But the torrential rains that struck the Baton Rouge region in August flooded the buildings anyway. He’s been spending days and nights since working to recover his business before mold sets in and his tenants move out. “He's tapping into every loose dollar he can find to get things moving and get on top of the recovery,” said his daughter, Nicole Gould.
As millions in disaster-relief money pours into Louisiana, you might think a good federal disaster policy would get money to people like Formeller almost immediately, giving them enough short-term cash to keep their businesses afloat. And you’d be right: experts on disaster recovery think getting money quickly to small-business owners is crucial not just for the owners, but letting the community around them recover. One oft-cited study by the Federal Emergency Management Agency found that 40 percent of small businesses that close for even a day after a disaster never reopen.
“[Small businesses] are so much the part of a fabric of a community,” said Robin Keegan, the former executive director of the Louisiana Recovery Authority, which was created following Hurricanes Katrina and Rita to oversee the recovery. “In most cases, the recovery of a community is almost a mission rather than a profit-making endeavor. They need the resources to be part of that recovery.”
After Katrina, Congress passed a new law designed to do just that. The Immediate Disaster Assistance Program, 1 of 3 emergency loan programs created under a 2008 law, was supposed to funnel money to small businesses within 36 hours of a disaster, with a government guarantee for the lender. But as POLITICO reported last year, that program — which was supposed to be piloted in 2010 — had never actually managed to secure a loan for any small business.
Congress held a hearing on the problem last summer, but today, as Louisiana faces its worst disaster since Katrina, the emergency loan program still hasn’t secured a single loan. What has happened, instead, is a bit of buck-passing. Last year, Congress was pointing the finger at the Small Business Administration, which was supposed to administer the loans but had never actually helped issue one. This year, Congress has the agency’s feedback on what went wrong — but it’s unclear what, if anything, lawmakers plan to do about it.
