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offices. These men worked at no cost to the Government side by side with our men, Government employees.
These bankers made an outstanding record of service to their communities.
In addition, many banks served as auxiliary offices in our disaster program, passing out application forms to victims, advising and assisting in the preparation of applications. Of course, our own loan officers made the final decisions.
We are now working with the American Bankers Association to establish this arrangement on a nationwide standby basis for future disasters.
Is soon as the magnitude of the Northeast flood became apparent, we were aware that the $17 million we had available in our disaster loan fund would not be sufficient to meet the demands. We discussed this matter with members of both Houses of Congress from the sevenState flood area and with the appropriate officials in the executive branch of the Government. As a result of these discussions, the White House, after determining the probable congressional concurrence, recently announced a procedure whereby we would continue to make disaster loans even though our $25 million disaster loan fund is nearing exhaustion.
Under this procedure, the Small Business Administration will process business disaster loans as regular business loans wherever possible, at 6 percent interest. When the Congress reconvenes in January, and assuming its action in lifting the $25 million disaster loan limitation, these loans will then be converted on a retroactive basis to regular disaster loans at 3 percent interest.
And may I say that the first payments on those loans have been set beyond February, so that it seems likely that no one will have to pay interest at the higher rate until Congress has had an opportunity to act.
I feel certain this will not work a hardship on any disaster victim.
At the last session of Congress, authority was given us to extend our disaster loan service to some businesses hitherto ineligible. I am referring to our drought-disaster loan program.
There are some 1,323 counties in 20 States that have been officially designated as drought areas. Business firms in these areas are eligible to apply for a drought-disaster loan if they can show that their business has suffered substantial economic injuries, because of drought conditions.
Such a showing may be in the form of a comparative operating statements, excessively large accounts receivable, a decline in sales volume, and other factual data.
As the established agency of the Government to make loans to small businesses and to make disaster loans to homeowners and to businesses of any size when they are struck by a natural calamity, the Small Business Administration, I believe, has developed a sound organization and plan ready for disaster whenever it strikes in the making of loans.
SBA has effectively assisted small firms with their term-credit needs in cooperation, not competition, with private lending institutions, and our plans are, of course, to act as swiftly and as promptly as possible.
Now, I have some other charts and data which I think may be helpful to the committee bearing on this particular disaster. I have a breakdown of the applications that we have received by States showing the breakdown as to how many home applications, how many business applications, and the average size.
Incidentally, in this disaster, the average size of the applications so far received for homes is $5,050. The average size of business loan applications received is $27,700.
Senator Bush. Well, Mr. Barnes, haven't there been a few large loans that have brought that average way up?
Mr. BARNES. Yes, sir.
Senator Bush. I am thinking about my own area there, and I know of a few large loans that seem to have brought that average very high.
Could you give us any figures as to the average on the lowest 80 or 90 percent of the loans? Do you see what I mean?
I don't know whether the New Haven Railroad was one of your loans or not.
Mr. BARNES. No; it is not.
Mr. BARNES. In order that the committee may understand, section 302 loans are loans that can be made by the Treasury if there is a defense aspect to the business and providing the Office of Defense Mobilization issues a certificate of necessity, I believe it is, and through arrangements between agencies we have been designated as the agent to receive those applications, to collect the credit data, and to process them up until time for final action, and then we refer them to proper officials in the other agencies.
Five of those loans have been made, for $3,500,000.
The exact figure of how many loans there are in excess of $100,000 or $200,000 I do not have, since my figures are only through September 30, which would not give a complete breakdown on this disaster. However, I do have that breaking down the loans by dollar size and indicating the percentage of the total number of applications received falling in different categories.
Now, of course, there had been I would say probably 50 or 60 percent of the large loans filed up there prior to September 30, but I can give this to you for
Senator Bush. Could we look at that just a moment, Mr. Chairman? Senator LEHMAN. Yes.
Senator Bush. This is the Small Business Administration, and this committee is interested in seeing how small businesses come out in connection with these loans, these disaster loans. I want the record to show if possible just how small business did come out. This does it pretty well, yes.
What we ought to have is not just the September 30 report for the record, I would think, but perhaps hold the record open for a report that would give as late as possible a summary of this, Mr. Chairman, rather than a September 30 report.
Mr. BARNES. Îf I may do so, I will file that as an exhibit showing the total number and perhaps individually the companies which have applied.
Senator Bush. Well, I am agreeable to inserting anything the Senator wants. I just wanted the whole picture.
Senator LEHMAN. I quite agree with you. I think it should be brought up to date and placed in the record.
Senator Bush. Then our request is, Mr. Barnes, that for inclusion in this record we get the latest possible report on this summary here sometime in November, you see, when you are able to give us this. Find out when the record closes and get the latest possible report of these figures, which will also give effect, you see, to the mid-October floods, will it not? Mr. BARNES. Yes, sir. (The information furnished by Mr. Barnes follows:)
SMALL BUSINESS ADMINISTRATION Disaster loan applications received and approved, by size, cumulative through Nov. 30, 1955 1
61, 639 515, 352
4 33, 705
i Cumulative amounts approved at any one time exceed loans outstanding by reason
2 Distribution by size class is based on gross amount of all loans approved, including
3 Distribution by size class is based on amount of direct loans approved and SBA share
4 421 loans representing an SBA share of $8,113,000 were temporarily approved under
3 Excluding 7 applications received in the amount of $4,467,000, which were approved
Disaster loans approved, classified between home loans and business loans, in
eastern and northeastern areas suffering flood damage during August 1955 (Hurricane Diane) and October 1955, by States, as of Nov. 30, 1955
Mr. BARNES. The other schedule which I had prepared I will give for distribution, which further explains the chart which I pointed out a few minutes ago and breaks it down by States.
I think the committee may be interested in the overall figures, my latest report being October 29. There is sometimes a discrepancy between these two figures, between the figures I might have given earlier in my statement, since they are drawn from official reports that are transmitted by mail, and the figures that I am now giving you which come to us by TWX and telegram and are a little bit more complete.
As of October 28, we had received a total of 1,964 applications from this New England disaster, and this includes, however, the Carolina areas where the same storm had hit a day or so earlier. This in dollar amount was for $39,845,643.
Now, we had approved 1,402 loans for $19,479,889, and, together with the 5 loans approved as section 302 loans, it left a total of approximately $23 million that had been approved at that time, with some 400 applications still pending to be acted on and with about 152 loans declined.
Senator LEHMAN. Were these loans all made or approved, the applications received and the loans approved, after the Hurricane Diane?
Mr. Barnes. Yes, sir. These are all attributable solely to Hurricanes Diane and Connie.
I will offer this for the committee's record, which gives a breakdown of the applications by offices.
Senator Br'sh. May I see that?
Senator LEHMAX. Mr. Barnes, I want to commend the Administrator for an effective statement of the achievements of his agency.
Listening to your figures, I am a little confused as to the purpose of some of these loans. If my recollection is accurate, I think you stated that there were a number of loans with large amounts. I believe one loan was mentioned to the Hershey Co. of about $1,800,000. Is that correct?
Mr. Barxes. Yes, sir,