taxpayer dollars while keenly assisting our communities. I hope
today's discussion will be a productive step toward improving
the Federal Government's response to disasters, including these
catastrophic floods, and shed some light on how we can enhance
the integral role SBA plays in helping survivors get back on
their feet and on with their lives.
And with that, thank you again. Senator Cardin, I will turn
it to you.
OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, RANKING MEMBER, A
U.S. SENATOR FROM MARYLAND
Senator Cardin. Well, Senator Ernst, first of all, thank
you for help in putting together this hearing and for your
leadership on this Committee. It is always a pleasure to work
with Senator Rubio in the Chair but it is also nice to have you
in the Chair, so welcome to that.
This is a continuation of our hearings on the
reauthorization of programs under the Small Business
Administration. This hearing is going to be on disaster
assistance programs, which is a critically important part of
the SBA toolbox.
Senator Ernst, I know the pain that you have gone through
in your community in the Midwest with the continuing flooding,
and you have our heartfelt feelings, and we obviously want to
come together as a Nation to do everything we can to help the
people that have been victimized, and do everything we can to
make the circumstances better.
I experienced this firsthand in Maryland, in Ellicott City.
Ellicott City experienced two deadly floods in a period of less
than two years, where floodwaters came down Main Street, which
is basically family-owned-type businesses, what a Main Street
used to be and still is in Ellicott City, Maryland. This was a
unique flood. We have had flooding before where the river banks
just rose. This was so much rain in such a short period of time
the flow of the water caused the damage.
I was there. I saw firsthand the damage that was inflicted,
the loss of life, the loss of property. Jason Barnes is here
from All Time Toys, and we will have a chance for him on this
second panel.
But I want to tell you, when I got there I was so impressed
to see SBA already there. They were on the ground, working and
helping and providing the necessary information to the property
owners. I will also acknowledge the SBDCs that were there. Now
we anticipated that, in the law that we passed in 2015, the
RISE Act, to empower the SBDCs to play a greater role in the
recovery process. They provided resources for training, et
cetera, and it worked. And it was, I think, the right thing to
do, because, quite frankly, the resource partners know the
communities best. So the SBDCs, the Women's Business Centers,
SCORE, these affiliates can really help with the businesses on
the ground to give them firsthand advice on how to keep their
businesses going. And I think we need to take a look at the
CDFIs to see whether we cannot use them in a better way in
disaster relief.
Our focus here is whether we can be more effective in the
use of the tools that we have. That is the reauthorization
process. Senator Ernst mentioned the tools that are available.
I will not go back over them. But let me just tell you the
numbers, as I understand it. Forty percent of small businesses
cannot survive a major disaster. They never reopen. That is a
shocking number. So we need to try to do something better.
One of the things you hear frequently is that they need
quick access to capital, and that is why the SBA program for
disaster relief is unique. It is direct loans, and it applies
not just to small businesses but to property owners,
residential property owners. So it is a broader program, and we
have made a lot progress in streamlining the process so they
can get their capital quicker. I think it is about three weeks,
on average, in order to be able to get disaster loans from the
SBA.
Well, quite frankly, for some businesses three weeks is too
long. They need the money immediately in order to be able to
keep their doors open. As I understand it, also, we tried to do
something about that in 2008, with new bridge loans that did
not work. I am not blaming anybody why it did not work. There
was no, as I understand it, commercial bank interest. It just
did not work. But the need is still there. So are there other
things we can do to allow businesses to access capital sooner
in order to bridge and stay in existence?
Fifty percent of those who apply for the SBA disaster loans
do not qualify for it. So if there is a three-week
determination and then they have to go to the next source,
which might be through FEMA and HUD, can we coordinate that
better so that they have clear direction sooner as to what is
available to keep them in business?
The other thing I think we need to concentrate on is to
recognize that small businesses need help to be prepared for
disaster for a plan of business continuation. You do not think
about it until after you are out of business, but you really
should be having those discussions, and we should be able,
through SBA, to provide those types of services earlier, and
obviously we also need to look at, and we do allow funds that
are made available through the SBA to deal with mitigation to
reduce the risks in the future.
These are all important issues. We have an excellent panel.
So I look forward to hearing from our witnesses.
Senator Ernst. Thank you very much, Senator Cardin. And
what I would like to remind, for our panels, we have got some
wonderful witnesses here today for our panel and for our
audience today. We will have a series of votes beginning at
3:30 p.m., so I will apologize ahead of time. We will be
coordinating to move back and forth to the floor of the U.S.
Senate. But if we need to we may have to take just a short
recess to accommodate any movement. But again, I want to thank
our witnesses for being here today.
So we are going to go ahead and start with our first panel,
and thank you, Mr. Rivera, for being here.
James Rivera is the Associate Administrator in the Office
of Disaster Assistance of the U.S. Small Business
Administration here in Washington, D.C. Prior to this position,
Rivera served as Deputy Associate Administrator of the Office
of Disaster Assistance, improving the agency's disaster
operations after Hurricanes Katrina, Rita, and Wilma. He has
worked in the Office of Disaster Assistance since 1994.
Rivera received his bachelor of business administration
degree in finance and economics from Texas Tech University.
Thank you again, Mr. Rivera, for being here today. We will
go ahead. If you would please, we will listen to your opening
statement.
STATEMENT OF JAMES RIVERA, ASSOCIATE ADMINISTRATOR, OFFICE OF
DISASTER ASSISTANCE, U.S. SMALL BUSINESS ADMINISTRATION,
WASHINGTON, DC
Mr. Rivera. Thank you, Senator Ernst and Ranking Member
Cardin, and members of the Committee. I appreciate the
opportunity to testify today on the agency's current Federal
disaster efforts in the Midwest as well as other areas in the
country.
Let me start by saying how much we appreciate the support
you have provided the agency and our disaster program. Over the
years you have been very responsive to our findings and
staffing needs, and we are thankful for the working
relationship with the Committee and the leadership you provide.
I also want to share how proud I am of the men and women in
the SBA's Office of Disaster Assistance. They are a dedicated
group who work very hard year-round to help disaster survivors
in time of need. Working with our Federal partners and State
Emergency Management Agencies, SBA is on the ground soon after
the weather events, to begin assessing damage. In coordination
with your governor, SBA will help determine if appropriate
factors might exist for Federal disaster declarations.
Ultimately, requests for Federal disaster declarations are
initiated by the governor's office and fall into one of two
categories. A major declaration is submitted to and approved by
the President and involves Federal agencies including FEMA,
SBA, and HUD. An agency or SBA declaration would involve only
SBA resources and is approved by the SBA administrator.
To give you a sense of scale, in fiscal year 2018, SBA
responded to a total of 13 major presidential declarations and
35 agency declarations. So far in fiscal 2019, SBA has
responded to 13 presidential major declarations and 34 agency
declarations. We have current disaster declarations in Iowa,
Oklahoma, Indiana, Illinois, and Kentucky. In addition, we
continue to provide disaster loan assistance to survivors from
Hurricane Florence in South Carolina and Hurricane Michael in
Florida.
Senator Ernst, in your home State of Iowa, we continue to
serve disaster survivors of severe flooding, and have so far
approved over 300 loans for over $27 million. We will continue
to keep you informed of our efforts and we hope you will
continue to call on us if we can be helpful in any way.
Just last week, our acting administrator had the
opportunity to visit with Governor Reynolds to provide her an
update on our activity. We made the same offer to her to please
reach out if we can help answer questions, clarify loan status,
or simply help disaster survivors to the right contact.
A large part of our success in providing disaster loan
assistance to survivors are the improvements we have made in
processing and approving loans. Since 2005, we have greatly
reduced our cycle times to a current average of 8 days for home
loans and 12 days for businesses. In Iowa right now, those
numbers are slightly lower, with 7 days for homes and 10 days
for businesses.
We also just spent a lot of time expanding our preparedness
efforts. Just last week, we conducted a conference for agency
personnel involving media training. Additionally, we continue
to focus on outreach plans for working with local, State, and
Federal officials, as well as our resource partners. We have
focused staff efforts this year on interagency coordination,
and on Monday we conducted a conference call with all the
governors' offices to refresh them on our role and to share our
points of contact.
In my almost 30 years of working at SBA, most of it has
been in the disaster program. I have learned that every
disaster event is unique. The agency has come a long way and we
have made numerous improvements to address the challenges we
face in every disaster. The SBA team will continue to be there
for disaster survivors and we hope you will continue to call on
us when disaster events impact your State.
Thank you again for the opportunity to testify and for your
ongoing support.
[The prepared statement of Mr. Rivera follows:]
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Senator Ernst. Thank you very much. I really do appreciate
that, and I would like to echo what Ranking Member Cardin had
said as well, during the Ellicott City flooding, that you saw
SBA there right away. And I would say that with the flooding in
southwest Iowa, SBA was there right away as well, so I do
appreciate that.
We will go ahead and start our round of questions for you,
Mr. Rivera. I will go ahead and start and then we will pass it
off to Senator Cardin.
To receive SBA disaster assistance, folks must go through a
pretty convoluted process. At least that is the way it seems to
the folks back home. For example, I have received feedback that
many disaster victims are unaware that you have to be denied by
FEMA in order to receive the SBA assistance.
What can we do to better educate the folks that are going
through a very stressful time, to make sure they understand
what that process is?
Mr. Rivera. Thank you for the question. ``Convoluted'' is
not the word I like to use. We like to use the word
``streamlined.''
We refer everybody to FEMA, DisasterAssistance.gov. From
every Administration I have worked for, the face of
presidential declarations is FEMA. So if you go through the
DisasterAssistance.gov portal, when you register with FEMA,
what we have done from a streamlining perspective, 30 of those
data points, when they get referred to--actually get
transferred, so the disaster survivor, when they are filling
out our application, do not have to go through that same
process with those 30 data points, from that perspective.
We continue to work closely with FEMA. We are trying to
make the process as simple as possible, but that is the current
process that we are currently working through. But we continue
to try to maximize any sort of efficiencies we can get with
FEMA, to the SBA process.
Senator Ernst. Okay. So would it be fair to just simply say
then, everything needs to start with FEMA? Everything needs to
start with FEMA.
Mr. Rivera. So we are covered by the Disaster Recovery
Framework, the broad interagency coordination between 25
Federal and State agencies, so the first point of contact is
Disaster Assistance. What a lot of disaster survivors do not
realize is that they may not be eligible for SBA assistance on
the front end, so FEMA will filter out those individuals and
will refer them to their unmet needs program, which is another
FEMA program. So we have tried to simplify the process from
that perspective.
Senator Ernst. Okay. Thank you very much. And on a similar
note, what we have heard from folks going through some of these
disaster loans, there have been improvements, and you did
mention some lower days to actually get those disaster loans.
And there have been improvements on the issue by moving to
things like desktop verifications, and maybe you can talk a
little bit about that, versus the on-the-ground inspections. We
know that more progress is always needed. If there is a way
that we could assist with that, we want to do that.
I have heard from some folks who have been flooded out of
their homes and attempted to purchase other homes in the
community, using SBA financing, but they were unable to meet
closing dates because of certain SBA delays.
So what can SBA and Congress do to ensure that the folks
are receiving their assistance in a timelier manner? So while
they may be approved, there are certain delays.
Mr. Rivera. If I can start back with Katrina-Rita-Wilma, I
know 2005 is a long time ago. We used to take every disaster
survivor through the entire experience, and up front we knew a
lot of these individuals would not qualify for a loan, but we
went ahead and put them through the credit score, the
verification process, the full processing. And that is why it
took us 74 days to process a home loan back then.
Since we have actually started streamlining the processes,
we know, up front, that individuals with a lower credit score
will not qualify for an SBA loan. That is approximately 30
percent that we call get automatically declined.
We experienced--if I can take you to 2012, during
Superstorm Sandy--it took us 10 days, on average, to get a loss
verifier, one of our staff on the ground to do a physical
inspection on the ground. So since that period of time--we
started doing this during Harvey, Irma, and Maria--we actually
do a desktop verification. So what we get is we get similar to
a footprint of a Realty.com that shows the home or the
business, and we have Marshall & Swift standards that can say,
based on three feet of water you cut sheetrock up to four feet,
and so forth and so on. And we can estimate what it costs to
repair or replace that home or that business. So that actually
cut five days off of our processing time.
We continue to have these rigorous internal controls in
place to make sure that we are not jeopardizing any taxpayer
funds, from that perspective. But those are a couple of
examples that we have used over the years that have accelerated
the processing times.
Senator Ernst. Okay. And you said that the process now, we
are down to 8 days in Iowa for homes?
Mr. Rivera. Yes, ma'am. We are running 7 days for homes and
about 10, 11 days for businesses. And I always caution
everybody that will listen to me, our goal is two to three
weeks, just based on volume. We do not really know how much
volume we are going to get. But we are able to successfully get
most applications in that 10-day time frame.
Senator Ernst. Okay. Wonderful. Well, I appreciate that,
and thanks for moving to that desktop verification. That sounds
like it has helped. I appreciate it.
Ranking Member Cardin.
Senator Cardin. Thank you, Madam Chair. Thank you very much
for your dedicated service. You have done this for a long time
and we appreciate it very much.
Let me tell you the confusion that I see in the system, the
way it is designed. A business owner who has not had experience
with a disaster or how to keep a business open all of a sudden
finds that they are in a crisis situation. They need to get
capital quickly if they are going to be able to stay in
business, if they are going to pay their creditors. They may
have critical employees that they have to deal with.
And the SBA gives a loan, and you can make that decision
kind of quickly, but you have to qualify for it. But through
FEMA and HUD you could get a grant. So if I am there the day
after a flood, it seems to me I have choices to make, and it
does seem like it is set up with challenges to figure out where
I should go. If I go through the FEMA route and wait that time
I might be out of business before they qualify me for a grant.
If I go through the SBA you could do it quickly, but I have to
qualify for a loan, and that means if I would have qualified
for HUD I may not have qualified for SBA.
So how do we make this easier for people to understand?
Mr. Rivera. The current process that we have everyone
follow is start with FEMA. Even if you are a small business you
probably have employees that may have been impacted by the
disaster. FEMA does a real quick referral on businesses. They
provide minimal assistance from that perspective to businesses.
Once they come to us we will process the application in that
two- to three-week time frame.
In larger presidential declarations, HUD, with their
Community Development Block Grant, DR funds do come into the
scenario, but usually it is further behind us, from that
perspective.
From a Federal response perspective, you know, we are
probably the only player in town when it comes to disaster
businesses that play.
Senator Cardin. So you are saying HUD is not a player in
this?
Mr. Rivera. They are in some cases. It is dependent on how
the grantee for the specific State is set up. We have seen
where some businesses are eligible for grants, but that is
after it has filtered through the SBA loan program.
Senator Cardin. Okay. And I understand you are not
responsible for that. I fully understand that. But if I am
going to qualify for a HUD grant my income has got to be pretty
low, and I am the most vulnerable to be out of business before
we get to that point, aren't I?
Mr. Rivera. Yes, sir.
Senator Cardin. All right. We have identified a problem.
How do we fix it?
Mr. Rivera. That is always the challenge we have, is just
how quickly we can provide the service from that perspective.
We encourage lenders out there that have a current existing
base to borrow. I was a commercial lender in the private sector
before I came to SBA. We would not make those loans. Or we
would ask them--we would ask--you know, I had a portfolio of
road contractors. That is how I became familiar with SBA
disaster lending. They flooded, and I was asked to lose a
relationship as a desk officer. And here comes SBA to make the
loans, from that perspective.
We do not--we are not--I wish we could help everybody, but,
on average, our approval rate is in the 50 percent range, so
that is the best we can do from that perspective.
Senator Cardin. All right. I will ask one final open
question for you. We are looking at reauthorizing and changing
laws to make them work better. So from the SBA point of view--
we will leave HUD and FEMA aside right now--but from the SBA
point of view, do you have any priorities for us to consider to
make your job a little bit easier and to give easier time for
those who have been victimized, businesses that have been
victimized?
Mr. Rivera. Right. Well, one of the big items that we would
like to make permanent is the reauthorization of the RISE Act
as far as the insecure threshold. It sunset last year--it did
not sunset last year. It got extended last year to Thanksgiving
of this year. What that means is for an unsecured loan we can
make an initial disbursement up to $25,000. Without that
authority, when it sunsets, it will go back to $14,000. So that
is an additional $9,000 worth of capital we can provide through
a low-interest, long-term loan. That is one of the bigger
items.
Money is always an issue, even though we closely watch the
taxpayer funds. We have spent close to $200 million this year
as a result of Florence and Michael earlier this year. So I
know that is a part of the appropriations staff, but those are
probably the two major things.
Senator Cardin. And we can weigh in with appropriators. I
appreciate that.
How about the CDFIs? Could they play a stronger role?
Mr. Rivera. We have not dealt with CDFIs in the disaster
arena. That is a really good question. I mean, we can go back
and do some due diligence on that, from that perspective, but I
have not--we have not dealt with the CDFI community. You know,
we have dealt with--very few banks have been interested in the
program, because of the risk associated with a disaster loan.
Senator Cardin. We will follow up on that, but as you know,
the RISE Act did empower certainly the development centers, so
we will take a look at that. Thank you.
Mr. Rivera. Thank you.
Senator Ernst. Senator Hawley.
Senator Hawley. Thank you, Madam Chair.
Mr. Rivera, can I just--I want to go back to Senator
Cardin's line of questioning about loans versus grants, just to
make the point again that often those who have been impacted
by, for example, flooding like we have experienced here in the
State of Missouri, or my State of Missouri, are not in the best
situation when it comes to their credit, and yet SBA's disaster
relief is currently centered around loans.
So I am just wondering, is there space for more grant
programs to assist both homeowners and small businesses?
Mr. Rivera. From my perspective, the Small Business Act is
only, under 7(b), from the Disaster Loan Program, we can only
provide loan assistance. We have never been given the
opportunity to provide business grants.
Senator Hawley. Should we change that?
Mr. Rivera. That is really your call. We will acquiesce to
whatever it is from that perspective. There has been some grant
assistance down the road, but historically we have just been a
direct lender.
Senator Hawley. Sticking with just the topics of flooding
and recovering from it, to date, no Federal dollars have yet
been spent in response to the terrible flooding we have
experienced in Missouri, partly because, in the first weeks of
flooding, we did not qualify under the Stafford Act guidelines,
for the extent of the damage required before a State qualifies
for aid. We do now, and appeal is under consideration, and I
believe--I have every indication from the relevant agencies
that we are going to get that aid as soon as possible.
However, while we are going through this process, there are
hundreds of Missouri families and businesses who are
struggling, and it prompts me to ask, do you think that the
Stafford Act and other guidelines, as currently structured, are
maximizing our ability to get timely relief to folks who need
it?
Mr. Rivera. The choice of how a declaration is declared, is
at the governor's--you know, at the governor's hand.
Presidential declarations include--Stafford Act declarations
include other types of assistance--individual assistance,
public assistance--I am sure you know all of this--mitigation,
and so forth and so on. Ours is a very narrow disaster loans
only. So the governor does have the ability to go presidential,
and we stand behind the President, and, you know, we sit and we
wait until the President declares, or if they decline it then
what we can do is we can proceed forward with our regulatory
criteria.
We have two different types of disaster declarations. They
are in our Code of Federal Regulations. If there is a governor
certification, if there are five small businesses have
sustained substantial economic injury, we can do an Economic
Injury Disaster Loan Program. On the flip side, if 25 homes or
businesses sustained 40 percent or more uninsured loss, we can
provide an agency declaration for physical loss. But we stand
down until the decision through the presidential process has
been finalized.
Senator Hawley. Thank you, Madam Chair.
Senator Ernst. Thank you. Do you have any other questions.
Senator Cardin. No.
Senator Ernst. Okay. Well, since we do not have other
members present we appreciate the time and the information. If
we do have other members that have questions for the record we
will submit those to you, Mr. Rivera, but again, I want to
thank you very much for being here today and representing the
SBA and the disaster loan program. So thank you.
And at this time we will go ahead and move forward to the
second panel.
Senator Cardin. So that the members of the second panel
understanding, I am leaving only so I can cast a vote so we can
keep the hearing going as long as possible, but I will be back
in time to drill you in questioning. Don't worry.
[Pause.]
Senator Ernst. Thank you to the members of our second
panel. We will go ahead and get started. We will start with
opening statements from each one of you. First I will go ahead
and make the introductions of the members of our panel, and
again, I want to thank you very much for being here today.
So a very special welcome, of course, from me to our first
panelist, Lisa Shimkat. She is the State Director of the Iowa
Small Business Development Center. Shimkat has worked for the
Iowa Small Business Development Center since 2007, and received
the National State Star Award in 2010, commending her
performance as an SBDC.
Ms. Shimkat received her MBA from Iowa State University,
which is the finest of institutions known to man--thank you so
much--and is a Certified Business Advisor from University of
Toledo, and obtained an Economic Development Finance
Professional Certification through the National Development
Council.
We are incredibly lucky to have Ms. Shimkat in Iowa. She is
a tremendous asset for small businesses across our State, and
she and her staff have played a critical role in helping our
flood victims get back on their feet this year. So, Lisa, thank
you very much for being here.
Next we have Robin Barnes. Thank you very much, Ms. Barnes,
for being here. She serves as the Executive Vice President at
Greater New Orleans, Inc., the Regional Economic Development
Organization for Southeast Louisiana, and oversees several
major initiatives designed to create and protect jobs in the
region.
She has a deep knowledge of disaster resilience strategies,
having served on the Hurricane Sandy Rebuilding Task Force in
2013, and as the Director of the Louisiana office of Seedco
Financial, a national nonprofit community development financial
institution, where she ran the organization's emergency
business and economic recovery response to Hurricanes Katrina,
Rita, Gustave, and Ike, and the Deepwater Horizon oil spill.
She also opened the Seedco Financial Southeast Louisiana
Fisheries Assistance Center in Belle Chasse, Louisiana, the
first business assistance center for commercial fisheries.
Following 9/11, she managed small business recovery programs
for Seedco in New York.
Thank you very much, Ms. Barnes, for your efforts.
And Jason Barnes, our final panelist today, thank you very
much, sir, for being here. He is the owner of All Time Toys,
which has been in business since 2006, and was formed by a
group of friends. In the summer of 2016, their store in
Ellicott City was hit by a major flash flood, which left the
company in shambles. However, Mr. Barnes worked with the
Maryland Small Business Development Center for two years to re-
establish his business, and laid the groundwork for a second
location in Eldersburg, Maryland.
When another flood hit Ellicott City in 2018, All Time
Toys' original location was completely destroyed yet again,
this time beyond repair. But thanks to his efforts in the two
years between disasters, his business was able to survive and
has actually continued to grow in a second location.
Thanks for your perseverance. Thank you for being here.
Again, welcome to the members of our second panel, and Ms.
Shimkat, we will go ahead and start with you.
STATEMENT OF LISA SHIMKAT, STATE DIRECTOR, AMERICA'S SBDC IOWA,
AMES, IA
Ms. Shimkat. Thank you, Chairwoman Ernst, Ranking Member
Cardin, and members of the Committee. Thank you for inviting me
to testify today. I am the State Director of Iowa's SBDC. My
background includes both SBA and USDA programs. I was raised in
Iowa, moved away after college, following a path through
Chicago, Myrtle Beach, Atlanta, and then we chose to return to
Iowa to raise our children.
I am here today to share information about the flooding
disaster that has gripped our State in its clutches, and it
does not seem to be ready to leave any time soon. Iowa has been
hit with a flood event that started in March of 2019. Our SBDC
teams reached out immediately to the economic developers,
chambers, and other partners to let them know how we are able
to help. They encouraged them to make sure to use us as a tool
in their toolbox to help local businesses navigate through the
process of clean-up and move toward recovery.
The sustainability of these small, rural communities
depended upon our State working together and working quickly to
find information, hopefully solutions, for these small
businesses.
Sadly, businesses who were able to clean up in May, when
the waters receded, were hit by a second round of flooding the
first week in June. Roads that had just opened to bring
visitors and consumers back to our business communities were
closed again.
The flood is a different kind of disaster, a different kind
of frustration, and I hope to be able to discuss how a
different kind of defense is needed.
On March 23rd, it was announced that the several Disaster
Recovery Centers and Business Recovery Centers were going to
open. During this time, we were also communicating with the
Office of the Governor, Iowa Economic Development Authority,
the Iowa DOT, Secretary of Ag, and many county and local
officials.
Businesses were affected in varying degrees. Keg Creek
Brewing Company was impacted by fresh water availability and
transportation. A boil issue was in effect for their area and
they had two choices--either boil their own water or have it
trucked in from Red Oak, which added another 30-mile round-trip
drive. The additional handling of the water and the extended
commute time for their employees due to a majority of the roads
in the area closed increased their production costs by
approximately 30 percent. Their distributor is in Nebraska,
which provides additional challenges because many of the roads
across the Missouri River are closed.
Several communities have been devastated. Hamburg, Iowa, is
a community with a population of just over 1,000 residents.
They were still under water when we toured. We saw homes that
were gutted, belongings sitting on the front lawns while the
home itself looked like just an empty shell. What once held a
family now just held nothing. I have never felt so much
hopelessness. Tanya Garfield, Director of the SBA Disaster
Field Ops immediately got on her phone and had her team set up
a Business Recovery Center in Hamburg.
Businesses lost more than just inventory. The clean-up
efforts seemed insurmountable. One small business owner reached
out to her SBDC counselor after mud and debris filled her
building. Our regional director went over to her place the next
day, which was a Saturday, and on her own time spent 12 hours
helping Alicia scoop mud out of the building. The flood waters
came back in June, and that business owner is under water
again, and will not be reopening. She is frustrated that the
programs were not designed for smaller businesses like hers.
Interstate highways and local roadways north and south of
Council Bluffs, along the Missouri River, were overtopped and
damaged due to the high flow rate of flood waters. Flooding
caused the closure of approximately 48 miles of Interstate 29
and three major Missouri River crossings in Southwest Iowa.
This means that there are 125 miles between open State highway
bridges crossing the Missouri River. The only way for commuters
and freight to cross is through bridges in the Omaha/Council
Bluffs area and St. Joseph, Missouri. The DOT estimates 45,000
vehicles and trucks were detoured per day.
Throughout the floods so far, SBDCs have played, and
continue to play an integral role in disaster response and
recovery in Iowa. SBDC counselors and advisors are often first
on the scene, helping businesses and communities rebound from
the damage. We work closely with State and Federal agencies to
make sure that small businesses, rural small businesses as
well, the backbone of our community, are supported. SBDCs offer
significant advising to our clients during the response. SBA
disaster team leads did a great job coordinating with the SBDC
network.
Disaster recovery is not a one size fits all. We need to
find ways to help get rural businesses back to wealth creation.
In closing, thank you for letting me share my thoughts and
I look forward to questions and sharing ideas for how to
address this problem.
[The prepared statement of Ms. Shimkat follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Rubio [presiding]. Thank you very much.
Ms. Barnes.
STATEMENT OF ROBIN BARNES, EXECUTIVE VICE PRESIDENT AND CHIEF
OPERATING OFFICER, GREATER NEW ORLEANS, INC., NEW ORLEANS, LA
Ms. Barnes. Chairman Rubio, Senator Ernst, Ranking Member
Cardin, and members of the Committee, including my Senator from
Louisiana, Senator John Kennedy, thank you for inviting me to
speak with you today. I am Executive Vice president at Greater
New Orleans, Inc. I have worked with small businesses engaged
in disaster recovery from 9/11 to Katrina and beyond, and I
also served on the Hurricane Sandy Rebuilding Task Force.
Today I stand in solidarity with my colleagues here and
with communities around the country that have experienced
disasters and are recovering, rebuilding, and building
resilience to weather their next disaster or market shock.
So many of you on this Committee represent districts that
have been brought to complete halts by disasters. We know
reviving and bolstering the small business ecosystem can be one
of the most effective strategies for jump-starting the recovery
after a disaster. Small businesses are fundamental to the
economic and social health of their communities. They provide
critical services, enhance quality of life, supply major
industries, generate tax revenues, and offer economic mobility
opportunities for people of all ages, ethnicities, and genders.
Small businesses have generated over 65 percent of net new jobs
since 1995, and that is why I am honored to be here today with
all of you, for this important national conversation.
GNO, Inc.'s mission is to create a greater New Orleans with
a thriving economy and an excellent quality of life for
everyone. Since Hurricane Katrina, Greater New Orleans is
creating new and supportive road maps for small business
growth. Some key examples include our Louisiana Small Business
Recovery and Grant Program, a $230 million multi-pronged
effort, funded by HUD CDBG after Katrina, that enabled 4,500
small businesses, including restaurants, commercial fisheries
to reopen.
The New Orleans Startup Fund is a CDFI that has created
1,400 jobs through its investments and serves as the investment
arm for Propeller, a nonprofit incubator that grows and
supports entrepreneurs to tackle social and environmental
disparities.
The post-Katrina recovery process revealed critical gaps in
the small business ecosystem that prevented full participation
of local small businesses in the rebuilding. New infrastructure
and new tools have been established to ensure full
participation moving forward. For example, the City of New
Orleans revamped its DBE program, piloted a mobilization fund,
and organizations like the Urban League of Louisiana, Launch
NOLA, Good Work Network, and the New Orleans Business Alliance
identified niche opportunities to better serve entrepreneurs. I
believe that these innovations in my community can be
replicated and scaled to benefit small businesses nationwide.
After most disasters, small businesses first rely on their
insurance--if they have insurance--their reserves, and the help
of neighbors to get up and running. After the worst disasters,
they require the help of the Federal Government. SBA loans and
other Federal resources in the forms of grants and technical
assistance are critical to economic recovery.
I commend Congress for the passage of the 2015 RISE Act,
which has catalyzed several improvements in the process of
helping small businesses recover from disasters.
When considering additional small business disaster
recovery solutions, I would ask the Committee members to
include the following three components:
One, access to capital. Quick access to small loans and
grants is key to small business survival, and that is a fact.
Many of the small businesses that borrow funds after a disaster
are first-time borrowers, and as you can imagine, a disaster is
not necessarily the best time to take on debt for the very
first time. Therefore, it is imperative that there are other
sources of funding, like grants, to be considered, and that
technical assistance is provided to support the businesses
before, during, and after the loan is made. Community
development field can play a great role here with organizations
such as CDFIs.
Two, technical assistance and information about resources
and services. After a disaster, businesses need immediate,
direct, and consistent communication about resources available
to them and how to access those services. The SBDCs are key
providers of this sort of assistance. But also there are other
community-based and economic development organizations in
communities that know how to engage the most vulnerable
populations and can accommodate language and literacy barriers.
And, frankly, sometimes what is needed is for someone to go out
into the field, open up an iPad, and walk someone through a
loan application process.
Three, building business resilience. Building business
resilience means not only anticipating near-term disasters but
also planning for the long-term future. Making businesses aware
of the need for, and availability of flood insurance is key,
but furthermore, including businesses in a broader conversation
about climate adaptation, long-term planning, and how
businesses can consider adapting their business model to
accommodate the severe weather patterns and transition their
businesses to other opportunities.
In conclusion, I thank you for this opportunity and I offer
myself and my organization, GNO, Inc., as a resource to you in
the future.
[The prepared statement of Ms. Robin Barnes follows:]
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Senator Ernst [presiding]. Thank you very much.
Mr. Barnes.
STATEMENT OF MR. JASON BARNES, OWNER, ALL TIME TOYS,
ELDERSBURG, MD
Mr. Barnes. Thank you, Senator Cardin and Senator Ernst for
having me. I am the owner of All Time Toys that was located in
Ellicott City, Maryland, until the May 2018 flash flood. I am
now located in Eldersburg, Maryland. I was employed by the
company in 2005, and worked my way up to the operations manager
and then, on June 1st, 2016, I bought the company, only two
months before the July 30th, 2016, flood.
The 2016 flood completely devastated my business and caused
a complete system failure across the board. I lost about 75
percent of the total company, including most inventory and the
back-end systems needed to support the business.
Several days later, I was sitting in the Disaster
Assistance Center, completely drained. I was emotionally and
physically beaten and was looking for answers about what to do
next. I approached the Maryland SBDC help desk and met with its
consultants, Craig Panos and Garrett Glover. From that point
forward, with their continued support and knowledge and
resources, I was able to rebuild my business and restore my
company.
I first met with Garrett a few days after that fateful day
in August, and we came up with our first plan for recovery, the
first of many ongoing strategic plans. The first priority was
to start selling product and generate revenue. We started by
selling what merchandise was left online and did everything
else that was needed to get the brick-and-mortar back up and
running, from grants to displays to staffing, and Jan. 20th,
2017, we reopened in record time.
What a massive success the reopening was, with some of the
highest sales the company had ever seen. From that point
forward, I met with Garrett on a weekly basis on a recovery
plan. Together we worked on everything from the basics of
merchandising to financing to advance business tool and
systems, like diagnostic P&L formats for tracking sales and
analyzing expenses. We created a differentiating brand ID,
enhanced customer experience, human resource, and employee
development procedures. We created a unique company culture
where we could expand the company and allow it to keep growing.
And so we did. By the winter of 2018, we started working on and
were succeeding with plans to launch a second location within
the year.
Then, disaster struck again. May 2018 brought in another
flash flood to Main Street. The second one was even more
devastating than the 2016 flood. But, because of the work and
lessons learned from the previous flood, we had the skills,
systems, and confidence to rebound smartly and quickly. Within
a month, working continuously with the SBDC, we were selling
online, and within five months we were able to reopen again,
but this time bigger and with a more mature operation.
At this point our store has been open for eight months, and
again, we are still setting new sales records, greater customer
satisfaction, and repeat business, and, in the process, we have
retained and created jobs. And yes, we are even now back on
track scouting for a second location.
In August of 2016, I was a new, clueless business owner
facing one of the greatest disasters a business can face. And
when I bought the company, I knew how to make money selling
toys, but I knew nothing about being a business owner. All I
knew is what I did not know, which was a lot. I knew I had a
passion for toys, game, and collectibles but zero about running
a business. But working continuously with the Maryland SBDC,
and even after a few weeks, I was able to start learning how to
run a business.
The SBDC did more than just help me find financing and put
things back together to recover. They taught me how to analyze
and improve every aspect of my business so that I did not just
survive but, more importantly, I could thrive moving forward.
The lessons I have learned are too many to count and too many
to say in any sort of time frame that would not take hours.
You have to understand that the lessons and resources
Garrett and Craig provide are tailored to the individual needs
of each business. What I needed and learned might not fit what
others needed and that is what makes them so special. Because
of the individualized action plans and one-on-one meetings,
they were able to find out what my business is, what my
business needs, what I wanted my business to be, and how best
to move forward in my disaster recovery effort.
The greatest gift that the Maryland SBDC has given me is a
true passion for business, which now outweighs my love of toys,
games, and collectibles. This love of business has truly driven
me after multiple disasters, and I am consoled knowing that the
SBDC will always be there to help with recovery and growth,
moving forward. I have talked about that fateful day in August
2016, when I first started working with the SBDC, but that is
not the one day that stands out most in my mind.
The one most memorable day came the morning after the
devastating May 2018 flood. My store manager and I were picking
up our new IDs for access and survey what was left of our
business on Main Street. When we pulled up, we saw two familiar
faces. Both Garrett and Craig were standing there, and I knew
from this point they were in it with us for the long haul, and
so they have been.
To say my business would not be standing today without the
Maryland SBDC is an understatement, and with their help I am no
longer just surviving disaster. I am looking to a brighter
future where long-term success is possible.
Thank you.
[The prepared statement of Mr. Jason Barnes follows:]
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Senator Ernst. Very good testimony from everyone. Thank you
very much.
We will start with our questions now, Senator Cardin and I,
so we will--what did you say, you were going to grill them? Is
that--okay.
[Laughter.]
Okay. Well, and this is for the entire panel. But according
to FEMA, roughly 40 to 60 percent of small businesses never
reopen their doors following a disaster. I believe that Ranking
Member Cardin had mentioned something to that effect.
What are some of the obstacles that prevent businesses from
reopening after a disaster, even if they are finding the
services you have to offer. What stops them from reopening?
And maybe, Mr. Barnes, you might be able to speak to that
first. What were some of the obstacles that you faced?
Mr. Barnes. Financing was first. That was the biggest
thing. I only had two months, previously to opening, you know,
my shop. I put everything in to buy the company. I was sitting
with like maybe $500. Financing was the biggest problem. There
was a good chance that by September I was not going to be able
to reopen. Everything was just gone. On top of that it is just
clean-up, getting the--you know, everything up and running,
moving forward.
But financing was the number one, and luckily, with our
Ellicott City, that was not as much of a problem. There were a
lot of options available from the DHCD to SBA that people could
tap into, depending on what happened. So we had a 90 percent
success rate, but even after 2018, a lot more shut down because
it just got harder to, you know, sustain.
Senator Ernst. Okay. And then, Ms. Shimkat, now Jason was
able to get back on his feet, utilizing some of these different
programs and tools. So what barriers would folks face where
they would not be able to receive assistance through those
programs, and reopen their businesses?
Ms. Shimkat. Some of the barriers that we have seen is,
specifically even with a flood, it just keeps happening. And
with the inability to know when the end is, and to try to
recover, you lose hope. When you do all this clean-up, you
spend this money, of your own money to clean up, because you
cannot wait many times. The inventory could get ruined. You
need to make sure that you are also providing for your
employees.
So the clean-up and then the rural aspect. In many of those
rurals--Hamburg, Pacific Junction--you had folks that lost
their homes, their employees lost their homes, and those were
folks that were also buying from those local small businesses,
the mom-and-pop stores, those Main Street businesses.
And then the third part, as a clean-up rule, and then to
the employees, we have very low unemployment in the State,
which is a great thing, but it also can be a barrier as well
for these small businesses. When the Missouri went over its
banks and we lost Interstate 29, we lost Highway 34, we lost a
lot of employees. There are a lot of employees that go across
the State there, where maybe they worked in one and lived in
another. What we ran into then is the commute time goes from
five minutes to an hour and a half. And maybe in larger
communities, you know, the Coast, that is not a big deal, but
it is when they can find another job closer to where they are
for about the same pay, with a five-minute commute. So they
struggled then, as well, keeping those employees. Those are
some of the challenges.
Senator Ernst. I understand. And so then they would make
that choice not to reopen their business and perhaps seek other
employment elsewhere.
Ms. Shimkat. Absolutely.
Chairman Rubio. Okay. Thank you. And Ms. Barnes, did you
have any thoughts on that?
Ms. Barnes. Absolutely. I think sometimes we tend to start
from the time that the disaster happens and look at all the
things that are going to make it challenging for the business
to come back and reopen, when what we really need to do is take
a step back and look at sort of the situation with small
businesses.
First of all, most small businesses in this country are
tiny. They are under 20 employees, or 10 employees, or less.
And they are particularly vulnerable to disasters because they
have small profit margins, they lack revenue diversity, and
they cannot sustain extended business interruption.
Small businesses lack adaptive business management models,
and I want to be very careful about that, because I think small
businesses are really incredible in terms of adapting as
neighborhoods change and things change over time. But when
there is a catastrophic event and something happens, it is
particularly hard to immediately adapt your business model when
you do not know who is coming back, what customers are going to
be around, and that sort of thing.
They tend to be uninsured and they tend to depend on
generating revenues from customers and clients who have also
been impacted by the businesses.
All of these things are amplified then, when there is a
disaster. And so starting the process of recovery from the time
of the disaster is almost too late, because what we really need
to be thinking about is how do we help them prior to the
disaster, really build that capacity in anticipation that there
probably will be a market shock or a disaster at some point.
Senator Ernst. Very good. Well, thank you very much. I am
out of time but I think we will have time to bounce back and
forth.
Senator Cardin.
Senator Cardin. Well, thank you very much.
Mr. Barnes, you defy the odds, first, to survive a flood,
being in business for such a short period of time, not having
any cash to deal with that, not knowing what to do next,
because you had never thought you would have to go to through
this. You were still on a learning curve being a business
owner. And then 20 months later, to go through a second
experience.
But in the second experience, you already understood how to
keep a business open, because you went through it the first
time. And it seems to me the SBDC, the Small Business
Development Center, really was your lifesaver, really was your
lifeline to understand how you could stay in business.
That was exactly what we intended when we passed the RISE
Act, to have help on the ground that understood the community
and had the confidence of the community, that could be there on
a continuing basis.
So I really do appreciate your courage. I was on the ground
and saw the devastation, and I must tell you, the courage of
the shop owners on Main Street is unbelievable, because it was
a frightening situation after the first, and the second was
worse than the first. So good work.
Mr. Barnes. Thank you.
Senator Cardin. Mrs. Barnes, you are reinforcing Senator
Hawley's point about grants, which is interesting. We had not
really given that a lot of attention, because SBA does not have
the capacity right now to deal with how they would deal with
grants. But it is something we should consider, since there are
grants available through HUD. And that takes a long time and it
does not really work to keep you in business. So it is an area
that we do have a gap that we really need to concentrate on.
You did mention, though, the CDFIs. How could we enhance
their ability to help us in a disaster?
Ms. Barnes. Well, CDFI's are a very interesting
organization, and I do want to also broaden it to the idea of
community banks and community development, credit unions,
because I believe that there are a lot of organizations that
are on the ground that have the capacity to make financial
transactions--that is what they do--that can be activated if
they are incentivized to do so.
I worked for a CDFI after 9/11 and after Katrina, and what
we were able to do, as an organization, was pull together
resources. So we identified the Federal resources that were
available, we looked to philanthropy, and we really started to
put together a comprehensive program, which is really, I think,
what is most needed, where you have grants, loans, technical
assistance, and such.
In New Orleans, after Katrina, we relied on the SBDC to
partner with us. So we operated a program for fishermen, and we
had a Fisheries Assistance Center. We had the SBDC sitting in
our office doing intake with the fishermen.
We actually, by the time of the BP oil spill, SBA was
sitting in our office as well, because we talked to SBA and we
said we have vulnerable populations, and this is the thing that
CDFIs know about. They know about their community and they know
about the population in their community, so they know how to
think about the services.
And so, basically, we were able to sort of aggregate all
these services under one roof. Everybody had different
resources that they were using, right. We were not necessarily
pooling resources. But we were able to, through the smart
intake of the SBDCs, and then referrals that we were able to
make to other resources, grants that we had through HUD CDBG,
we were able to really activate a very strong program.
Senator Cardin. And I think Mr. Barnes would agree that the
partnerships that were available in Howard County, in Ellicott
City, the County Exec was incredibly open to all the county
resources, that you had the reinforcement of community
organizations. You had neighbors helping neighbors. All of that
was coordinated through the county and State, with the Federal
partners, and it made a real difference with the confidence
level to get back into business.
Mr. Barnes. Oh yeah. The 2016 flood was--you know, the
difference between 2016 and 2018, you know, 2018 took the wind
out of a lot of stuff. But definitely the 2016, all the
resources and everything were set up and it made a huge
difference. Howard County, I always said, was the petri dish of
how to survive a flood the best way possible, between the SBDC,
the SBA, FEMA was there. I mean, the Disaster Center was just a
wealth of knowledge and resources to get everyone back up and
running.
I think after the 2016 flood they had a 90 percent
retention rate. That is huge. And I think only two businesses
went under completely.
Senator Cardin. Right. A couple relocated, but you are
correct. It was a very high percentage that stayed in business
after the flood.
Mr. Barnes. Yeah. It was unheard of numbers after a
disaster.
Senator Cardin. Thank you.
Senator Ernst. Yes, and Ms. Shimkat, we have had a good
discussion about the partnerships that exist out there, and
from you I know that the work that you and your colleagues at
the Iowa SBDC have done in helping Iowans recover. I have heard
a lot of those stories.
And as you and our other panelists have pointed out, the
SBDC counselors are not only serving as mentors to those that
are going through a very stressful experience and helping them
in navigating government resources, but you are all the
volunteers on the ground that are helping the small businesses
actually clean up their properties, whatever needs to be done.
We know that you work in tandem with SBA and their Disaster
Field Office. Can you go ahead and walk us through your work
together and what resources, if any, SBA does provide to you to
aid communities with their disaster recovery.
Ms. Shimkat. When a disaster happens--and every disaster is
a little different--let's say a tornado. When a tornado comes
through, the first thing we do is we get one of our folks over
there immediately, on site, with the local people. And in Iowa
we are already partnering with everyone, so many times it is a
quick phone call right after an events happens, so we can get
started.
In this most recent instance, it was a great example of
they reached out to us. We already were there. We were reaching
out to all the economic developers, and they said, ``Where
should we locate? Help us get those names.'' And I thought that
was excellent because we were able to get them where the core
offices needed to be, where, ``Hey, here are some ideas. Here
are some people to reach out to immediately.'' That was very
beneficial.
When the head of Disaster Operations West, Tonya Garfield,
came to town the first time, she reached out, or had her team
reach out, and they said, ``We need to get together. Why don't
you come with us as we tour as well.'' And then we could add,
``Hey, here are some things we are running into,'' and then
they could also be that arm to get those services immediately
where they needed to go.
I was very impressed. I was around in 2008, as we were just
kind of starting down the road of some of these things. So I
have seen a huge difference in what is working. I know that
puts more pressure on them, the timetable to get things more
quickly.
The other part is they were also in constant contact. They
also made sure that they were available at every town hall
meeting, and if there was somebody that maybe was upset, I
instantly got a phone call from their lead person here in the
State, and said, ``Hey, get somebody over to this person right
away. Let us know how we can help.'' So that was another way
too.
One of the questions you asked earlier of SBA was how can
we get the information out. Sometimes people may not be ready
to hear when the disaster is so overwhelming, and by repeating
the message, and repeating ``here is who is available,'' that
is key. And then also having all of the partners understand
there are no silos here. ``Hey, you know what? You are the one
that can help them better. Let's get you over there.'' That has
been very, very beneficial, that we can really reach out
quickly and handle problems efficiently.
Senator Ernst. That is very good and very helpful. And I
appreciate that. It is important that we are sharing that word
back and forth between various agencies and communities to make
sure that we are getting the right people to the right
organizations.
Ms. Shimkat. Absolutely.
Senator Ernst. So thank you.
I am going to focus a little bit on our farmers, and we do
have some great farmers in Maryland as well.
Senator Cardin. Absolutely.
Senator Ernst. In your testimony, Ms. Shimkat, you
discussed that designed disaster accounted for 9.2 percent of
the total U.S. market value of agricultural products in 2017.
Can you provide insight on how our farmers are recovering and
how can Congress assist to expedite that recovery?
Ms. Shimkat. Absolutely. One thing, if I may add, when I
first started bringing up that the egg and the business side
are interconnected, people were a little confused at first. But
I reached out to Secretary Naig, and some of the flood damage--
1.9 million bushels of corn lost, 482,000 bushels of soybeans
lost, and that is just what we have so far. We have the bins,
that as the moisture got into those bins and the bins expanded,
the corn expanded, and all of that lost. So you are looking at
the 2018 crops that were in the bins lost; 2019--many of them
have not gotten in the fields, so now the 2019 crop is lost.
And if we cannot get the debris cleaned out of those fields,
the 2020 is going to be lost.
So helping with the lost grain that was stored is
tremendous. Also, being able to look at the clean-up side, and
if there are recovery loans that they more so fit what
traditional loans for the agricultural industry are. They are
the seasonal side. Here is when they are given. Here is when we
can follow up with them.
As far as the payments, deferred payments. And then also,
some other things that we are looking at is you have many of
the business owners are also farmers at the same time, and
looking at if there could be, you know, tax deductions or tax
credits when it comes to disaster, that can be applied to
current or even, over an extended period of time, future tax
years as well.
Senator Ernst. That is fantastic information, because
oftentimes we do not think about the farmers. We think about,
you know, businesses and Main Street. But we have to understand
there are other types of businesses that exist out there,
farming being one of those.
Senator Cardin.
Senator Cardin. I am going to sort of wrap up for this,
because we do have some votes that are on right now. I want to
thank all three of you.
Ms. Barnes, I want to just underscore the point you said
about adaptation and resiliency. I think that is very
important, that before there is a disaster you get as much
preparation as possible, including flood insurance and
information about that.
So as we look at information that is made available through
the SBA generally, there should be more preparation for the
unexpected, because, unfortunately, it happens. So I think that
was a good point and I think it is something else that we need
to take a look at as we move towards the reauthorization of
these programs.
But I want to thank all three of you for your testimony,
and we really do look forward to strengthening these tools, and
we are proud of the work that is done at the SBA.
Senator Ernst. Thank you so much, Ranking Member Cardin,
and I do appreciate our distinguished panel for being here
today and sharing your experiences and your expertise. It is
imperative that this committee stays focused on making sure
that the Small Business Administration is supporting small
businesses and our individuals in a timely and efficient manner
as they recover after the devastation of a disaster.
So the hearing record will stay open for two weeks, and any
statements or questions for the record should be submitted by
Wednesday, July 3rd, at 5 p.m.
Again, our thanks to the panelists, and with that this
hearing is adjourned.
[Whereupon, at 4:08 p.m., the Committee was adjourned.]
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