Sba the Small Business Association

SBA The Small Business Association (SBA): The aftermath of its Katrina response While a great deal of criticism has been leveled against the Federal Emergency Management Agency (FEMA) for its 2005 response to the crisis of Hurricane Katrina, the Small Business Association (SBA) also came under fire for its reaction to the series of Gulf Coast hurricanes that impacted the southeast region during the season. The SBA's problems were deemed to be at least partially computer-related.

As a result of the it difficulties it experienced, the SBA, after attempted to 'fix' problems within its existing system, decided to start from scratch and implement a new system. What was wrong with the existing loan management system and why did SBA decide to replace it in 2004? The Small Business Association (SBA) offers low-interest recovery loans to homeowners and businesses, including after major natural disasters (SBA, 2006, SRA). But the SBA was widely criticized for its inability to effectively provide disaster assistance to victims of Hurricane Katrina.

Its faulty application system and poor use of computer resources was blamed. Granted, the level of disaster was unprecedented and unexpected after the Gulf Coast hurricanes, and was the largest ever faced by the association. But its response was still deemed unsatisfactory, given its poor planning. Agencies are often accused of 'fighting the last war' when dealing with crises in the present day. The SBA was no exception.

The SBA used data from its last major disaster, the 1994 Northridge earthquake to plan for the 21st century capacity needs of its Disaster Credit Management System (DCMS). The SBA models were based upon past needs and little risk modeling and simulations of potential catastrophes was deployed (SBA, 2006, GMO). Despite attempts to reform what was widely regarded as an inflexible, faulty system, high volumes of applicants were consistently delayed or ignored. There was simply not enough system capacity for the DCMS to handle the influx of demands for assistance.

Furthermore, the computer hardware was contracted from a firm that did not adequately test the system. Outages and crashes, as well as slow responses created even more backlogs. There was no prioritization of applicants in dire need of review and although there was some segmentation of applicants whose needs could be better met by other channels, the process of doing so was slow and resulted in delays in processing the applicants of individuals for which the SBA had been created (SBA, 2006, GMO).

In what other ways could the agency use information systems to improve the process of loan application, approval, and maintenance? The inadequacies of even the reformed system were further exposed in the wake of the Katrina disaster. Along with the much-criticized, publically condemned FEMA, the SBA was attacked for not predicting the 'danger zone' potential of the Gulf Coast. The SBA did try to address some system-related issues by increasing the number of users who could access DCMS.

It also began to flag individuals with low credit scores likely to be rejected, so these applicants could be directed to apply for FEMA loans instead, for which they were more likely to qualify. Of course, the FEMA application process itself was also problematic. The SBA created secure Internet-based application templates for aid to expedite the loan request process. Stress testing and plans for maximum user capacity levels was instituted within the system (SBA, 2006, GMO).

User applications were thus better 'triaged' based upon likelihood of approval, and where the loan should be directed. Risk modeling was introduced, to help cope with future emergencies. The prediction of damage from a variety of types of disasters, in target locations would allow for anticipation of increased levels of demand (SBA, 2006, GMO). Unfortunately, improvement of the system was undertaken only after the backlog had been created.

Unmet demand can create more demand, as businesses without critical resources can fall into more debt and see more damage being done to their businesses, as a result of the aftereffects of the disaster. While the SBA blamed its faulty computer infrastructure for its initial problems, some politicians, such as Olympia Snowe, stated that the problem was less due to computer infrastructure, and more due to a lack of systems analysis that enabled the SBA to use the information on hand to predict and meet victim needs (SBA, 2006, GMO).

SRA: The SBA solution In response to criticism, the SBA attempted to institute major reforms of its it infrastructure. It contracted SRA International, Inc. To create a new, web-enabled electronic loan application processing system to expedite the process. SRA had provided it support for the SBA since 2002, and was thus deemed to know the organization's needs fairly well.