which are Hurricane Celia, Hurricane Camille, the flood in Puerto Rico, and the tornado in Lubbock, Tex.

Then there is $24 million in smaller relatively unpublicized disasters. I will not itemize those but we have a number of them. Many of these are non-Presidential declarations but nevertheless SBA is totally involved and committed. We feel very strongly that a victim in a catastrophe of sorts is just as bad off as a victim that is in an area that is Presidentially declared as a disaster area.

Currently we are operating 48 disasters. Eleven of these are Presidential and 37 are non-Presidential.

We are also expecting on the basis of advice given to us by OEP that we will be looking for some other disasters in Minnesota, Wisconsin, North and South Dakota, Iowa, Illinois, and Nebraska. We are doing all we can to get ready for this.

DISASTER OPERATIONS

There have been some criticisms of our efforts in assisting disaster victims. I would like to very briefly indicate what it is that we do when this comes about. Upon notification from any source the nearest office of the SBA sends a man to the site and hopefully we can get him there within 3 or 4 hours. What he does is to contact the local officials to make them aware of our presence. He surveys the damage and prepares an on-site report. Then he contacts our office here in Washington to give us advice on this evaluation. Then he receives authority to make a local release of the disaster declaration.

Then after 24 hours notice by the central office we are out there on the spot and we contact the local press, radio, and television. We try to estimate the number of potential applications, determine the appropriate location for SBA offices, and we determine whether there is a large-scale problem. Then we make arrangements for transportation, communications, housing, and the like.

We give briefing sessions to our SBA people so they can move, and move fast, in the case of a disaster. We tell them how to proceed. We publicize the flood insurance with HUD, and we contact banks for gratuitous services. In some areas this is working beneficially for all of us. We also make what other arrangements have to be made.

There has been some question about the duplication between Farm Home Administration and SBA. It has been very justifiable.

I want to report we have been meeting with FHA to work out these areas of conflict, these areas of duplication, and an agreement has been reached so that citizens now can be aided without duplication or referral.

I also would like to make a comment regarding some of the criticism that was registered against SBA by Senator Tunney. I do this only from the standpoint of clearing the record.

We do inquire on disaster business loans that exceed $10,000 as to the character and the name check of the individual applicant. This thrust is a criminal one and not a moral one. It was developed as a result of revelations that took place in Louisiana under another disaster. We do not peep through any keyholes. We do believe that it is better to have this kind of a check, and if we have to have adverse publicity for SBA we believe we would rather have it this way than

having us accused of making loans to organizations controlled by organized crime.

DISASTER LOAN PROGRAM

The disaster loan program for fiscal year 1971 is $400 million. This additional $265 million in this supplemental will provide for that program and will leave $108 million for fiscal 1972.

I want to point out that without this supplemental we will be out of disaster funds in April of this year. Even though this $108 million projected carryover into fiscal 1972 is there, it already is committed for declared disasters.

If this supplemental is approved it will allow us to continue our orderly proceessing of disaster applications. There is $100 million requested in 1972 for further disasters, and very frankly we all hope that will be more than sufficient.

That completes my comments on the disaster portion.

BUSINESS LOAN AND INVESTMENT FUND

Mr. KLEPPE. With regard to the requested $80 million additional for the business loan and investment fund, this one was established in July of 1966. Up until fiscal year 1971 it was financed through the sale of participation certificates and $1,100 million were sold through GNMA.

We requested $242 million and received $200 million at that time. We thought this $200 million plus repayments would be sufficient to take care of our demands for this year.

FALL OFF IN REPAYMENTS

Frankly the repayments did not materialize as they were anticipated. The fall off in 1970 was $50 million. In 1971 it has been $54 million. There has also been an increase in operating costs, and primarily because of interest to Treasury. The amount we have currently available is barely sufficient, we believe, to get us through fiscal 1971. This is even with a reduced loan program.

For instance, in the 7(a) business loan and direct and immediate participation it was reduced from $135 million to $90 million for the fiscal year 1971. Without this supplemental appropriation our balance as at June 30 this year would be zero.

The supplemental, if approved and passed, would provide us with $77 million worth of carryover for 1972. We feel, of course, that this is vital because of being able to continue our orderly processing of loan applications. Otherwise we will plainly have to play catch-up and slow-down.

BACKLOG OF APPLICATIONS

We have a tremendous backlog of applications from small business which moves us to admit and to understand that the needs and the demands along the countryside are tremendous. Frankly, what we are asking for is this carryover so we can continue into the first quarter of fiscal year 1972 at least at the same level as we are operating in this last quarter of 1971.

We also feel we need some flexibility to overcome any shortfalls and then to increase loan programs if they become critical.

SUMMARY

In summarizing these remarks, Mr. Chairman, I would like to say that I know that there could be, and understandably so, a tendency on the part of your committee to reduce this supplemental for the direct loan fund because of the $77 million carryover that we have projected. However, I want to put in a very strong plea for the full amount because of the necessity of carrying on at the level we are today based on the needs in the communities that do exist.

With that, Mr. Chairman, I will be very pleased to answer your questions.

I would like to say that with us today is our General Counsel, John A. Knebel, our Associate Administrator for Financial Assistance, Mr. Jack Eachon, and Mr. Paul Howell and Mr. Herbert Mills, Comptroller and Director of our Office of Budget and Finance respectively. I know they can answer what I cannot answer.

AUTHORIZATION

Mr. ROONEY. Are all of the items you are requesting money for, authorized by law?

Mr. KLEPPE. Yes, sir.

REQUEST TO CONGRESS

Mr. ROONEY. With regard to the disaster loans, how much did you request of the Congress and when I say you it is perhaps your predecessor in SBA-for the current fiscal year in new appropriations in the last session of Congress?

Mr. KLEPPE. $100 million supplemental request. We asked nothing for the regular appropriation.

Mr. ROONEY. How much were you allowed?

Mr. MILLS. $100 million.

UNOBLIGATED BALANCE

Mr. ROONEY. What is the unobligated balance in this disaster loan fund at the present time?

Mr. MILLS. $70 million, sir.

Mr. ROONEY. How much do you now estimate you will obligate from today until the end of the fiscal year?

Mr. MILLS. We estimate we will obligate a total of $259.7 million, sir. Mr. ROONEY. What do you estimate will be the unobligated balance as of next June 30 if the Congress were to approve this $265 million? Mr. MILLS. $108.4 million, sir.