New Orleans Business Owners Update

In late 2005, John Rowland's catering business was teetering. Before Katrina, it had thrived on the city's booming convention business. Although spared physical devastation, Southern Hospitality Catering (southernhospitalitycatering.com) was out $100,000 from lost bookings, spoiled food and vandalism and Rowland feared that his business might not survive long enough to see the conventions return. Like many business owners, he turned to the Small Business Administration for emergency assistance, but his struggle with the bureaucracy soon made him a poster boy for New Orleans businesses getting the runaround; Rowland testified before the Senate Committee on Small Business on Sept. 22, 2005, its first investigation into the bungled response to the emergency. ("Small Bungling Administration," FSB November 2005).

Two years later, Southern Hospitality Catering is back on its feet, no thanks to the government, Rowland says. Dealing with the government remained so difficult that he wound up getting a bank loan instead. "We had to do it all on our own," he says. Before Katrina, 40% of the company's business consisted of convention parties, at $40,000 to $60,000 a shot. Conventions have shrunk to 7% of revenue, but Rowland says he's rebuilding with corporate events. "We have rewritten all of our businesses," he says.

Two years after Rowland testified about the inadequacy of the SBA response to Katrina, the agency is still trying to catch up with the needs of businesses in the Gulf region. Only in May of this year did it finish processing the 420,000 loan applications submitted after Hurricanes Katrina and Rita. In July, the SBA reopened applications for Economic Injury Disaster Loans in the area. Steven Preston, administrator of the SBA since July of 2006, says the SBA is creating a disaster response plan that can handle an event even bigger than Katrina. The plan, announced on June 1, calls for 900 staffers to be ready to respond in 48 hours. The SBA computers, which could barely handle 2,000 users in 2005, can now accommodate 8,000 simultaneous users. "We took a step back to say if a Katrina happened, how does this agency need to ramp to ensure that we can respond to the need effectively," he told FSB. The Small Business Disaster Response and Loan Improvements Act of 2007, placed on the Senate calendar this spring, will increase the maximum loan amount from $1.5 million to $5 million and grant short-term loans of up to $100,000 to keep businesses going in the aftermath of a disaster.