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When disasters strike, it is comforting to know that technology can help streamline the recovery process. After a crisis, the United States Small Business Administration (SBA) relies on its Disaster Credit Management System (DCMS) Operations Center to quickly provide low-interest, taxpayer-subsidized loans to both homeowners and businesses. Not too many years ago, it was a slow process because the loan system was almost entirely paper- and pen-based. Now, the SBA has consolidated IT operations and has automated the lending process with a software suite that runs on top of Oracle9i Database.
The SBA contracted with SuperSolutions and Oracle to install SuperSolutions' Daybreak Lending Suite. SuperSolutions Director of Development Amarnath Naidu says that the company utilized Oracle Database "because it can scale to a large data volume and it's very flexible."
The system was tested—and is succeeding—after the devastation of 2005's Hurricane Katrina, which was by far the largest disaster that the SBA has faced. Over 1.5 million applications have been issued to date, and it is anticipated that processing will be completed more quickly compared to past disasters.
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Spotlight on Financial Services
A Helping Hand
By Karen J. Bannan
The Small Business Administration speeds loans in times of trouble.
When Hurricane Katrina made landfall last year, it crushed everything in its path. Human losses were devastating; even those who made it out lost nearly everything. Officials in the southeastern U.S.—especially in Louisiana and Mississippi—took months to calculate the number of homes and buildings that were lost. And yet less than 1,000 miles away from the tragedy, in Herndon, Virginia, the U.S. Small Business Administration's Disaster Credit Management System (DCMS) Operations Center offered a ray of hope.
Giving Small Business a Big Hand
The Small Business Administration (SBA) is a government-funded organization that assists businesspeople in the U.S. with funding and advice. In times of crisis, the SBA also provides low-interest, taxpayer-subsidized loans to businesses and homeowners. The organization is the primary source of funding for repair of uninsured damage to homes and businesses or replacement of those structures. Businesses can qualify for loans of up to US$1.5 million, which cover repairs, inventory, machinery, and working capital. Homeowners can borrow US$200,000 for real estate losses and US$40,000 for replacing personal property. Repayment terms of the loans, which typically carry rates less than half of the prime rate, vary depending on income and assets. The usual loan maxes out at 30 years, says Michael Sorrento, the director of the DCMS Operations Center, and even those without insurance may qualify for a loan.
Until November 2004, the Office of Disaster Assistance operated four separate geographically oriented centers in Atlanta, Georgia; Buffalo, New York; Fort Worth, Texas; and Sacramento, California. Each had its own IT infrastructure. Each was staffed by a small crew, which was supplemented by temporary workers during emergencies. Some worked in the offices handling paperwork and routing, while others went into the field to assess damages.
Unfortunately, although the SBA did impressive work helping people and businesses get back on their feet, it wasn't a fast process for anyone involved, as it was almost entirely paper- and pen-based. The only computerized portion, says Hector V. Barreto, administrator of the SBA, was an Automated Loan Control System (ALCS), which was cumbersome, unreliable, outdated, and noncompliant with the current IT security requirements. "ALCS was not a loan processing system but a tracking system that interfaced with our mainframe to fund and disperse loans," Barreto explains. As a result, it became more an obstacle to successful lending than an aid.
Too Much Red Tape
In the past, once the Federal Emergency Management Agency (FEMA) declared a disaster, SBA officials would mail out applications and set up temporary centers in the affected areas. Center employees advised displaced home and business owners about the loan process, issued and accepted applications, and started the paperwork on its way through the system.
"SBA employees would move that paper into the office where the data was entered, and then the paper would become part of a file," explains Sorrento. Credit reports would be run manually, and benefits reports would be pulled off other systems, printed out, and put into the file, he adds. Different processes came into play for businesses, including running a Dun & Bradstreet report or other credit report and putting it into the file and checking other internal SBA systems to see if there was already an existing loan. If so, that would be printed out and put into the file.
From there the physical file would bounce from person to person, first stopping in the Loss Verification department, and then wending its way down—usually via overnight delivery—to a property inspector. He or she would take the file out to the field to do a visual inspection of the property. The entire package, including field reports and photos, would be sent back to a loan officer, who made a loan determination, Sorrento says. And that's the abbreviated version. As with any lengthy, paper-based process, there was plenty of room for mistakes. Files got lost, duplicate entries were created, packages got waylaid. Sometimes numbers didn't add up since math was computed manually. And along the way, an inordinate number of people needed to physically touch the file.
"The business case is predicated primarily on the number of people needed to perform all of those functions, including those that needed to be there to actually log files in and log them out to do this whole file control," explains Sorrento. "The number all depends on the disaster activity, but I can tell you that in 2004, with four hurricanes coming across Florida, the staff to support just the file control process was probably upward of 200 people. The loan portfolio there is small compared to what we're responding to with Hurricanes Katrina and Rita." Even so, those smaller hurricanes still required more than 3,000 people on staff.
Starting Over
When the SBA set out to redesign its disaster-related process, administrators realized quickly that streamlining was key. They decided that consolidating each of the four centers into a single center would create a single point of contact and base of command for IT support. This left the old offices free for other SBA tasks. For example, the agency created a call center at the former Buffalo, New York, location. This means that all calls go through one place rather than being routed based on geography. The Fort Worth office became a processing and disbursement center where the loan and legal staffs actually make and disburse loans.
They also knew that they needed industry-standard software to run it, and a strong, bulletproof database that would withstand a large volume of entries. The SBA contracted with SuperSolutions Corporation, an i-flex solutions company, and Oracle, installing SuperSolutions' Daybreak Lending Suite, which automates the lending process. The software, explains Amarnath Naidu, SuperSolutions' director of federal accounts practice, runs on top of Oracle9i Database.
"Oracle Database can scale to a large data volume and it's very flexible," explains Naidu. "If we need to change on the fly, we can do it; and that's a huge advantage compared to any other product in the market."
On the end-user side, the data collection process changed with the addition of Toshiba's Protégé M200 tablet PCs and a Java-based custom application that help inspectors do their jobs. The process is simple: A loan request is created and put into Oracle Database. Those requests are turned into assignments that are pushed out to the inspectors' tablet PCs. They can enter data and inspection details directly into the tablet, and that data is then uploaded back to the database at the end of the day.
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U.S. Small Business Administration
www.sba.gov
Headquarters: Herndon, Virginia
Mission: To maintain and strengthen the nation's economy by aiding, counseling, assisting, and protecting the interests of small businesses, and by helping families and businesses recover from national disasters.
Products and services: Oracle9i Database, Oracle Application Server, SuperSolutions Daybreak Lending Suite, Toshiba Protégé M200 tablet PCs
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"The loss verifiers get to use the tablets, which weigh about three pounds, and they get to enter in their data, and then send it back. They don't have to go lick stamps, put FedEx labels on, or drive three hours to get to the DFO [Disaster Field Office] so they can drop off their work or pick it up," says Sorrento. "They enter their work and sync up with the same Oracle database that they receive their assignments from. They can go out independently without being connected to anything, perform their work, then go back to their hotel room, or anywhere with a WiFi connection, and sync with the database. This process cuts days if not weeks out of the loan process."
Making the Case
The system was tested—and is succeeding—in the aftermath of Hurricane Katrina, by far the largest disaster that the SBA has faced to date. The only event that even came close to Katrina was the 1994 Northridge, California, earthquake. At that time, the SBA processed more than 100,000 loan approvals worth US$4 billion. The loan applications this time should dwarf those numbers, according to the SBA, since more than 1.9 million applications have been issued to date. Processing, says Sorrento, should be completed far more quickly.
"Before Hurricane Katrina hit, we were handling about 100 applications a day. We're now taking in about 7,000 or 8,000 a day. That changed essentially overnight. I don't know another product that could respond with that kind of scalability other than what we're using," says Sorrento. "In our business, you can't predict the volume of workload you're going to get, and Oracle gives us the foundation to go to any limit."
In the end, the real benefit of Oracle Database and the Daybreak software is evident in the way that the people and businesses of New Orleans and other cities get back to normal more quickly with less hassle and waiting.
Aside from the effect this new software will have for disaster victims, there's also a strong cost savings within the program, says Sorrento. The biggest savings came from salary and per diem reductions. For example, you don't need as many people if you can pull up a record electronically whenever and wherever you need it. Postage savings are huge, too, says Sorrento, considering each file often made its way back and forth across the country several times.
The system can only get better, Sorrento adds. He and his staff envision a Web portal that allows disaster victims to enter their own applications directly into the system. This would eliminate the need to key in from a paper-based application, he says.
The SBA, in conjunction with FEMA, expects to launch this feature within a year. Even sooner, the SBA will make a staffing component live, says Naidu. This will give the agency more visibility into its staffing levels and help disseminate information out of each of its offices. This is significant, since during an emergency staffing levels can jump to 5,000 people almost overnight.
Combined, these features will make a real difference in the lives of countless Americans, says Sorrento. "We're not the team that gets out and helps save people's lives. We're not out there rowing people out of the damaged areas and getting them out of the helicopters off the rooftops, but we are very, very critical to the long-term longevity and the stabilization of the communities and the tax bases," he says. "We've got a lot of loan applications in, but we're going to get many, many more. And as our staffers go ahead and talk to individuals, the feedback they're getting is about just how customer friendly the SBA people are. They talk about how they're impressed with our responsiveness, because when their application comes in, we're concerned about everything that needs to be done to make that person satisfied."
Karen J. Bannan covers business and technology for publications such as Forbes and PC Magazine.
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