LegiStorm

Summary:
What GAO Found

The Small Business Administration's (SBA) Disaster Loan Program is available to rural and urban communities to cover qualified losses after a declared disaster. Disaster loans are intended to help homeowners, renters, businesses, and nonprofits repair, rebuild, and recover from physical and economic losses. For fiscal years 2017–2022, applications for disaster loans from rural and urban areas were approved and declined at comparable rates. Across both types of areas, SBA approved about 40 percent and declined about 40 percent of applications that met minimum qualifications for acceptance. The remaining applications were withdrawn (18.5 percent) or were still being reviewed by SBA as of June 2023 (1.7 percent).

Outcomes of SBA Disaster Loan Applications SBA Accepted by Geographic Area, Fiscal Years 2017–2022, as of June 2023



Note: This analysis includes applications that met SBA’s minimum acceptance qualifications and excludes 20,882 applications that were duplicates or could not be classified as rural or urban.

GAO found that rural communities may have characteristics that can make recovering from a disaster difficult. For instance, they are more likely to have limited telecommunication services (broadband and cellular) because of geographic barriers, such as mountains, or limited demand due to smaller and sparser populations. A lack of reliable communications can hamper outreach to disaster survivors and can make it harder for survivors to apply for disaster assistance. Also, rural communities often do not have the capacity and resources to support recovery activities. Stakeholders also identified challenges to obtaining assistance from SBA. For example, stakeholders noted that rural communities may not be aware of SBA disaster assistance and may not know that SBA aids homeowners as well as businesses.

SBA has introduced new outreach approaches in recent years, such as portable outreach centers that can be established after a disaster in hard-to-reach areas, including rural communities. However, SBA's outreach policies and procedures do not distinguish between rural and urban communities, and SBA does not tailor its outreach to address the specific needs of rural communities. Developing outreach plans with specific methods to address challenges rural communities face after disasters could help improve their access to SBA's Disaster Loan Program.

Why GAO Did This Study

GAO previously reported that the number and cost of weather and climate disasters, such as tornadoes and wildfires, are increasing in the United States. The Disaster Assistance for Rural Communities Act enabled the SBA Administrator to declare disasters in rural areas if certain conditions are met and included a provision for GAO to examine the unique challenges rural areas face when seeking disaster assistance from SBA. This report examines disaster loan trends in rural and urban areas for fiscal years 2017–2022, challenges rural communities may face after disasters, and SBA's actions that may address these challenges.

GAO analyzed and geocoded SBA disaster loan application data for fiscal years 2017–2022 to show trends for approved, accepted, and declined loan applications for rural and urban areas. GAO also interviewed officials from SBA, four regional nonprofit organizations, and 18 state and local entities from three site visits. GAO further reviewed literature and key agency documents related to outreach, marketing, equity, and implementation of the new rural disaster declaration.