Questions raised over federal Irene aid

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Photo by Rachel Gilmore.

The federal government has announced aplan to tackle the post-Hurricane Irene situation in New Haven County.

On Monday, the Small Business Administration opened two Business Recovery Centers, one at North Haven’s Gateway Community College and the other atSoundview Family YMCA in Branford.Tom Nocera, a public affairs officer for the agency’s Office of Disaster Administration, said that the purpose of the centers is “to provide a private environment for business owners to discuss their needs.” Clients of the agency can apply for Economic Injury Disaster Loans of up to $2 million that can cover working capital or repair costs for businesses. Some question whether this opportunity will attract cautious New Haven businesses that sustained limited amounts of damage and are trying to avoid debt.

Nocera said the assumptionis that businesses will receive emergency loans, typically valid for up to 30 years at an interest rate of around four percent, that will be paid back once the firms receive payments from their insurance companies. Businesses lack necessary funds right now because insurance payments often take longer to process than loansfrom the agency, Nocera said. The first post-hurricane loan was approved last Sunday, he added, just 13 days after the businessowner in question applied for it.

Congresswoman Rosa DeLauro has said that she “applaud[s] the Small Business Administration’s efforts to make their services more accessible [by setting up the Centers].”

Despite such support, doubts have arisen about the need for the program and how effective it is likely to be, considering particular quirks of the situation in New Haven and the priorities of small-businessowners.

New Haven businesses were “very fortunate [and] did not report a lot of damage,” said Clay Williams, the city’s small business development officer, in terms of the amount of damage they sustained. He said that most of the businesses he spoke to in the area did not have damages they wished to file for and weretrying to deal with any repairs by themselves instead.

The businesses that do want government assistance want federal funding for physical damage or “economic injury,” ­which is the potential revenue retailers lost during the power outage.

Williams told the News about a daycare center which had to shut down for twodays and reimburse parents who had already paid for the period.The center is now asking the government cover these costs.

When seeking federal reimbursement, Williams said, accurate documentation is critical to the loan application.He said that this is one of the secondary complications that might mean businesses would not take advantage of the programs, as small businesses that conduct most of their dealings in cash often do not have records of all transactions, he added, making it difficult for them to successfully apply for loans.

“A lot of businesses just don’t want to deal with red tape,” Williams said, highlighting a third factor that could turn businesses away from the new program. Willliams said that an annoyance with bureaucracy leads some to seek alternate sources of assistance such as FEMA, which in his experience responds more quickly than the Small Business Administration.

Another deterrent, Williams said, is that business owners see government loans as less attractive than grants, which do not have to be paid back.

Of the 873 loan applications the small-business-focused agency has distributed so far in Connecticut, only 16 have been given back, Nocera said. And no applications have come in to the Business Recovery Centers during their first three days.

And there is some confusion aboutwhat interested parties should do.

For instance, Williams, as a city official, said anyone asking for compensation, whether a business-owner or an individual, needs to register with FEMA.

But Jay MacKenna, a public affairs specialist at the Small Business Administration’s central office for the region that includesConnecticut, said FEMA mainly deals with individuals, and generally does not assist business-owners.

The agency’s stance, MacKenna added, is to encourage business-owners to apply to FEMA for back-up assistance in case they do not qualify for one of the agency’s loans.

Williams told the News the hurricane damage compensation program also may be an effort by the agency to balance its budget by the start of the new federal fiscal year.

“What many federal agencies do [before Oct. 1st] is spend the excess money they have for the year,” Williams said, considering the agency has already offered $1 million in micro-loans in the last two weeks.

Regardless, Nocera said business-owners should hurry to the Centers, which will close on October 13, to see if they qualify for a loan.

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