[Senate Hearing 119-331]
[From the U.S. Government Publishing Office]
S. Hrg. 119-331
SBA'S HURRICANE HELENE RESPONSE: ONE YEAR
LATER
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FIELD HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
OF THE
UNITED STATES SENATE
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 22, 2025
__________
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
63-079 WASHINGTON : 2026
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED NINETEENTH CONGRESS
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JONI ERNST, Iowa, Chair
EDWARD J. MARKEY, Massachusetts, Ranking Member
JAMES E. RISCH, Idaho MARIA CANTWELL, Washington
RAND PAUL, Kentucky JEANNE SHAHEEN, New Hampshire
TIM SCOTT, South Carolina CORY A. BOOKER, New Jersey
TODD YOUNG, Indiana CHRISTOPHER A. COONS, Delaware
JOSH HAWLEY, Missouri MAZIE K. HIRONO, Hawaii
TED BUDD, North Carolina JACKY ROSEN, Nevada
JOHN R. CURTIS, Utah JOHN W. HICKENLOOPER, Colorado
JAMES C. JUSTICE, West Virginia ADAM B. SCHIFF, California
JON HUSTED, Ohio
Meredith West, Republican Staff Director
Sean Moore, Democratic Staff Director
C O N T E N T S
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SEPTEMBER 22, 2025
OPENING STATEMENTS
Page
The Honorable Ted Budd, U.S. Senator from North Carolina......... 1
WITNESSES
The Honorable Rebecca K. McCall, County Commissioner, Henderson
County, North Carolina......................................... 3
Prepared Statement........................................... 5
The Honorable Peter O'Leary, Mayor, Chimney Rock Village, North
Carolina....................................................... 8
Prepared Statement........................................... 10
Mr. David N. Jackson, President and CEO, Boone Area Chamber of
Commerce, Boone, North Carolina................................ 11
Prepared Statement........................................... 13
Mr. James ``Chris'' Stallings, Associate Administrator, U.S.
Small Business Administration.................................. 26
Prepared Statement........................................... 29
QUESTIONS FOR THE RECORD
The Honorable Rebecca K. McCall
Responses to questions submitted by Ranking Member Markey.... 37
The Honorable Peter O'Leary
Responses to questions submitted by Ranking Member Markey.... 38
Mr. David N. Jackson
Responses to questions submitted by Ranking Member Markey.... 39
Mr. James ``Chris'' Stallings
Responses to questions submitted by Ranking Member Markey.... 41
SBA'S HURRICANE HELENE RESPONSE: ONE YEAR LATER
MONDAY, SEPTEMBER 22, 2025
United States Senate,
Committee on Small Business
and Entrepreneurship,
Washington, DC.
The committee met, pursuant to notice, at 2:01 p.m., in
Henderson County Historic Courthouse, 1 Historic Courthouse
Square, Hon. Tedd Budd, presiding.
Present: Senator Budd.
OPENING STATEMENT OF SENATOR BUDD
Senator Budd. Good afternoon, everyone. I call the
Committee on Small Business and Entrepreneurship to order.
Today's hearing comes in a somber moment. Almost one year ago
today, Hurricane Helene made landfall in Florida before
continuing northward and devastating Western North Carolina.
Many of us here today personally experienced the
devastation that storm brought. Many areas were hit with high
winds, and received 20 to 30 or more inches of rain, leading to
catastrophic flooding and mudslides that tragically claimed the
lives of 108 North Carolinians. Altogether, a total of 11
states were impacted, and Helene caused almost $80 billion in
damage, making it one of the worst hurricanes to hit the United
States, ranking alongside Hurricane Sandy and Hurricane
Katrina.
Here in North Carolina, 39 counties were eligible for
federal assistance following the storm. Those counties
comprised 40 percent of the state's population and 45 percent
of the state's GDP. In the aftermath, our state's disaster
survivors started down the challenging road of rebuilding.
I want to say how proud I am of our state for coming
together in this time of need and the sheer tenacity of
everyone out here in Western North Carolina, who lent a hand
and helped folks in dire straits. Frankly, I wish the same
could have been said for our federal government, but
unfortunately, under President Biden, they were unprepared and
asleep at the wheel.
The Small Business Administration, or the SBA, provides
disaster loans and have been crucial to many Americans
recovering from natural disasters, and North Carolinians in the
wake of Helene were no different. The SBA gives eligible
individuals access to disaster recovery loans up to $500,000,
and eligible businesses loans up to $2 million for physical
damage and economic injury.
These loans help restore homes to their pre-disaster
condition, and help businesses replace equipment and maintain
payroll. Unfortunately, due to the blunders of the Biden's SBA,
too many North Carolinians were unable to find the help they
needed to simply rebuild and regain their livelihoods.
The prior administration mismanaged the SBA's Disaster Loan
Program by issuing irresponsible rules and dramatically
increasing the cost of making and administering disaster loans.
Moreover, as SBA drew closer to exhausting the funds it had on
hand for these loans. The staff at the wheel of the Biden
Administration failed in one of their most basic duties, and
that is notifying Congress that funding was running low. This
led to an unacceptable 66-day shortfall, lasting from October
12th through December 20th of last year.
Here in North Carolina, 97 percent of business loan
applicants were impacted by the shortfall. For more than two
months, the federal government left survivors in North Carolina
on their own with nothing but bootstraps and their community to
assist in rebuilding. We must ensure that a crisis like this
will never happen again.
This SBA program is instrumental in the rebuilding process,
and once it was back to working, it has served over 3,500 North
Carolinians following Hurricane Helene. And that's why, earlier
this year, I introduced the Disaster Loan Accountability and
Reform Act to create more safeguards against a future
shortfall.
This bill would require annual appropriations to SBA's
disaster loan program, inform Congress when funds are low, and
increase reporting to Congress. I want to thank my colleagues
on the Small Business Committee for working in a bipartisan
manner to get this bill through committee.
I'm grateful for the many changes the Trump Administration
has made to address the problems in this program since January,
including improvements to reporting, local coordination, and
constituent services. However, we're still recovering from the
aftermath of Helene. It's critical to understand the impacts of
the shortfall last year, and what steps can be taken to further
safeguard disaster survivors after being left without aid
again.
Returning Western North Carolina to normal following Helene
hinges on our federal government and its agencies working in
coordination with one another. I will continue to engage with
each of our cabinet agencies to ensure our federal government
is responsive to the needs of Western North Carolina.
I want to thank our witnesses on both panels today, and I'm
honored that you've decided to join us to speak on the efficacy
and unity of SBA's programs and ways to improve. I look forward
to your testimony. And before we start our testimony, I ask
unanimous consent that the witnesses's full statements be
included in the record. Without objection, so ordered.
For a quick run of show, I want to note that each of the
witnesses will have five minutes to give their remarks, and
then, we'll turn to questions. I'll introduce each of you, and
then recognize you for five minutes for your testimony. And we
do have two panels today. So, after our first panel, we'll take
a brief moment to let them and get up, and we'll have our
second panel seated.
And we'll now proceed with our first panel. We'll start
with Commissioner Rebecca McCall, who currently serves as a
Henderson County Commissioner. Commissioner McCall was sworn in
on December 3rd, 2018, and is serving in her second term as
Commissioner. She served as the Chair of the Henderson County
Board of Commissioners when Hurricane Helene hit Western North
Carolina.
She's a Henderson County native, and holds a bachelor's
degree in business administration for Montreat College. We
thank you for being here, and you're recognized for five
minutes for your testimony.
STATEMENT OF MRS. REBECCA K. MCCALL, COUNTY COMMISSIONER,
HENDERSON COUNTY BOARD OF COMMISSIONERS, HENDERSONVILLE, NORTH
CAROLINA
Mrs. McCall. Thank you for having me. September 27th, 2024,
will be a day we long remember in Henderson County and Western
North Carolina. Hurricane Helene hit us with full force. Not
only was there enormous amount of rainfall that resulted in
flooding as deep as 30 feet in some areas, there were also
2,000 landslides, 80 of which were in Henderson County. The
landslides uprooted giant trees and dislodged mammoth boulders
that took out everything in its path. In the Hickory Nut Gorge
area, the river grew three times wider than normal. Homes and
businesses along the river were washed away, as well as the
land they once stood on. The power outages that lasted up to
two weeks in most areas registered to one and a half million in
the multi-county area. With 95 percent of Henderson County
affected, more than 425 miles of roads and 200-plus bridges
were severely damaged in Henderson County alone. All of this
has left an impact on our businesses. Those that were not
severely damaged by flooding or fallen trees were still
affected by power outages and, most importantly, loss of
business because there were no customers. Even after power was
restored, the water receded and the main roads opened up, we
were left with the cleanup and rebuilding that continues today,
one year later. As a result, many businesses lost weeks of
sales.
Having been a small business owner, I'm aware that one week
of slow business is tolerable, two weeks is concerning but
three weeks and beyond can be devastating. There was also the
ripple down effect where loss of sales led to loss of inventory
purchases, which affects other businesses, layoffs of
employees, and for the county, reduced sales tax income.
Within a few days, organizations showed up to offer
assistance. SBA was one of those. We quickly established a
disaster relief center (DRC). SBA had a presence at the DRC to
answer questions and assist in application filing for loans.
Once we opened those doors, SBA representatives were there to
speak with residents about the possibility of loans to rebuild.
Our staff conveyed how SBA was there, eager and ready to assist
those in need. The staff who manned the table were friendly,
accommodating, and helpful.
We commend SBA on their presence and willingness to help,
and are grateful for their continued support all these many
months later. The benefits of the SBA program, though, are
numbered. The paperwork is straightforward and the low-interest
rate terms are favorable. But when asking people why they
didn't apply, the biggest issue we heard was that these are
loans, not grants. While recovering, many individuals and
businesses didn't feel comfortable taking on another loan that
they would have to pay back, especially as they were uncertain
about their source of income in the coming months. Some
businesses chose not to reopen. Some have closed after
reopening. Some are still undergoing repairs. Some embraced the
opportunity to become better than they were before and are
thriving once more but still working to make up the loss. Even
nine months after the storm, half of the businesses in Western
North Carolina were still earning 20 percent less than they
were before Helene. The damage to small businesses in the
county is hard to quantify, but we do know that across Western
North Carolina, 96 percent were impacted. This includes 83
percent that had to close for some period of time. In Henderson
County, specifically, of 130 businesses we have data on, over
$9 million has been reported in damages.
Henderson County's economy changed completely in the
aftermath of the storm. The infrastructure of the region was
not capable of supporting the usual fall tourists, and the
local businesses suffered a loss of revenue with $10.5 million
lost in the agritourism business alone. While our TDA did a
great job reminding folks that there were areas of the county
open for business, we lost over $4 million in stored apples
that were ready for distribution. The hesitancy to use SBA
loans for some of these losses speaks to locals' fear of taking
on debt in such a challenging economic situation.
Adjustments to the SBA, including the addition of grant
opportunities or loan forgiveness for businesses rebuilding and
continuing to operate post-natural disaster would have
increased the number of businesses turning to SBA for
assistance.
In conclusion, we are extremely grateful for the role SBA
played in our recovery from Hurricane Helene. We have learned
many lessons from the storm of how to be better prepared to
support businesses in the wake of natural disasters, and we
hope that we can work together with the SBA to implement these
changes to better support our future disasters. Thank you.
[The prepared statement of Mrs. McCall follows.]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Budd. Thank you, Commissioner. Now we turn to Mayor
Peter O'Leary. Peter is the owner of Bubba O'Leary's General
Store, and also serves as the mayor of Chimney Rock Village.
Mayor O'Leary has owned Bubba O'Leary's General Store with his
wife, Ann, for 33 years. And thank you for being here, and
you're recognized for five minutes for your testimony.
STATEMENT OF MR. PETER O'LEARY, OWNER, BUBBA O'LEARY'S GENERAL
STORE & MAYOR, CHIMNEY ROCK VILLAGE, CHIMNEY ROCK, NORTH
CAROLINA
Mr. O'Leary. Thank you, Senator. As you said, I'm a small
business owner in Chimney Rock Village. I own three retail
buildings. Two of them operate as the general store and one of
them I rent out to another small business owner.
Hurricane Helene severely damaged two of my buildings and
completely destroyed the other one. The buildings were assessed
at some point by SBA after we filled out an application for
assistance in October of '24. And I was not notified when the
assessment was done, but I did receive a phone call shortly
after that November 6th, 2024, from an SBA staffer with
questions about our application. We were approved shortly after
that, and everything seemed to be going extremely well.
Our application to SBA is for the funding to rebuild the
destroyed building. My other buildings and contents were also
included, and we did need that financial assistance to do some
repairs and replace contents in both of them as well.
We knew at the time that no funds were available, and we
were told that when we filled out the application. But we were
assured that funds would be available soon, and they were, I
believe, in January. So, we were excited to move forward.
Our issues started after that, basically, in February of
2025, when I started reaching out to the SBA officers to answer
their questions, but also try to get my questions answered.
Every few weeks, I would receive a notification that my case
manager had been changed. I would then try to reach out with a
phone call and/or email to my new case manager with questions,
but would not hear from them or would get a very slow response.
Then after a few weeks, I would be notified that I had a new
case manager came. It became very frustrating.
Over about a six-month period, I had five different case
managers. During this time there were several requests for
information from SBA, which raised many questions from me about
their procedures, and how much I would be allowed to borrow,
and other issues. Many times, I would have questions and would
reach out to the case manager and not get the information I
needed.
My impression of the process was that many of these case
managers were not correctly trained or did not have the
experience needed to respond to my questions. I have worked in
a previous life as a bank loan officer and are very familiar
with commercial lending. It was frustrating to try and make
building plans and business decisions based on information I
was told, and then be notified that something had changed or
was not being allowed. This would require me to attempt to
clarify information and ask questions, but a lot of times I
wouldn't get a timely response, or I'd have to deal with a new
case manager and bring them up to speed.
The whole process has now worked out, thankfully, but it
did take about seven to eight months, longer than it
realistically should in my opinion. I've heard similar stories
from other businesses in Chimney Rock Village who have been
very frustrated with the length of time necessary for their SBA
applications to be processed, and the confusing information
that's given to them regarding their applications and requests
for funding.
So, I'll just reiterate that I believe there's a lack of
training, and I think that's really the main issue that I
noticed as a business owner is that people are not able to
respond to the questions, especially in a timely manner. And I
just feel like with better management, maybe that problem could
be solved. Thank you.
[The prepared statement of Mr. O'Leary follows.]
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Senator Budd. Now, we turn to David Jackson, who serves as
President and CEO of the Boone Area of Chamber of Commerce in
Boone, North Carolina. And earlier this year, Mr. Jackson was
recognized as a Community Advocate of the Year by North
Carolina Rural Center. He holds a Bachelor of Science from
Appalachian State University. It's a great school. We thank you
for being here, and you're recognized for five minutes for your
testimony.
STATEMENT OF MR. DAVID M. JACKSON, PRESIDENT & CEO, BOONE AREA
CHAMBER OF COMMERCE, BOONE, NORTH CAROLINA
Mr. Jackson. Thank you, it's great to see a fellow
Mountaineer here as well today. Senator, thank you for bringing
this Committee to Western North Carolina, and spending time in
this beautiful area of the state. In the testimony that I
submitted, I detailed some of the positive aspects of the
response with SBA and FEMA in the wave of Hurricane Helene,
along with opportunities for improvement.
I'd like to build on those comments this afternoon, by
first reiterating sincere gratitude for the SBA and FEMA field
agents that arrived in our communities to staff the business
and disaster resource centers. These workers left their
families to come assist ours. They brought empathy and
compassion along with the seal of the United States government,
and they helped our citizens and business owners understand a
language and a process that was new, confusing, and at times,
very frustrating.
These agents were the conduit for over $85,000,000 in
allocated funding through SBA businesses and EIDL loans in
Severity 1 Counties as defined by the Economic Development
Partnership of North Carolina (EDPNC) and their Helene Business
Loss Assessment Report. That represents just more than half of
the dollars that have been allocated to Western North Carolina
to support our small businesses after the storm. The estimated
economic loss in the fourth quarter of last year for the region
was calculated in that same EDPNC report at $1,800,000,000. The
philanthropic dollars that have been raised nearly match the
SBA's deployed loan payouts, but don't come close to satisfying
the loss of revenue, or stability, our small businesses saw
disappear over the course of about 72 hours.
$1,800,000,000 in loss cannot be absorbed just through
loans to the businesses that lost inventory, revenue
predictability, staffing, and core infrastructure. Many of
those impacted businesses were not finished paying off COVID-
era loans when the storm hit and the thought of more debt was
daunting and simply not economically responsible. So, some just
closed.
These small businesses are the heartbeat of the economy
your Committee aspires to support. We need diversity and
available disaster funding for businesses to restore savings,
to supplement losses not covered by insurance, and to restore
economic stability for our local governments, all of which
suffered sales and occupancy tax declines during one of the
most profitable quarters of our calendar.
Philanthropic support for businesses has come from
fundraising from a number of organizations, individual donors,
and local chambers of commerce. The Boone Area Chamber
Foundation has raised over $1,300,000 in hurricane relief, the
majority of which has been deployed through Business Disaster
Resiliency Grants across Watauga, Ashe, and Avery counties.
We will release a fourth round of that funding next month,
centered mostly around storm-related revenue loss. Chambers
across Western North Carolina have worked with partners to
generate north of $6,000,000 in direct business disaster
support grants. Partners like the U.S. Chamber of Commerce,
Mountain BizWorks, Dogwood Health Trust through a partnership
with Governor Stein and the North Carolina General Assembly,
made grant funds available.
To small businesses, the economic ramifications of this
region would be far greater if not for those efforts, but don't
come close to covering the loss. As I bring my remarks to a
close, I offer our collective partnership. My chamber
colleagues and I are eager to participate in conversations
about what our business community has experienced.
We're eager to strategize and create a small business
disaster support playbook that can be replicated in communities
like ours across the state and the country. We feel strongly
that funding must come from blended sources, and it must
feature creative avenues for deployment. As we see, not all
programs fit all businesses. We're ready to help the SBA lean
into their preparedness culture that they've tried to create,
but honestly hasn't gotten the traction it deserves because,
frankly, that's not how our society is wired. We encourage you
to bet on small businesses. It's the Main Street coffee shops,
the outfitters, the art galleries, the retailers that make our
communities different than suburbia.
Many visitors use the Blue Ridge Parkway as their escape,
and I thank you and your staff for your leadership in
prioritizing parkway repairs and balancing the timing of that
work along with the Great American Outdoors Act projects that
our region wholeheartedly supports; work that will keep the
parkway available for generations to come. There is no more
unique connector of our communities than the Blue Ridge
Parkway, and the $1,300,000,000 of annual economic impact this
national park generates is essential for our region's economic
prosperity.
I conclude with this comment from a local business owner in
Watauga County that summarizes the mood of the moment, and
certainly, captures some of what we felt collectively during
the two months that you referenced a moment ago, that last
year, SBA was without disaster funding.
He said, ``While I recognized the challenges our leaders
face, I remind them that business is not about a vote. It's not
about the next election. It's about our lives. And I'd like
them to recognize that we represent a real and meaningful part
of our economy.''
Thank you for your opportunity to speak today, and look
forward to additional questions.
[The prepared statement of Mr. Jackson follows.]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Budd. Thank you. And I thank each of you for your
testimony. I recognize myself for some questions. As we're
coming up on the one-year anniversary that's actually this
Thursday night into Friday the 27th, we're all reflecting on
the horrors that were brought by the storm. And the scars left
by Helene are innumerable, but I'm proud of how we're coming
together as a community to support each other in rebuilding
after the storm. So, with this in mind, would you walk us
through the immediate aftermath of the storm and what the
federal response was like on the ground? Commissioner McCall,
let's start with you.
Mrs. McCall. Well, frankly, I wasn't even thinking about
the federal government at the time. I was thinking about how to
get from my house to downtown because every road was blocked by
either fallen trees, or fallen power lines, or flooded, or one
way or the other. It took hours, and hours, and hours, to clear
a path just to get from one spot to another. But we did come
together, and we did take care of each other, and our EMS was
amazing. They had prepared days ahead of time, and they were in
prominent locations so that they could respond quickly. And our
fire departments had gone door to door previously, days before
to evacuate people that we thought needed to be out of harm's
way and that saved many, many, many lives. We were setting up
shelters; we were looking for generators; we were doing
everything that we could think of just to survive. I'm going to
tell on our county manager; he broke into Ingles and took food
off the shelves just to take our EMS facility so that those
people would have something to eat. But then we saw a response
from numerous organizations. It was volunteers, it was
nonprofits, it was churches, it was people coming from all over
bringing things, and bringing food trucks, and helping us get
through each day, one day at a time. FEMA did show up. SBA
showed up maybe a week, I think it was a week later. It's hard
to put in my mind the time elements, but everybody did start to
come. They had to learn the lay of the land, though. They were
unfamiliar with who we were, and what was going on. But they
were here, they wanted to help, they wanted to respond. But we
felt a little bit like we needed to--they expected us to cater
to them, and we did not have time to do that. So, we said, you
know, here's what it is. Figure it out yourself. Tell us what
you need. We'll find the best way to help you get what you
need. So, we did set up a distribution or a disaster relief
center. We turned our college parking lot over to FEMA, and
they set up all of their places to stay there. They took it
over. I remember seeing all these trucks show up, and it was
like a convoy of trucks, and they were pulling these trailers
that looked like shower trailers. And I was going, ``They're
here. The shower trailers are here.'' But they were only for
FEMA employees. They weren't for our public. So, we had to wait
for others to show up. But like I said, they came, they did
their thing, they went door to door, they put flyers on doors.
But it was more, we took care of ourselves, we took care of
each other, and that's how we got through this, and that's how
we're continuing to get through this.
Senator Budd. Thank you, Commissioner. Mr. Mayor?
Mr. O'Leary. Well, the initial response was certainly much
more local. As Commissioner said, the volunteer fire
departments did a fantastic job, the county officials. We had a
lot of out-of-town people and just local citizens, for that
matter, bring equipment in to help out. SBA and FEMA did show
up well. FEMA more specifically, but it was the very early--I
don't mean to cast too many aspersions on, but the very early
was more like almost a PR-type appearance for FEMA. But they
did show up and start going around and assessing the damage.
But I think one thing you have to sort of keep in mind is that
it's kind of a multi-layered approach. I mean, local obviously
is going to be the first ones to respond. And, honestly, in my
opinion, the federal government, FEMA, SBA, their response does
come several weeks and maybe even several months later as
you're trying to rebuild more. The biggest problem that we had,
and I'll switch my mayor hat, was there is a tremendous amount
of cleanup that has to be done after an event like this right
away. And you can't wait for--you can't even wait a day. I
mean, people need to have roads cleared, driveways cleared,
access for safety, and you know, just for the well-being of the
public. So, that falls on the local governments. It falls on
Chimney Rock Village, for example. But the problem that we
faced was that's extremely expensive for a small community like
ours. And FEMA is set up basically as a reimbursement agency
for those types of things. And that moves extremely slow. So, I
think a lot of your small communities faced a huge financial
crunch trying to pay these local contractors who are doing a
phenomenal job of cleaning, but then you turn around for
funding to pay for that from FEMA, and it takes quite a bit of
time. And I hope that--I do understand that maybe some changes
are being made along those lines, but for as far as the federal
response, that's really the biggest hurdle that I saw was just
the way that the funding goes to reimburse the communities. It
maybe should be funding up front for some of these immediate
needs.
Senator Budd. I think it's helpful.
Mr. Jackson. Yeah. So, I'll start this off in a couple of
different ways. First off, I remember our FEMA administrator's
name, Jake Kwiatkowski. He was the first person to reach out to
us. I found out very quickly that in order to get FEMA or SBA
staff into the community, that required a reservation
authorization number from the hotel. If they were going to
come, and stay, and be deployed, that that confirmation number
was what triggered the deployment. So, our office ended up
coordinating about 100 different federal personnel for the
local area that way, and we were glad to be able to do so. And
I'm appreciative that because of the storm's impact on the
football game, we had enough hotel space for that to occur.
There was some additional confusion about the setup of the
Business Resource Center and the Disaster Resource Center. They
were co-located in a facility that we managed, which we were
happy to do. But who was taking the lead on that? And that's
where Jake was able to come in and say, you know, here is the
process. That facility had to be inspected twice by two
different agencies before full deployment could occur. And that
ended up taking a few extra days to get that resource up. I
will say, though, that the staff that we had in Boone, working
out of that center, seemed to be specifically trained for some
key things. And I go back to Jake for a second. He was a former
firefighter with a background in building, planning, and
inspections. That became incredibly helpful dealing with the
impact of the disaster that we had on our side. And again, I
mentioned it in my testimony, the fact that the folks that got
deployed were disaster survivors. We had folks from Houston,
Puerto Rico, Florida, that were able to teach a language that
people did not understand and brought some compassion along
with that. So, that part of our experience was very helpful.
Our FEMA staff and SBA staff got in line with our emergency
management very quickly. And Will Holt was able to make a lot
of the decisions and make sure that there were people that were
going out with those folks. Because one of the first things
that was shared with us was that this disaster brought a
topographical challenge that nobody had ever seen before. And
they just didn't know where to go or how to access some of
those areas. So, that I would totally agree with, our local
responders were essential in making sure that the federal
response could get deployed accurately.
Senator Budd. That's very helpful. You know, Mr. Mayor,
when you were speaking, it reminded me of Ronald Reagan's nine
famous words, ``I'm from the government, and I'm here to
help.'' But hopefully, with some reforms, we can actually be a
little more helpful. This is very good, appreciate that. You
know, as a lot of you know, the Biden Administration made a
number of changes to SBA's disaster loan program, including
increasing the unsecured loan limit and changing the ``credit
elsewhere'' standards. These changes, coupled with a lack of
Congressional notifications when funding for the disaster loan
program was almost exhausted, led to a 66-day shortfall in the
program. And this is just days after the storm in early
October. During the shortfall in North Carolina alone, over 900
businesses were left waiting to receive loan approvals and
disbursements, thus delaying their recovery by over two months.
Mr. O'Leary, can you talk about the impacts that shortfall had
on your business and community?
Mr. O'Leary. Well, it affected people's planning. I guess,
for the individual businesses. We were, like I said, able to
get the applications done fairly quickly. So, that response was
good. And then, even the follow-up to me personally was pretty
quick, I thought. And I was approved for the loans that they
said, but they said there's no money. So, that was extremely
frustrating. And then when you're working with--obviously, you
have to work with a builder if you're rebuilding, or you know,
spending the money in some fashion. And those people are asking
what your plans are or when you can start, and you don't know.
There's just so much uncertainty.
Senator Budd. Do you know how long after the storm of
September 27th that you actually began the paperwork process?
Mr. O'Leary. We did in, probably, mid-October. I don't know
the exact date, but yeah, mid-October. And we were actually
approved, I did have an interview on November 6th, and shortly
after that, our application was approved, but approved and no
funding.
Senator Budd. Which didn't happen until earlier this year
of 2025, the funding. In North Carolina, we're entrepreneurs at
heart, including in rebuilding. Mr. Jackson, the Boone Area
Chamber of Commerce set up its own program, I think you
addressed that a few moments ago, for business resiliency
grants. Could you talk more about how these grants bridge the
gap during this time with no SBA funding, and how it continues
to help recovery today?
Mr. Jackson. Yes. Thank you for acknowledging that. There
was no gap to bridge. It was the money. We were very quick to
find out that through the delay process, and the SBA loan
program, certainly that happened, as you mentioned right after
the storm was over. We found also that the timing of insurance
payouts that weren't coming, it seemed like everything was a
negative answer. The State of North Carolina was working
through the General Assembly on their own ideas around grants,
but nobody's got anything that looks like that, from a
governmental standpoint, that is a true grant. I think one of
the unfortunate things about the timing of this, too, is that
this disaster occurred close enough to the COVID pandemic that
that's what people were looking for. The amount of times I
heard, ``Are we going to get a PPP loan? Are we going to get
something that behaves like that?'' And the behavior, yes, that
makes a lot of sense. Some sort of forgivable loan that has
some performance tied to it could have been the right recipe.
But without that, not only our Chamber, but chambers across the
region, and other partners like Mountain BizWorks, and others,
had no other choice but to try to get the philanthropic
dollars. And that's where, I think, there's a silver lining
here in just finding out how much people care about our region.
Those dollars came in from all over the country, all over the
world for that matter. And they were small, they were large
payouts, they were philanthropic agencies that got behind that
work, but they wanted to see the small communities that we all
represent here survive this. So, we were able to put together
an initial payout of $206,000 that went directly to our early
childhood businesses and the families that have kids in those
programs. We paid off tuition for the month of October, because
we knew that families needed some money to make quick repairs,
but we needed that industry stabilized. Soon after that, we've
deployed a little over $1,000,000 dollars now in grants--small
end, $500, top end, about $25,000. But you hear from businesses
that had the foundation of their business knocked off, the
building off of the foundation, or major infrastructure
hurdles, that a $25,000 grant's not going to touch. So, it gets
back to the broader picture of how we are looking at business
in terms of the disaster. We've got good programs for the
individuals. A lot of these individuals have family businesses
that are almost symbiotic. And that's where we are eager to
have some conversation about what comes next, and how can we
have something that's readily available deployable by
communities for these instances.
Senator Budd. Thank you. The SBA's Office of Inspector
General and the U.S. Government Accountability Office have both
reported that the SBA fails to effectively reach rural
communities following a disaster. After Hurricane Helene, these
problems were only compounded by downed telephone lines and
little to no internet service. Mr. O'Leary, you were not only a
leader of the community, but you were also a small business
owner. So, how did you learn about SBA's products, especially
in those early days, and what sort of outreach do they do in
your community to let you know who they were and how they could
help?
Mr. O'Leary. We learned primarily about SBA through the
FEMA representative. So, if you were a business and you went to
the FEMA representative and filled out--they encouraged you to
fill out applications and we did, too. We encouraged all of our
residents to fill them out. And if you were a business, they
directed you to SBA. Our problem was SBA didn't have an office
set up in Chimney Rock Village. They were mostly set up--the
two I remember were in Asheville and Hendersonville, which at
the time, we had to go--we couldn't go directly there because,
like you said, the roads being out. So, we had to drive about
an hour drive, an hour and a half drive, to get to those
offices. Eventually, they did send some representatives down
after--I can't remember the exact timeframe, but it would've
been in the January or February timeframe, that they sent SBA
officers.
Senator Budd. FEMA was in the early weeks?
Mr. O'Leary. FEMA was much earlier. We had FEMA
representatives in mid-October that were down there talking to
residents.
Senator Budd. And so, in that early period, FEMA was
telling you about SBA, but it was months before SBA came to
you?
Mr. O'Leary. Right. And FEMA said, fill out a FEMA
application, but then if you were a business, you had to take
that next step and fill out an SBA application.
Senator Budd. Thank you. The U.S. Small Business
Administration provides loans to renters, homeowners, and
businesses following a disaster. SBA established a field
presence in North Carolina shortly after the storm to provide
in-person consultations for these types of loans. We've talked
about that just a second ago, although it wasn't always where
the need was. So, Commissioner McCall, I know that
Hendersonville had an active recovery site with multiple
agencies. Do you think this was beneficial? And what was your
experience in coordinating with the federal resources?
Mrs. McCall. Yes, it was very beneficial. We were lucky
enough to find a place. It was previously had been a grocery
store, so it was a large space that we were able to separate
and have FEMA on one side, and our local nonprofits and other
organizations on another side. Even our DHS was there for a
period of time for the SNAP project. Having everything under
one roof was helpful because people could come, and if they met
with say, FEMA, and FEMA said you needed to meet with SBA, then
it was all right there together. One of the problems that I
think needs to be addressed is all the application filing. I
mean, it is all the same government, and there were multiple
applications that had to be filed. And if you didn't dot an I
or cross the T, you were automatically denied. I actually think
this goes--there's a movie about this--but I actually believe
that they're trying to say no first, and get people to appeal.
And a lot of people didn't know that they could appeal, and so
they just went away. But if anybody contacted me, I said
appeal, appeal, appeal again, appeal, appeal a third time,
appeal a fourth time. One of the organizations that was there
represented the Commissioner of Insurance for North Carolina,
and insurance really was concerning because the insurance
denials were worse than the FEMA denials, I believe. There was
a family that I know of that their whole entire house flooded
from raw sewage. And the sewage came up from inside of the
house. And they had flood insurance, but they were denied by
their insurance company because the sewage did not come in from
outside. If it had come in from outside, then their insurance
would've paid. So, they had to turn to FEMA. Again, they were
denied. I think they eventually got $20,000 for their $400,000
house that had to be completely rebuilt inside. And if it
hadn't been for our local churches and other organizations to
help them, they probably would never have been able to rebuild
their house, but they're back in it today. But it took months,
and months, and months, and months, to get there. But I think
having all those organizations together to support each other,
and especially a one-stop-shop for those who needed the help
was very beneficial.
Senator Budd. Thank you, Commissioner. Mr. O'Leary, from
your testimony, it's clear that you experienced a lot of
problems on the back end of your loan. Even once the shortfall
ended and there was the funding, I think we can all agree that
a couple of weeks is too long to wait for simple questions to
be answered, and eight months is too long to receive
disbursements for your loan. So, how did the long wait time
impact your ability as a business to recover from Helene plan
for the future of your business?
Mr. O'Leary. Well, it just put everything in limbo in the
sense that we couldn't make firm plans. We thought that we were
moving forward with the funding. We thought we'd been approved,
actually, right up front. And then, once the money became
available, we were asked to provide additional documentation.
We were given additional clarifications, and it became very
confusing. And that's why there were so many questions that I
had for my case managers. And it just slowed the whole process
down. I mean, it essentially added a good six to seven months
to our rebuild time. And we are presently looking at receiving
funding within the next couple of weeks and starting the
building. But you know, we were hoping to start back in March
or April. And so, it's just put that much of a delay on it. So,
for a seasonal business like Chimney Rock Village, and a lot of
Western North Carolina, we are seasonal, if you don't do it at
the right time of year, then you're liable to not only miss
this season, but maybe the next season. So, that's why, of
course, for us, timing is very important. But you know, it
could have easily happened--this funding could have happened
six months ago if things had been moving a little faster.
Senator Budd. That's very helpful. Thank you. You know, our
second panel has the SBA's Associate Administrator for the
Office of Disaster Recovery and Resilience. So, I'd like to ask
two things from each of you all while you're still here, given
that you've got a unique opportunity to give feedback. First,
what's your top line message to SBA about Hurricane Helene,
specifically? And second, if you could ask SBA to fix one
thing, what would it be. Commissioner, I'll start with you.
Now's your chance.
Mrs. McCall. Make the process simpler, I think. We were
speaking earlier in the room we were waiting in, if anytime you
go to--well, Mr. Jackson brought up the example of FAFSA. FAFSA
used to be the hardest application to fill out ever made, but I
helped my granddaughter this year, and it was just a matter of
minutes, and it was all complete. And because they were able to
pull from all the information that was already there, why can't
the process be as simple with other applications? But also,
loans are great, but SBA needs to look at it from the small
business perspective, and realize that these people needed help
recovering, and they were already paying off a mortgage. And if
they lost the business, if the business floated down the river,
then there's nothing left of that business to even have a loan
for. And then they're stuck with that loan, and then they're
facing the possibility of bankruptcy. So, there needs to be a
possibility of offering grants, or forgivable loans, or
whatever it is. But there's got to be more to offer through the
SBA than just the loan.
Senator Budd. Thank you. Mr. O'Leary?
Mr. O'Leary. I would say I would echo that, simplify the
process. And by that, I mean also cover all the basics upfront.
I mean, as I said, I was a commercial loan officer years ago,
and when you're approved for a loan, then you're approved for
the loan, and you know up front what the money's for. And I
felt like things kept changing, and that's why I needed all
these clarifications because they approved me, and then they
started kind of changing the rules and saying, ``Well, this
doesn't cover that, and it doesn't cover this.'' And it's like,
``Well, I thought it was approved.'' So, I think simplify the
process, make sure you cover all those bases up front. And
then, the other thing I would just emphasize is the people that
are dealing with the public, just make sure they're well
trained. Just train them in how to answer these questions and
have a timeline for when you get back to people with an answer.
You know, it shouldn't be weeks to get an answer. It should be
maybe a day or two, if not a few hours.
Senator Budd. I think you mentioned there were six loan
officers in five months or so.
Mr. O'Leary. Five case managers.
Senator Budd. Five case managers.
Mr. O'Leary. Yeah, over a six-month period, five case
managers.
Senator Budd. So, that added to the complexity, of course.
Mr. O'Leary. I never knew who to contact.
Senator Budd. Thank you. David.
Mr. Jackson. So, my advice would be customer-forward
relationships. And, I emphasize the word relationships. And
maybe this was a little bit unique to our disaster, given the
geographic region, but I would echo or I would think that this
would echo across the country as well. We've got some deep-
rooted Appalachia culture in our region, where trust is earned.
This is not a community where you say, ``Go call somebody on
the phone,'' especially, when the phone is at work. Don't call
somebody on the phone, don't log onto a website and wait for
your time in the queue. This is about a person who's in a
center that you form a relationship with. And once those
relationships were able to be formed, we had some of the best
interaction with FEMA, the SBA, and any federal agency for that
matter. And then it all went away. I would consider the value
of customer-forward relationships, and how that can lead to the
information getting processed in a timely manner. I would echo
the process. I think that's been well articulated. I would go
back to my one suggestion, being diversity in the products you
offer--forgivable loans. I don't think that anybody that's been
represented by any of our communities has just come to this
thing looking for a handout. They need a hand up into making
sure that they have a fighting chance to move forward. And that
means there's a measure of performance that I think that most
businesses, most small businesses, in our region are willing to
understand that they have to abide by. It's not just take a
check and go to the beach. It's here's what can help me get my
doors open again. Forgivable loans, grants, that equals tax
base. And it comes back to the customer side of this. Again,
taxpayers are customers, too. And I think that if there were
more tools that were available to help them get out of the
gates, they are the first ones that want to be a part of the
positive piece of recovery for all of our communities.
Senator Budd. This has been great. Thank you all for being
here today. We appreciate your time. We appreciate your
testimony. We're going to take a quick recess to allow our
first panel to get up and allow the table to be reset for the
second panel.
[Recess.]
Senator Budd. I call the Committee back to order. And we
will now proceed with our second panel. I'm pleased to welcome
Mr. Chris Stallings, who serves as the Associate Administrator
for the Office of Disaster Recovery and Resilience at the Small
Business Administration. Prior to his role at the SBA, Mr.
Stallings served as the director of the Georgia Emergency
Management and Homeland Security Agency. We thank you for being
here, and you're recognized for five minutes for your
testimony.
STATEMENT OF MR. CHRIS STALLINGS, ASSOCIATE ADMINISTRATOR,
OFFICE OF DISASTER RECOVERY & RESILIENCE, U.S. SMALL BUSINESS
ADMINISTRATION, WASHINGTON, DC
Mr. Stallings. Chairman Budd, thank you for the opportunity
to testify today on behalf of the U.S. Small Business
Administration, to discuss SBA's recovery operations in
response to Hurricane Helene.
My name is Chris Stallings, and I have the pleasure of
serving as the Associate Administrator of SBA's Office of
Disaster Recovery and Resilience. I bring nearly two decades of
emergency management and public safety experience to this role.
Before joining the SBA, I served as the Director of Emergency
Management and Homeland Security, leading the state's responses
to disasters, including the COVID-19 Pandemic and Hurricane
Helene, the very storm that brings us here today.
As we gather in front of the Henderson County Historic
Courthouse, I'm reminded of the incredible resolve Americans
displayed during the challenges brought by Hurricane Helene,
which was one of the most destructive storms to impact North
Carolina and the surrounding region. These were challenges I
witnessed firsthand in Georgia where communities were
destroyed, and where families and small businesses were
devastated.
Under the leadership of Administrator Kelly Loeffler and at
the direction of the President, Donald J. Trump, the U.S. Small
Business Administration has improved its readiness to serve
disaster-impacted communities like these, and we have committed
to taking the lessons learned from Hurricane Helene to ensure
that the SBA is always ready to provide reliable and robust
disaster support.
We are ready when disaster strikes, and we are committed to
serving as a trusted partner in recovery. And to that end, SBA
continues to lean forward supporting long-term recovery and
economic relief for all Americans affected by disasters.
Since January the 20th, 2025, the SBA has restored our
recovery mission to begin and end with the survivor in mind. We
have elevated our regional recovery coordinators for rapid
information sharing and extended partnerships with local and
state agencies to maximize outreach and service delivery.
We have prioritized cross training with our Office of Field
Operations to deputize more SBA personnel to assist with
disaster response. Most importantly, we have improved funding
readiness to prevent disruptions like those we saw during the
Biden Administration, which left thousands of Americans
stranded without vital relief.
SBA has expanded ground support to guarantee help is
visible and accessible to everyone. Through listening sessions
with state emergency management leaders and SBAs Office of
Rural Affairs, SBA has bolstered our recovery response to rural
regions, deploying mobile recovery vehicles, portable loan
outreach centers, which brings our team and the disaster
assistance programs to the survivor, no matter how remote their
location.
And in July, we ended a Biden-era regulation that banned
the SBA from providing disaster relief in the form of economic
injury disaster loans to faith-based organizations. SBA has
also extended the capacity of our disaster processing and
disbursement center to accelerate the release of funds after
the loan is approved. Today, the average approval time after
submission is 14.83 days, down from 17.73 days just a year ago.
During recovery operations for Helene, SBA mobilized 381
staff across seven states, supporting 115 disaster recovery
centers. These centers which provide in-person assistance to
residents, businesses, and nonprofits seeking federal disaster
assistance were visited by over 27,000 disaster survivors, with
SBA approving over 18,500 applications for a total of
$1,700,000,000 in long-term recovery funds, helping families
rebuild homes, allowing small businesses to replace equipment
and inventory, and fueling the local economy recovery.
In North Carolina, SBA led economic stabilization efforts
and developed the recovery needs assessment, and recovery
support strategy, which identifies specific needs of small
businesses. Utilizing available data, SBA provided targeted
support through our resource partners fueling local economic
recovery.
SBA has remained a key contributor in recovery initiatives,
which includes the Private Roads and Bridges Task Force holding
business recovery resource expos, and hosting mitigation
funding workshops, enabling survivors to use additional SBA
funding assistance to reduce the risk of future disaster
damage.
Our agency remains focused on how we can continuously
improve and help the disaster survivor. The lessons learned
during Hurricane Helene were vast and have already been woven
into SBA's mission to deliver disaster loan assistance through
extensive partnerships with local leaders, our own field
apparatus, and a small business community.
In closing, thank you for your continued support of SBA's
disaster recovery mission. Your partnership ensures that we
deliver timely and reliable assistance to families and small
businesses when they need it most. The SBA remains committed to
helping disaster-impacted communities rebuild stronger and more
resilient for the future.
Thank you, and I look forward to your questions, sir.
[The prepared statement of Mr. Stallings follows.]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Budd. Thank you for your testimony. I now recognize
myself for questions. Mr. Stallings, you've been in this
position since February of this year, and thank you for your
willingness to serve. While you were not in this role during
the SBA's initial response to Helene, this afternoon, you were
able to listen to the experiences of individuals in businesses
across Western North Carolina in the aftermath of the
hurricane. So, is there anything that you'd like to say in
response to their testimony and the discussion we had
previously?
Mr. Stallings. First and foremost, we apologize for the
funding lapse that I can't imagine what that sent shockwaves
through the community. The Biden Administration failed to
communicate with one another internally, and certainly with our
members of Congress. That's something that we take very
personal. I, just like them, woke up at sunrise and I found out
that, before sunrise, I'd already lost 10 Georgians under my
watch. I know the impact that this storm has had, and I can say
that we have made every step through this process as customer-
focused and as disaster survivor-friendly as we can make it.
Some of the heartburn that has been laid out today is the
heartburn I brought with me, because I, too, saw these
challenges in Georgia. I had to answer the phone to the
businessmen and women, and survivors there trying to explain
why their government, that they pay their taxes to, didn't have
enough money to fund their need. So, I understand that. My
heart hurt, I was frustrated and when given the opportunity, I
thought, if you can't beat them, let's join them. I look
forward to the opportunity to come in under the leadership of
Administrator Kelly Loeffler, who brings a wealth of knowledge
in business who says, ``Chris, we need to turn this back into
what it should be, about the survivor.'' And so, we leaned in
heavy. And so, I just first want to apologize for our lapse. We
made the promise that we're here to do everything we can to
learn from our mistakes and embrace them so that we can build a
better future for everyone else who experience similar
situations.
Senator Budd. Thank you very much, Mr. Stallings. I
remember those early days and the North Georgia coverage. It
was our own Franklin Graham from Samaritan's Purse and former
President, soon to be President again, Trump, and now
Administrator Leoffler. Perhaps you were at that site, but I
appreciate your work there. We have to remember, while the
lion's share was Western North Carolina, Georgia was
tremendously impacted as well. So, thank you for your work
there. Specifically, I want to follow up on Mr. O'Leary's
testimony that appears to have heard more recently. I
understand that you inherited a backlog from the prior
administration. So, what have you done to address the backlog?
Mr. Stallings. So, I think the first thing that was
mentioned was the separation of the disaster loan program from
the Disaster Recovery and Resilience branch. The first thing
that Administrator Loeffler has done is through our
reorganization once complete, she's bringing that back
together. That gives us the opportunity to work that process
completely from beginning to end. When talking with our team,
one of the first things I talked about and learned from our
team was that those customer service reps that sat in those
disaster recovery centers that talked hand in hand with those
survivors, had the ability to get that person to the submit
button. But once that application was submitted, they lost the
ability to have some of those back-office conversations and see
where that loan process was. Under the previous administration,
there was a focus on speed. Now, in my biography, if you read a
little further back, I was a state trooper, and when I stood on
the firing line, I couldn't miss fast enough. I needed to be
accurate with every round that left my revolver or my firearm.
What I would say is the previous administration focused on
speed, but not accuracy. So, why did someone experience maybe
five loan officers? Well, the faster I could get it off my
desk, I met a metric. I'm a human; I want to be treated as
such. I'm bringing back through the leadership of Administrator
Loeffler and under the direction of our President, a human
element to the process; picking up the phone, talking one-on-
one. I grew up in the foothills of the Blue Ridge Mountains. I
understand and speak Appalachian. You don't have to worry if
they like you or they hate you. Give them three seconds and
read their face, you'll know. I think that is important in the
process. How would you want your loan treated when you call me?
And I think that's the effort you deserve. So, one of the
things we're bringing back is picking up the phone and bringing
the human element. Yes, technology's great. It is wonderful to
be approved in 15 minutes, but it is an awful experience to be
denied in 15 minutes and have to wait weeks on a letter that
tells you why. And it could be as simple as mentioned in one of
the applications, a mis-stroke of the keyboard. I have a
grandmother. I'm very fortunate, I have all of my grandparents.
I would never ask them to sit down on a computer and fill out
an application they're not comfortable with. Part of that human
element is still keeping that pen-and-paper mentality, walking
someone through that process slowly. I think that's so
important, something that this administration is committed to
doing; bringing the human element back to the process, because
we're dealing with folks who didn't ask to be there. I promise
you, if we had went back on the 26th of September, and took a
poll and said, ``Who's willing to have their home or business
destroyed by generational flooding?'', that not a single hand
went up. We have to keep that in our mind as we go through the
process.
Senator Budd. Thank you. This may be a continuation of that
prior answer, but under your leadership, the Office of Disaster
Response & Recovery has been hard at work undoing a lot of the
mistakes from the prior Biden Administration. So, could you
talk about some of the changes you've made, and how it's going
to better serve disaster victims?
Mr. Stallings. Yes, sir. Focusing on the individual, not a
metric. Not a, ``Did I do well enough to get my performance
evaluation checked off because I approved or disapproved so
many loans.'' Also, the ability for our team to just sit down
and look at where we're good. You know, it's really easy to
stand here, and thump our chest, and talk about the areas that
we're good at. Everybody enjoys that. But it is taking a moment
to look and see our areas that we're not good and we need some
improvement. Our customer service needed improvement. One
mandate that I've required is, once the reorganization is
complete, every individual in my agency, that falls under our
disaster program, if you've never been deployed to a disaster
scene, you have to go to one. And why is that important? I
thought I was an emergency manager in Georgia until I stood in
a disaster scene and saw the tear streaks through muddy faces,
and I saw children picking up their toys out of the mud in the
yard, and I saw families broken. And until someone experiences
that, unfortunately, you don't really have compassion and
understanding for what a person is going through. So, first
mandate was we're putting every single individual in the field.
You've got to go stay, you've got to go work those disaster
recovery centers, before you go back, you'll be truly
sympathetic then to that disaster loan. The second part is
within our statutes. My focus is not speed of approval or
denial, it is make the effort to get to yes. That is our motto.
What is our effort--get to yes. If we can get to ``yes''
legally through our statutes, there's no reason why we
shouldn't. These are tax dollars paid by taxpayers, and they
deserve the right to have access to the resources that the
federal government has promised that we would bring.
Senator Budd. Thank you. So, for everyone here lucky enough
not to be steeped in SBA disaster loan funding and how the
federal government estimates funding requirements, the subsidy
rate helps Congress understand how much money the SBA needs to
fund its disaster program each and every year. In 2022, the
subsidy rate was 8.96 percent. By 2025, the subsidy rate more
than doubled to 22.22 percent. A higher rate means the program
costs more, and the SBA should work with Congress to ensure the
program won't run out of money during a disaster. So, Mr.
Stallings, how does a higher subsidy rate impact the number of
loans you can make and disaster survivors that you can assist?
Mr. Stallings. In easy language that even a guy who grew up
in Fannin County, Georgia, can understand; the higher the rate,
the less dollars I have. And so your $100,000,000 that you give
me just doesn't go as far as it did. So, the more we can work
together to get that subsidy rate down the better chance we can
to reach more folks. It also prevents that funding lapse that
fell under the previous administration.
Senator Budd. So, would you agree, Mr. Stallings, that this
higher subsidy rate likely limited the number of loans that SBA
was able to make following Hurricane Helene?
Mr. Stallings. I would, sir.
Senator Budd. Earlier this year, I introduced S. 300, the
Disaster Loan Accountability and Reform Act, or DLARA, for
short. The bill looks to make statutory changes to increase
oversight, ensure that a funding shortfall like this never
happens again. Mr. Stallings, I'm pleased that some of the
provisions in this bill, such as the monthly disaster report,
have already been addressed by the Trump Administration. Can
you explain what changes have been made to disaster report and
the importance of Congressional reporting?
Mr. Stallings. Yes, sir. So, per the Small Business
Disaster Response and Loan Improvement Act of 2008, there
should have been monthly reporting already occurring. We came
in, looked at the report, and the report was difficult, at
best, to understand. We revitalized the report, we changed it,
we made it much easier to digest, We made it easier to look at
and regurgitate. I can give you the information on it, and it
is easy to recall. It's not just spreadsheet after spreadsheet
of trying to hide a mistake. By that, we've also made a promise
that it will come to Congress every month as it should. We've
been faithful to that promise already, and we've got positive
feedback on the changes that we've made. I think it was
extremely important, as someone that has worked with the
federal government, the transparency of it, showing where we
stood. You know, just give me my odds. I'll fight from there.
Tell me what I have, and what I don't have. I don't like the
word ``maybe''. And this report that we're doing takes away the
maybes. I think it gives us a lot of ``yes'' and ``no''. And
so, the report itself was important. It also, in your bill that
you mentioned, sir, you talk about us bringing the program back
together. That was a Day 1 priority. Once confirmed,
Administrator Loeffler said we've got to bring that back
together. It just doesn't make sense to have it torn apart. So,
bringing back that disaster loan apparatus together, I think,
is extremely important as well.
Senator Budd. Thanks. The SBA ran out of funding on October
16th, beginning a 66-day shortfall, which we discussed earlier.
And that lasted until December 21st. And this shortfall ended
only after Congress passed a supplemental appropriation, which
provided the SBA with an additional $2,300,000,000. DLARA would
require the SBA to submit a statement as part of its annual
budget, detailing the 10-year average cost of providing
disaster loans and administering the program. Do you think
incorporating the funding of SBA's disaster loan program in the
regular appropriations process could have helped avoid a
similar shortfall in the future, or lessen the need for
supplemental appropriations?
Mr. Stallings. I think transparency between our agency and
Congress is extremely important, whether it's with a monthly
report or the annual budget. I think the fact is, that we need
to maintain an open line of communication. We certainly enjoy
our work with the Small Business Committee, both the Senate and
in the House, and we promise to remain transparent. As long as
Administrator Loeffler is in her seat and I'm in mine, we
promise to make that relationship work.
Senator Budd. So, I wish you were in your role five months
earlier, but one of the most concerning problems with the
shortfall is SBA failed to find the solutions in the moment.
SBA wasn't able to stretch the limited funding they still had,
to ensure that some people got even a little bit of money while
SBA waited for the full amount to be approved by Congress.
Having this flexibility during disasters was an important
lesson learned, and my bill will provide the flexibility to the
SBA Administrator to lower SBA's loan obligations to the
statutory unsecured loan limit of $14,000 when the disaster
subsidy account falls to under 10 percent. More simply, this
fix will allow the Administrator to ensure more people can at
least get a first portion of their loan so they can start
rebuilding, rather than making thousands of borrowers wait on
the federal government. Mr. Stallings, how will this
flexibility increase the number of constituents who could
receive the funding?
Mr. Stallings. Well, first I have to brag on my
Administrator. I don't think President Trump could have made a
better selection by naming Administrator Loeffler to her seat.
She comes with a business background, so she understands how to
make dollars and cents work. She understands that flexibility
is key. And if that bill is passed, I believe that--I don't
believe--I know that our agency will be able to work with you,
and your team, and the whole committee to ensure that that
flexibility allows us to be nimble. I think that most lessons
that I ever learned in my emergency management background was,
give me a little of something--that beats all of nothing. And
so, if I can take a little of something and be flexible, it can
get me down the road a little further.
Senator Budd. That's helpful. Thank you. Another challenge
is the whole-of-government approach to disasters and ensuring
proper interagency coordination. For many folks, the alphabet
super agencies involved in disaster recovery, it only hurts
rather than helps. Could you talk about your work alongside
other federal partners to ensure the process following disaster
is more coordinated and streamlined?
Mr. Stallings. So, I take great pride in communication,
talking with those agencies. It did not fall on deaf ears the
aggravation of the application--multiple agencies, multiple
applications. We have made it a priority to express our desire
to see one application. And I believe that is a future that
needs to be funded and found quickly in the federal government,
is that there's one place that an individual can go. Business,
homeowner, renter, private, nonprofit, enter in their
information, and then those in federal family should be able to
pull what information they need that's applicable to their
program. So, I'm a big advocate of that. I believe simplifying
it. The disaster portfolio, whether it's grant or loan, is
different than the 7(a), or the 504, or any other operation
that you would get from SBA. Why is that? It's the mindset in
which someone is applying. We have to take into consideration
the mindset of the applicant. What they've just experienced,
what they've just faced, and keeping it simple for them is a
huge step in the process. So, sir, I'm a big advocate of
bringing those partners together. I've met with USDA, I've met
with FEMA, weve met with HUD, we've met with all the federal
family that would show up, and say; how can we better do this?
And I think the first step is that one application process.
Senator Budd. You talked a lot about agencies, particularly
SBA, and how to improve. What would you recommend to Congress
on how to improve the process on our side, and how to better
serve taxpayers?
Mr. Stallings. I think more flexibility on the ground when
our team shows up. We are now making some changes to how we
operate internally. As you mentioned earlier, and I believe in
Panel 1, the response is very important. But we're not a
response agency. We're a recovery agency, unfortunately. I
spent a long time with blue lights and sirens on a vehicle, and
when I hear them, my heart starts beating fast now. But it's
difficult to know that my role sometimes is not to be there in
the immediate. And so, we are leaning forward in other ways.
We're starting to put our regional recovery coordinators inside
state operation centers where we can--so that we could start
talking then and whispering, ``Hey, don't forget us. Let's go
ahead and start doing this. Let's think about that.'' The value
of blue-sky conversations. You talked about earlier the role of
the government. Well, I think part of our response is knowing
what tool to reach in the toolbox. You know, if the old adage,
``If the only tool you have is a hammer, everything is a
nail.'' Well, if we can show someone else another tool, having
some more blue-sky day conversations. So, we've made a lot of
strides. President Trump's intergovernmental affairs team has
really given us an opportunity at SBA. They've set up a lot of
phone calls on our behalf so we can start talking to governors
and governor staff. Myself, and Administrator Loeffler have
traveled a lot talking to these teams. So, that going into a
storm, you know, we're there, you thought about us in advance,
you're understanding the programs that we do offer so that when
it does go bad, unfortunately, you know you've got a friend in
us that you can call. That SBA has a myriad of programs that we
can bring to the table, and that you're not trying to scramble
for solutions. There's a solution you met months ago called
SBA, and we just want to be there to help.
Senator Budd. Great. Thank you, Mr. Stallings. I have no
further questions, and that concludes this panel. I want to
thank our witnesses on both panels for being with us today. I
ask unanimous consent that the record of today's hearing to
remain open for two weeks for members to submit questions,
revise and extend their remarks, and submit additional
information for the record.
Without objection, so ordered. With that, the Committee on
Small Business and Entrepreneurship stands adjourned. Thank
you.
[Whereupon, at 3:15 p.m., the hearing was adjourned.]
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