GAO-24-106755: Small Business Administration: Targeted Outreach about Disaster Assistance Could Benefit Rural Communities

Summary

GAO-24-106755, Small Business Administration: Targeted Outreach about Disaster Assistance Could Benefit Rural Communities, a Government Accountability Office Q&A report to congressional committees dated February 22, 2024. Prepared under the Disaster Assistance for Rural Communities Act, it examines SBA disaster loan trends in rural and urban areas for fiscal years 2017–2022 and challenges rural communities may face after disasters. It reports that rural and urban disaster loan applications were approved and declined at comparable rates, and that disaster survivors may lack awareness or understanding of SBA's disaster loans. GAO recommends that SBA distinguish between rural and urban communities in its outreach and marketing plan, and SBA concurred.

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U.S. Government Accountability Office

Small Business Administration: Targeted
Outreach about Disaster Assistance Could
Benefit Rural Communities
GAO-24-106755
Q&A Report to Congressional Committees
February 22, 2024

Why This Matters We have previously reported that the number and cost of weather and climate
disasters, such as tornadoes and wildfires, are increasing in the United States. In
recovering from a disaster, rural communities may face different challenges than
urban communities because of their distinctive characteristics. According to the
2020 Census, approximately 20 percent of the U.S. population lived in rural
areas, and rural areas represented 97 percent of the land area.
The Disaster Assistance for Rural Communities Act includes a provision for GAO
to examine the unique challenges rural areas face when seeking disaster
assistance from the Small Business Administration (SBA) and identify potential
legislative recommendations for improving rural areas’ access to such
assistance. 1 This report examines how SBA’s disaster loan program assists
communities after disasters, 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 those challenges.

Key Takeaways • Applications for disaster loans from rural and urban areas were approved and
declined at comparable rates from fiscal years 2017 through 2022.
• Rural areas have characteristics that can make disaster recovery difficult.
These include infrastructure vulnerabilities, limited local capacity and
resources, and rural demographics or social norms.
• Rural areas face challenges in seeking SBA assistance following a disaster.
For example, disaster survivors may lack awareness or understanding of
SBA’s disaster loans. SBA has taken some actions that may help address
these types of challenges, but they are not specifically targeted to rural areas.
• SBA has issued a regulation and taken other steps to implement the newly
authorized rural disaster declaration, which provides SBA with an additional
way to declare a disaster that is specific to rural areas.
• We recommend that SBA distinguish between rural and urban communities in
its outreach and marketing plan. SBA concurred with our recommendation.

What SBA assistance is SBA’s Disaster Loan Program is available to rural and urban communities to
available for rural cover qualified losses after a declared disaster. Disaster loans are intended to
communities after a help homeowners, renters, businesses, and nonprofits repair, rebuild, and
disaster? recover from physical and economic losses after a declared disaster. The three
main types of loans for disaster-related losses are (1) home and personal
property loans, (2) business physical disaster loans, and (3) Economic Injury

Page 1 GAO-24-106755 Small Business Administration Disaster Assistance
Disaster Loans (EIDL) to cover normal operating expenses that cannot be met
due to the disaster (see table 1). 2

Table 1: Characteristics of SBA Disaster Loans
Type of loan Eligible borrowers Lending limits and use of fundsa
Home and personal Homeowners and renters Homes. Up to $500,000 to replace or
property loans repair primary residences.
Personal property. Up to $100,000 to
replace or repair property (e.g., clothing,
furniture, cars, and appliances) damaged or
destroyed in a declared disaster.
Business physical Most types of businesses Up to $2 million to repair or replace
disaster loansb and nonprofit organizations property damaged in a declared disaster
regardless of size that is owned by the business, including
leasehold improvements, furniture and
fixtures; to refinance liens on damaged
property; and to implement mitigation
measures to project the damaged or
destroyed property from future disasters.
Economic Injury Small businesses, small Up to $2 million of working capital to help
Disaster Loans agricultural and producer meet financial obligations and operating
(EIDL) cooperatives, small expenses that cannot be met as a result of
aquaculture enterprises, the disaster.
designated small nurseries,
and private nonprofit
organizations
Source: GAO analysis of Small Business Administration (SBA) information. | GAO-24-106755
aThe home and personal property loan limits apply to disasters declared on or after July 31, 2023, and the

current business loan limits have been in place since 2008.
bDisaster business loans, including both physical disaster loans and EIDLs, to the same borrower, together with

its affiliates, cannot exceed $2 million. 13 C.F.R. § 123.202.

This report uses Census Bureau definitions of “rural area” and “urban area,” and
it uses “rural community” to refer to a place, such as a county, that predominately
consists of rural areas. According to the Census Bureau, urban areas represent
densely developed territory and encompass residential, commercial, and other
nonresidential urban land uses. Each urban area must encompass at least 2,000
housing units or at least 5,000 people. Rural areas encompass all population,
housing, and territory not included within an urban area.

How does SBA To administer the Disaster Loan Program, SBA’s Office of Disaster Recovery and
administer the Disaster Resilience has two Field Operations Centers that establish and maintain field
Loan Program? operations and conduct SBA outreach in disaster areas. 3 These efforts may
include allocating SBA staff to federal Disaster Recovery Centers, which inform
disaster survivors about available federal assistance. The Field Operations
Centers also set up SBA Disaster Loan Outreach Centers and Business
Recovery Centers at disaster locations to help individuals and businesses apply
for disaster loans. In addition, SBA’s Office of Disaster Recovery and Resilience
reviews disaster declaration requests and works with federal agencies and state
and local governments to determine whether a minimum amount of damage or
economic injury occurred for a disaster declaration.
SBA’s Office of Capital Access is responsible for all disaster lending policy and
loan-making operations, including loan origination, processing, closing,
disbursement, and servicing. It also manages the Disaster Customer Service
Center to respond to incoming disaster survivor phone calls and emails.

Page 2 GAO-24-106755 Small Business Administration Disaster Assistance
What is the process for The process for making SBA disaster loans available to disaster survivors has
making SBA disaster several phases, including disaster declaration, local outreach, and application
loans available to submission and processing, loan closing and disbursement, and loan servicing
disaster survivors? (see fig. 1).

Figure 1: SBA Disaster Loan Process

a
SBA refers applicants that do not meet minimum income and credit requirements or are declined to the Federal
Emergency Management Agency, which offers financial and direct services to eligible disaster survivors.

A federal disaster must be declared by the President or SBA Administrator for
SBA disaster loans to become available to homeowners, renters, businesses, or
nonprofits in the disaster area. The type of disaster declaration governs the
eligible borrowers and types of loan products available. Some declarations make
all three types of SBA disaster loans available to eligible homeowners, renters,
businesses, and nonprofits. Other declarations limit the loan type and eligible
borrowers, such as declarations that make only EIDLs available for small
businesses and private nonprofits. Disaster declarations define the disaster area
as the county or counties directly affected by the disaster (referred to as primary
counties). Depending on the type of declaration, the disaster area may also
include counties contiguous with the primary counties or other political
subdivisions.
After a disaster is declared, SBA conducts outreach to raise public awareness
and inform eligible homeowners, renters, businesses, and nonprofits about the
available disaster loan products. SBA deploys staff to the disaster area and
provides information to local media. Other federal, state, and local officials who
are knowledgeable about the Disaster Loan Program and who are operating in
the disaster area may augment SBA’s outreach.
Homeowners, renters, businesses, and nonprofits submit disaster loan
applications directly to SBA. SBA accepts an application if it is complete and
meets minimum qualifying requirements for disaster loans. 4 SBA then
underwrites the application and decides to approve or decline the loan,
depending on whether the applicant meets SBA’s eligibility and underwriting
criteria. If an application is approved and the loan is closed (i.e., loan documents
are signed and returned to SBA), the funding is disbursed to the borrower.
In addition, applicants may withdraw their applications prior to SBA’s underwriting
decision, and applicants or borrowers can cancel their loans or reduce their loan
amount before or after the loan is closed. Additionally, SBA may withdraw an
application if the applicant’s information cannot be verified or if the applicant fails
to provide requested documentation. SBA may cancel a loan if the applicant fails
to complete closing documents, or if the borrower fails to satisfy the terms and
conditions of the loan or experiences adverse economic changes.

Page 3 GAO-24-106755 Small Business Administration Disaster Assistance
How do SBA disaster Applications for disaster loans from rural and urban areas were approved and
loan outcomes declined at comparable rates for disasters that occurred in fiscal years 2017
compare in rural and through 2022.
urban areas?
Accepted applications

During this 6-year period, SBA received 1,165,635 applications (15.7 percent of
these were from rural areas) and accepted 809,180 (16.9 percent were from rural
areas) that met minimum qualifying requirements for disaster loans. SBA
accepted a higher proportion of applications from rural areas (75 percent) than
from urban areas (68 percent). SBA received more applications from urban areas
because more individuals and businesses are located in urban areas. The
number of applications and loans fluctuated from year to year due to variation in
the number, intensity, and location of disasters. 5

Loan outcomes

Overall, disaster loan applications from rural and urban areas had similar
outcomes for fiscal years 2017–2022 (see fig. 2). Across both types of areas,
SBA approved about 40 percent and declined about 40 percent of accepted
applications. 6 The remaining applications were withdrawn (18.5 percent) or were
still in process as of June 2023 (1.7 percent).

Figure 2: Outcomes of Disaster Loan Applications SBA Accepted by Geographic Area,
Fiscal Years 2017–2022

Note: Our analysis includes applications SBA accepted as meeting minimum qualifying requirements and
excludes 16,581 duplicate applications and 4,301 applications that could not be classified as rural or urban. A
duplicate application occurs when an applicant submits more than one application for the same event. In-
process applications were still undergoing review by SBA as of June 2023.

Loan product approval rates

Loan outcomes were also similar for rural and urban areas when analyzed by
loan type (see fig. 3). 7

Page 4 GAO-24-106755 Small Business Administration Disaster Assistance
Figure 3: Approval and Decline Rates of Disaster Loan Applications SBA Accepted, by Loan
Product and Geographic Area, Fiscal Years 2017–2022

Note: Our analysis includes applications SBA accepted as meeting minimum qualifying requirements and
excludes duplicate applications and applications that could not be classified as rural or urban. The approval rate
represents the number of approved applications divided by the sum of approved and declined applications.
Homeowners and renters may apply for home and personal property loans, and businesses may apply for a
combined physical disaster loan and EIDL or only an EIDL. Business loans include loans to nonprofits.

Reasons loans were declined or applications were withdrawn

The top reasons SBA declined loans were generally consistent across rural and
urban areas (see fig. 4).

Figure 4: Top Reasons SBA Declined Disaster Loans, by Geographic Area, Fiscal Years
2017–2022

Similarly, the top reasons SBA or applicants withdrew applications were
generally consistent across rural and urban areas (see fig. 5). In addition, overall,
about a third of applications were withdrawn by the applicants. A higher
proportion of applicants from rural areas (35 percent) than from urban areas (30
percent) withdrew their applications.

Figure 5: Top Reasons SBA Withdrew Disaster Loan Applications, by Geographic Area,
Fiscal Years 2017–2022

Canceled loans

After a disaster loan application is approved, the loan may be canceled by the
borrower or SBA. A higher proportion of disaster loans from rural areas (29
percent) than from urban areas (23 percent) were canceled, and cancellation
rates varied by loan product (see fig. 6).
Page 5 GAO-24-106755 Small Business Administration Disaster Assistance
Figure 6: Proportion of SBA Disaster Loans That Were Canceled, by Loan Type and
Geographic Area, Fiscal Years 2017–2022

The reasons loans were canceled were consistent across rural and urban areas.
Overall, about 60 percent of canceled loans were canceled at the borrower’s
request. SBA canceled the remaining loans, with the top reasons being that
borrowers did not complete their closing documents (55 percent), had adverse
changes in their economic circumstances (23 percent), or failed to satisfy terms
and conditions of the loan (9 percent). SBA referred borrowers with adverse
economic changes to the Federal Emergency Management Agency’s Individuals
and Households Program.

What characteristics of Rural communities may have characteristics—related to infrastructure, local
rural communities can capacity and resources, and demographics and social norms—that can make
make recovering from a recovery difficult.
disaster difficult?
Infrastructure vulnerabilities

Infrastructure vulnerabilities in rural communities include limited
telecommunication networks, issues with transportation networks, certain types
of geography, and lack of temporary housing. These vulnerabilities can affect
disaster recovery.
Telecommunications. Rural communities are more likely to have limited
telecommunication services because of geographic barriers, such as mountains,
or limited demand due to smaller and sparser populations. A lack of reliable
telecommunication services, such as broadband and cellular, can hamper
communication and outreach to survivors, according to representatives from two
regional nonprofit organizations, SBA field offices, and five state and local
stakeholders we interviewed. It can also make it harder for disaster survivors to
apply for disaster assistance. We reported in 2020 that lack of or intermittent
cellular service can make it difficult for SBA to communicate with other staff and
with disaster survivors. 8 We also reported in 2021 that lack of consistent internet
access makes it difficult for disaster survivors in rural locations to apply for
federal assistance. 9
Transportation networks. Transportation issues can leave rural communities
isolated. Closed roads caused by fallen debris can make it hard to reach
survivors to provide outreach, assistance, or basic supplies. Rural communities
also often lack public transportation, which can hinder survivors in getting to
locations offering disaster assistance, such as Disaster Recovery Centers or
SBA Business Recovery Centers, according to some regional nonprofit
organizations we spoke with.
Geography. Geography in rural communities can make it harder to access
resources, such as supplies for basic needs, clean-up, or rebuilding, according to
three state and local stakeholders. Isolated rural areas may have limited supplies

Page 6 GAO-24-106755 Small Business Administration Disaster Assistance
nearby, according to some state and local officials, and the cost of supplies may
increase substantially following a disaster.
Mountainous terrain can make it especially difficult to get supplies to a disaster-
affected area. Such terrain can also make recovery after a wildfire challenging.
For example, in one mountain community we visited, a state official explained
that burned utility poles must be replaced on mountainsides using helicopters or
by carrying them up the mountain.
Temporary housing. Disasters can result in increased demand for housing from
both displaced survivors and aid workers. Rural communities may lack sufficient
temporary housing, especially when a disaster damages or destroys existing
housing stock, according to officials from two regional nonprofit organizations
and six state and local stakeholders. The National Low Income Housing Coalition
reported that following a disaster, lack of affordable housing can cause rural
families to be displaced by more than 100 miles from their homes, schools, and
jobs. 10 This can require disaster survivors to make difficult decisions about
whether to stay in the community and rebuild or to leave, according to an official
we interviewed at one regional nonprofit organization.

Limited local capacity

Rural communities tend to have limited local capacity and resources, including
both human resources and funding. We reported in December 2021 that
communities that have not previously experienced a disaster may lack
knowledge about the federal resources available and how to access them. 11 Two
state entities and seven local stakeholders from the disaster locations we visited
told us their local officials had limited knowledge of or prior experience with a
large-scale disaster.
Low-income and rural communities often do not have the capacity to support
recovery activities, as we reported in 2021. For example, some rural communities
may not have funding available to create or staff emergency management
departments. 12 Rural areas may also experience outsized economic effects. For
example, one disaster location we visited relied heavily on a single large
employer that was destroyed during a disaster, greatly affecting the town’s tax
base.

Rural demographics and social norms

The demographics or social norms of certain rural communities may affect their
ability to recover from disasters. According to a 2007 paper, many rural
communities are characterized by poverty, which can shape their capacity to
respond to and recover from disasters. 13 According to the most recent estimates
from the 2019 American Community Survey, the poverty rate for rural areas was
15.4 percent, compared to 11.9 percent for urban areas.
Building trust is important because some people in rural communities distrust
outsiders, including the federal government, according to multiple stakeholders
we interviewed. SBA officials from one district office told us they had better
engagement with disaster survivors when they worked closely with local officials
to reach out to the community. The importance of building trust was echoed
throughout our conversations with four state and local stakeholders, who noted
that rural disaster survivors were often hesitant to engage with the federal
government.
People in rural communities also tend to prefer in-person outreach, according to
research and six state and local stakeholders. In April 2022, the Consumer
Financial Protection Bureau reported that people in rural communities prefer

Page 7 GAO-24-106755 Small Business Administration Disaster Assistance
working with smaller banks and conducting all banking activities in person. 14 One
state entity suggested that SBA do more face-to-face outreach for its disaster
loans to help build trust with disaster survivors.

What are some of the Challenges to obtaining SBA disaster assistance in rural areas can include
challenges to obtaining qualifying for a disaster declaration, survivors’ lack of awareness, and a complex
SBA assistance? application process, according to our prior work and interviews with selected
regional nonprofit organizations and state and local officials.
15 However, these
challenges may not be unique to rural areas.

Qualifying for a disaster declaration

Qualifying for certain types of disaster declarations requires a minimum number
of damaged properties or a minimum amount of economic injury to businesses.
Communities must conduct and submit damage assessments, which can be time
consuming and onerous, according to some state and local stakeholders. Some
disasters create challenges in collecting damage data. For example, wildfires can
destroy markers, such as house numbers that identify a property, according to
one state official.
Furthermore, because rural areas are less densely populated than urban areas,
historically it has been difficult for rural areas to meet damage thresholds to
qualify for assistance. For example, some rural communities have had too few
damaged homes following disasters to qualify for federal assistance, according to
a representative of one regional nonprofit organization providing assistance in
disaster relief and recovery.
As discussed later in this report, the Disaster Assistance for Rural Communities
Act gave the SBA Administrator authority to make a rural disaster declaration
when, among other things, just one qualifying property has incurred significant
damage.

Survivors’ lack of awareness and understanding

SBA’s Office of Disaster Recovery and Resilience Outreach and Marketing Plan
states that one of SBA’s biggest challenges is communities’ lack of awareness of
SBA disaster assistance. 16 Officials we interviewed from three regional nonprofit
organizations and local officials in the three disaster locations we visited told us
that disaster survivors were not aware that SBA offered disaster loans to
homeowners in addition to businesses. In one location we visited, SBA
conducted its outreach virtually because the disaster occurred during the early
stages of the COVID-19 pandemic. SBA offered a 1-800 number, email address,
and website for disaster survivors to obtain information on SBA assistance.
However, most local stakeholders we spoke with were not aware of these
resources.

SBA’s application process

State and local officials at two disaster locations we visited described the SBA
application process as complex, slow, and inefficient. According to three regional
nonprofit organizations, following a disaster, people are traumatized, which
makes it even more difficult to navigate a complex process. State officials at two
disaster locations said disaster survivors preferred having someone walk them
through the application process in person rather than using a website. State and
local officials at two locations we visited described examples of SBA requesting
the same document multiple times, which was frustrating for residents.

Page 8 GAO-24-106755 Small Business Administration Disaster Assistance
In a February 2020 report, we described challenges experienced by disaster loan
applicants and the providers that assist them. 17 Reported challenges to applying
for assistance included the time and burden of providing the required loan
documentation, frequent changes in loan officers or case managers, poor
customer service, lack of translation services, and delayed loan disbursements.

How can the new rural The Disaster Assistance for Rural Communities Act authorized the SBA
disaster declaration Administrator to declare a disaster in a rural area when just one qualifying
increase access to SBA property has incurred significant damage and other criteria are met, as further
disaster assistance? described below. 18 This new declaration may increase access to the Disaster
Loan Program for homeowners, renters, and businesses in rural areas.
Legislative history indicates that the rural disaster declaration was intended to
address situations in which a natural disaster significantly affects a large
proportion of a small, sparsely populated rural community but does not reach the
minimum threshold of damaged properties to be eligible for another type of
agency disaster declaration. 19 SBA implemented the new disaster declaration by
issuing a direct final rule that became effective on June 5, 2023. SBA is
authorized to declare a disaster in a rural area upon request by the governor of
the state or the chief executive of the Indian tribal government in which the rural
area is located if certain conditions are met. 20
Similar to other disaster declarations, SBA issues a rural disaster declaration at
the county level. A county may include rural and urban areas as defined by the
Census Bureau. Figure 7 describes the characteristics for the SBA rural disaster
declaration.

Figure 7: Characteristics of an SBA Rural Disaster Declaration

SBA estimates that approximately 50 additional disaster declarations will occur
annually with this new type of declaration. According to SBA officials, this
estimate is based on the average number of annual disaster declarations for
which only Public Assistance was authorized between 2013 and 2022.

How is SBA To implement the Disaster Assistance for Rural Communities Act, SBA has
implementing the new issued an implementing regulation, developed internal policies and guidelines,
rural disaster and conducted training on the new disaster declaration. From June to November
declaration? 2023, the new authority allowed SBA to issue 12 rural disaster declarations
across 11 states—Alabama, California, Colorado, Illinois, Mississippi, Missouri,
Nevada, New Jersey, Oklahoma, Vermont, and Wyoming. According to SBA,
these declarations likely would not have occurred without SBA’s new authority.
Regulation. The act required SBA to issue implementing regulations within 120
days after enactment to carry out implementation of the rural disaster
declaration. 21 On April 19, 2023, SBA issued a direct final rule with an effective

Page 9 GAO-24-106755 Small Business Administration Disaster Assistance
date of June 5, 2023, which implemented the rural disaster declaration now
codified at 13 C.F.R. § 123.3(a)(6). 22
Guidelines. SBA has developed guidelines for field operations staff to determine
if a damaged property is located within a rural area for declaration purposes.
SBA officials told us the disaster assistance standard operating procedures will
be updated to include the rural disaster declaration in fiscal year 2024. They said
they will use the same outreach approaches for the rural disaster declaration as
for all other disaster declarations.
Reporting. The act requires SBA to provide a report to Congress within 120
days of enactment and annually thereafter highlighting certain information
pertaining to rural areas and the rural disaster declaration. 23 On May 2, 2023,
SBA provided a report to congressional committees that noted the following:
• Between April 19, 2022, and April 20, 2023, SBA approved 2,478 EIDLs for
$137.3 million in rural areas in response to major disasters declared by the
President.
• No rural disaster declarations had yet been made because the implementing
regulations were not yet effective.
• SBA published a direct final rule to implement the new declaration authority
on April 19, 2023, within the statutory deadline.
Training. SBA has conducted internal and external training on the new rural
disaster declaration, according to agency officials. SBA officials told us they
provided training to their field operations staff, who are responsible for
conducting damage assessments and coordinating outreach efforts with federal,
state, and local partners. According to agency officials, two external trainings
were conducted in May 2023, which included state emergency managers, SBA
resource partners, and chambers of commerce. Further, SBA officials stated in
January 2024 that they have incorporated training on the rural disaster
declaration into their default trainings.
What changes has SBA SBA has introduced new outreach approaches in recent years.
been making to its Portable outreach centers. SBA set up its first Portable Loan Outreach Center
outreach? in October 2022 in Florida following Hurricane Ian. These centers can be
established in any hard-to-reach area, including rural communities. Subsequent
centers were set up in Alabama, Mississippi, and Hawaii (see fig. 8). The centers
are staffed by customer service representatives who can provide full disaster
recovery center services for survivors, including application intake and loan
closing. These centers allow the agency to rapidly set up outreach and
assistance operations without the assistance of Federal Emergency
Management Agency or other resource partners. In January 2024, SBA stated
that it planned to add five additional Portable Loan Outreach Centers.

Page 10 GAO-24-106755 Small Business Administration Disaster Assistance
Figure 8: Portable Loan Outreach Center in Rolling Fork, Mississippi, following March 2023
Tornadoes

Virtual outreach. SBA began using virtual outreach for the Disaster Loan
Program in 2020 during the COVID-19 pandemic. Officials say they will continue
to use this approach in an effort to meet survivors where they are. For virtual
outreach, SBA officials told us they contact survivors referred by state and local
entities and publicize a phone number and email address survivors can use to
contact SBA directly. Virtual outreach can be effective for some survivors who
are located far from SBA outreach centers, according to one regional nonprofit
organization.
“Whole-of-SBA” approach. The new “whole-of-SBA” approach is intended to
align the Disaster Loan Program with core SBA programs (i.e., small business
loans and resources). The purpose of this effort is to better meet the needs of
disaster survivors. The Office of Disaster Recovery and Resilience is leading this
new approach to disaster response and recovery to connect disaster survivors in
both rural and urban communities with other SBA assistance, such as small
business counseling and training. According to officials, the “whole-of-SBA”
approach was introduced internally to SBA in August 2023 and will be initiated in
2024 with the launch of a working group and the development of tools, guidance,
and policies and procedures.

Does SBA’s outreach No. SBA’s outreach policies and procedures do not distinguish between rural and
distinguish between urban communities, and SBA does not tailor its outreach to address the specific
rural and urban needs of these communities.
communities? To guide its implementation of outreach activities after a disaster, SBA officials
use the 2018 Disaster Assistance Program Standard Operating Procedures, the
2019 Disaster Preparedness and Recovery Plan, the SBA Fiscal Year 2022–
2026 Strategic Plan, and the 2023 Office of Disaster Recovery and Resilience
Marketing and Outreach Plan. As of December 2023, these documents did not
yet include guidance on Portable Loan Outreach Centers, virtual outreach, or the
“whole-of-SBA” approach, as these initiatives were all relatively new. SBA
officials told us they plan to update the 2019 Disaster Preparedness and
Recovery Plan in 2024.
None of these new outreach approaches or their associated policies and
procedures are designed specifically for or targeted to rural communities. SBA
officials told us that their overall outreach activities address the needs of all
communities, including rural communities, affected by a disaster.
SBA’s Fiscal Year 2022–2026 Strategic Plan includes an equity measure to
increase the number of outreach activities to underserved communities. SBA’s
2022 Equity Action Plan identifies people who live in rural areas as an

Page 11 GAO-24-106755 Small Business Administration Disaster Assistance
underserved community and includes actions to reduce barriers and improve
access to the Disaster Loan Program for underserved communities. SBA officials
agreed that rural communities face unique challenges after disasters, but SBA’s
outreach plans do not recognize these challenges or include strategies for
addressing them. 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.

What other efforts does SBA has begun implementing plans to enhance relationships with stakeholders,
SBA have to improve train local resource partners, and improve its disaster loan application process.
its Disaster Loan Increased coordination with stakeholders. The 2023 Office of Disaster
Program? Recovery and Resilience Marketing and Outreach Plan states that SBA will
partner with mayors who can help facilitate local partnerships to increase SBA’s
outreach efforts to survivors. SBA’s Fiscal Year 2022–2026 Strategic Plan also
includes a strategy to improve coordination and collaboration with federal, state,
and local partners.
Training for local partners. The 2023 Office of Disaster Recovery and
Resilience Marketing and Outreach Plan includes plans to train resource partners
on the range of SBA programs available to business owners, including the
Disaster Loan Program. It also includes plans to provide media training for SBA
Regional Administrators and District Directors.
Improvements to the application process. SBA’s Fiscal Year 2022–2026
Strategic Plan says that SBA will leverage technology to expedite disaster
application processing. To do this, SBA officials told us they are moving all loan
application processes to a single system called the Unified Lending Platform.
SBA officials said that the new platform is accessible via the MySBA Loan Portal
and was fully implemented as of January 2024.

Conclusions SBA’s Disaster Loan Program can provide homeowners, renters, businesses,
and nonprofits in rural communities with assistance to help them recover after a
disaster. The new rural disaster declaration may make it easier for rural
communities to access this assistance. While SBA has several new outreach
approaches for the Disaster Loan Program, none are specifically targeted to rural
communities. As a result, SBA may not be addressing some of the special
challenges rural communities face in accessing disaster assistance.

Recommendation for The SBA Administrator should ensure that the Associate Administrator of the
Executive Action Office of Disaster Recovery and Resilience distinguishes between rural and
urban communities in SBA’s outreach and marketing plan and incorporates
actions to mitigate challenges encountered by rural communities in accessing the
Disaster Loan Program. (Recommendation 1)

Agency Comments We provided a draft of this report to SBA for review and comment. In its
comments, reproduced in appendix II, SBA agreed with our recommendation.
SBA stated that it is in the process of updating its strategy for conducting
outreach to survivors of disasters and will include ongoing engagement and
trainings specifically focused on rural communities. SBA also provided technical
comments, which we incorporated as appropriate.

How GAO Did This To describe how SBA’s Disaster Loan Program assists communities after a
Study disaster, we reviewed legislation, regulations, and SBA documents. We
interviewed officials from SBA offices responsible for the Disaster Loan Program,
Page 12 GAO-24-106755 Small Business Administration Disaster Assistance
including the Office of Disaster Recovery and Resilience and its two Field
Operations Centers, the Office of Capital Access, and three district offices.
To compare disaster loan outcomes in rural and urban areas, we obtained data
from SBA disaster loan applications from disasters declared during fiscal years
2017 through 2022. 24 We selected this time frame because 2017 had three large
hurricanes affecting a wide geographic range and because fiscal year 2022 was
the most recent complete fiscal year at the beginning of our review. We
geocoded the loan addresses to classify each application as either rural or urban
using Census Bureau definitions. 25 We analyzed the data to determine the
percentage of approved loans and other application outcomes from rural and
urban areas. 26 Official damage estimates from SBA and others were not
available for all declared disasters or loan applications; therefore, we were
unable to compare the extent of damage in rural and urban areas with loan
applications. 27 We assessed the reliability of the application data by reviewing
relevant documentation, interviewing knowledgeable agency officials, and
performing electronic testing. We determined these data were sufficiently reliable
for the purpose of describing the outcomes of the disaster loan applications for
fiscal years 2017 through 2022.

To identify challenges rural communities may face after disasters, we conducted
site visits to three selected areas that experienced declared disasters in fiscal
years 2021 or 2022 that affected both rural and urban areas (per Census Bureau
definitions), were geographically diverse, were generally smaller in scale, and
were generally caused by different incident types. We then selected the primary
county within the declaration’s disaster area that was mostly rural and had more
disaster losses than other mostly rural counties within the disaster area.

Based on these criteria, we conducted visits in person to Graves County,
Kentucky, and Grand County, Colorado, and we conducted a virtual visit to
Poinsett County, Arkansas. For more information on the disasters that affected
these counties, see appendix I. For these sites, we interviewed six state entities,
including emergency management departments and Small Business
Development Centers at the state level. We interviewed 12 local or regional
stakeholders, including Small Business Development Centers, emergency
managers, and government officials. We also interviewed nonprofit long-term
recovery organizations and disaster case management organizations. In addition,
we interviewed SBA officials from headquarters, both Field Operations Centers,
and three district offices. We also interviewed representatives from four selected
regional nonprofit organizations that work with rural communities (Center for
Rural Strategies, Center for Disaster Philanthropy, Catholic Charities-
Archdiocese of Oklahoma City, and Rural Community Assistance Corporation).
To inform our questions for these interviews, we conducted a literature review of
selected studies and reports issued from 2017 through 2022 to identify
challenges rural areas may face after disasters. We also analyzed SBA disaster
loan data and Census data for these selected areas to summarize the incidents,
impacted areas, and SBA disaster loan assistance for the disasters.

To understand how SBA conducts outreach for the Disaster Loan Program, we
reviewed SBA’s policies and procedures, including its Fiscal Year 2022–2026
Strategic Plan, 2022 Equity Action Plan, and its 2023 Outreach and Marketing
Plan. We analyzed these documents to determine the extent to which SBA has
policies designed to address challenges faced by rural communities seeking
disaster assistance. We also reviewed SBA’s direct final rule implementing the
Disaster Assistance for Rural Communities Act and other documents related to
the new SBA rural disaster declaration. In addition, we discussed with SBA

Page 13 GAO-24-106755 Small Business Administration Disaster Assistance
officials how they conduct outreach and address challenges faced by rural
communities seeking disaster assistance.

We conducted this performance audit from April 2023 to February 2024 in
accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions based on
our audit objectives.

List of Addressees The Honorable Jeanne Shaheen
Chair
The Honorable Joni Ernst
Ranking Member
Committee on Small Business and Entrepreneurship
United States Senate

The Honorable Roger Williams
Chair
The Honorable Nydia M. Velázquez
Ranking Member
Committee on Small Business
House of Representatives

We are sending copies of this report to the appropriate congressional
committees, the Administrator of the Small Business Administration, and other
interested parties.

GAO Contact For more information, contact: Daniel Garcia-Diaz, Managing Director, Financial
Information Markets and Community Investment, GarciaDiazD@gao.gov, (202) 512-8678.
Chuck Young, Managing Director, Public Affairs, YoungC1@gao.gov, (202) 512-
4800.
A. Nicole Clowers, Managing Director, Congressional Relations,
ClowersA@gao.gov, (202) 512-4400.
Staff Acknowledgments: Lisa Moore (Assistant Director), Rhonda Rose
(Analyst-in-Charge), Lauren Capitini, Chelsea Carter, Lorraine Ettaro, Ying Long,
Colleen Moffatt Kimer, John Milberg, John Mingus, Marc Molino, Minda Nicolas,
Jennifer Schwartz, and Farrah Stone.
Connect with GAO on Facebook, Flickr, Twitter, and YouTube. Subscribe to our
RSS Feeds or Email Updates. Listen to our Podcasts.
Visit GAO on the web at https://www.gao.gov.
This work of the United States may include copyrighted material, details at
https://www.gao.gov/copyright.

Page 14 GAO-24-106755 Small Business Administration Disaster Assistance
Appendix I: Profiles of This appendix summarizes the incidents, affected areas, and SBA disaster loan
Selected Disasters and assistance for the three sites we selected to visit for this report (see figs. 9–11):
SBA Assistance • northeast Arkansas, which experienced severe storms and tornadoes;
• southwest Kentucky, which experienced severe storms, flooding, and
tornadoes; and
• northern Colorado, which experienced wildfires.

Figure 9: Summary of 2021 Severe Storms and Tornadoes in Northeast Arkansas (AR-00120)

Page 15 GAO-24-106755 Small Business Administration Disaster Assistance
Figure 10: Summary of 2021 Severe Storms, Flooding, and Tornadoes in Southwest
Kentucky (KY-00087)

Page 16 GAO-24-106755 Small Business Administration Disaster Assistance
Figure 11: Summary of 2020 Wildfires in Northern Colorado (CO-00130)

Page 17 GAO-24-106755 Small Business Administration Disaster Assistance
Appendix II: Comments
from the Small
Business
Administration

Page 18 GAO-24-106755 Small Business Administration Disaster Assistance
Page 19 GAO-24-106755 Small Business Administration Disaster Assistance
Endnotes
1Pub. L. No. 117-249, § 2(c), 136 Stat. 2350, 2351 (2022). While the mandate asks GAO to identify

potential legislative recommendations, we are making one recommendation to SBA, consistent with
our findings.
2SBA also offers the Military Reservist Economic Injury Disaster Loan, which does not require a

disaster declaration. This type of loan is for qualifying small businesses that have suffered or are
likely to suffer substantial economic injury as a result of a qualifying essential employee who has
been called up to active service for a period of more than 30 consecutive days. 13 C.F.R. §
123.501.
3SBA’s Office of Disaster Recovery and Resilience was formerly known as the Office of Disaster

Assistance. According to SBA, in addition to being renamed, it will have an expanded focus on
recovery and resilience through enhanced coordination and a whole-of-agency approach to
deploying all of SBA’s programs to communities affected by disasters.
4SBA refers applicants that do not meet minimum qualifying credit and income requirements to the

Federal Emergency Management Agency’s Individuals and Households Program, which provides
financial and direct services to eligible individuals and households affected by a disaster. This
assistance is intended to meet basic needs and supplement disaster recovery efforts.
5For fiscal years 2017–2022, 49 percent of applications were from disasters that occurred in fiscal

year 2017, 20 percent were from disasters that occurred in fiscal year 2021, and 12 percent were
from disasters that occurred in fiscal year 2022. The remainder of applications were from 2018,
2019, and 2020.
6More specifically, in rural areas, SBA approved 40.0 percent and declined 39.1 percent of

accepted applications, 19.3 percent of applications were withdrawn, and 1.6 percent of applications
were still in process as of June 2023. In urban areas, SBA approved 39.8 percent and declined
40.2 percent of accepted applications, 18.3 percent of applications were withdrawn, and 1.7
percent of applications were still in process as of June 2023.
7SBA calculates approval rates by dividing the total number of approved applications by the sum of

both approved and declined applications.
8GAO, Small Business Administration: Disaster Loan Processing Was Timelier, but Planning

Improvements and Pilot Program Evaluation Needed, GAO-20-168 (Washington, D.C.: Feb. 7,
2020).
9GAO, Disaster Recovery: Additional Actions Needed to Identify and Address Potential Recovery

Barriers, GAO-22-104039 (Washington, D.C.: Dec. 15, 2021).
10National Low Income Housing Coalition, Housing Needs in Rural America (Washington, D.C.:

Mar. 31, 2021).
11GAO-22-104039.

12GAO-22-104039.

13M.A. Brennan and Courtney G. Flint, “Uncovering the Hidden Dimensions of Rural Disaster

Mitigation: Capacity Building Through Community Emergency Response Teams,” Journal of Rural
Social Sciences, vol. 22, no. 2 (Dec. 31, 2007).
14Consumer Financial Protection Bureau, Data Spotlight: Challenges in Rural Banking Access (Apr.

2022).
15GAO-20-168.

16Small Business Administration, ODR&R Outreach and Marketing Plan (Mar. 6, 2023). The

outreach plan is developed by SBA’s Office of Disaster Recovery and Resilience.
17GAO-20-168.

18“Significant damage” means uninsured losses of 40 percent or more, calculated consistent with

13 C.F.R. § 123.3(a)(6)(ii), which must be incurred by any home, small business concern, private
nonprofit organization, or small agricultural cooperative in the rural area.
19S. Rep. No. 117-103, at 2 (2022).

20Pub. L. No. 117-249, § 2, 136 Stat. 2350 (2022) (codified at 15 U.S.C. § 636(b)(16)). See also the

implementing regulation at 13 C.F.R. § 123.3(a)(6). For purposes of the rural disaster declaration,
“rural area” is defined as “any county or other political subdivision of a State, the District of
Columbia, or a territory or possession of the United States that is designated as a rural area by the
Bureau of the Census.” In addition, the federal government has consistently recognized Indian
Tribes as distinct, independent political communities with inherent powers of limited sovereignty.

Page 20 GAO-24-106755 Small Business Administration Disaster Assistance
21Pub. L. No. 117-249, § 2(b) (Dec. 20, 2022).

2288 Fed. Reg. 24107 (Apr. 19, 2023).

23Pub. L. No. 117-249, § 2, 136 Stat. 2350, 2350-2351 (2022) (codified at 15 U.S.C. §

636(b)(16)(C)).
24SBA provided data from the Disaster Credit Management System, which stores and processes

disaster loan applications and loans, including loan application decisions and loan disbursements.
For the period of our data analysis (fiscal years 2017–2022), these loan limits were lower than the
current limits. Homeowners could apply for up to $200,000 to repair or replace their primary
residences, and both homeowners and renters could apply for up to $40,000 to replace or repair
personal property.
25The Census Bureau delineates urban areas after each decennial census by applying specific

criteria to the decennial census and other data.
26Application outcomes, including loan approvals, were calculated using all available fiscal year

2017–2022 application data except for duplicate applications and applications that could not be
classified as rural or urban. Application decline or withdrawal reasons were estimated with a
sample of the available data so that we could sufficiently compare and rank the reasons across
rural and urban areas.
27Disasters may be declared without a preliminary damage assessment when the anticipated or

actual impact is deemed unmanageable by the state or local government without national
resources (e.g., a category four or five hurricane).

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