Fifteen miles outside of Baton Rouge, on a road washed out by the flooding that submerged a nearby highway, Robert Formeller is rebuilding his property, or trying to. An insurance agent and sole proprietor of the real estate company Formeller Investments LLC, he owns three small office buildings in Denham Springs, Louisiana. Having lived through the disastrous Louisiana floods in 1983, Formeller invested almost $100,000 raising the office buildings above historic flood levels.

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.

So far the SBA has spent $3 million on the program. Its eight-year history has become a story of slipshod reporting and missed deadlines. And it still hasn’t funneled a dollar to people like Formeller.

“That would be critically important, especially getting it up in 36 hours,” said Charles D’Agostino, executive director of the LSU Innovation Park, a research complex in Baton Rouge. “We don’t have a week. We don’t have two weeks.”

The emergency loan program was invented to fill a gap. Businesses actually can get disaster relief from Washington, but it takes a while — after Superstorm Sandy, the Government Accountability Office found it took nearly 40 days for SBA to review disaster loan applications from small businesses. In that time, they can lose inventory, miss payroll, lose all their customers, and usually need short-term cash to keep the doors open. The Small Business Disaster Response and Loan Improvements Act was supposed to do that, offering loan guarantees to local banks, with a goal of approving the money for businesses within 36 hours.

Congress appropriated $3 million in the 2010 fiscal year for the SBA to pilot the program, and the agency actually released rules for it the same year. But the pilot never happened, with the agency repeatedly pushing back its projected launch date. The GAO investigated the delays and delivered a scathing report against the agency in 2014. The watchdog pinpointed two main problems: faulty computers and an unwillingness among lenders to participate.

Last summer, despite the GAO report, the program still hadn’t made a loan, and POLITICO reported that lawmakers were increasingly concerned with SBA’s ability to get it up and running. The agency said it had solved its computer problems but had been unable to persuade banks to take part in the program under the strict financial terms required by law. It reiterated that complaint this summer, sending a letter in July to Rep. Nydia Velázquez (D-N.Y.), the ranking member of the House Small Business Committee, outlining comments it had received from lenders who refused to participate in the program.

Is the program doomed because banks simply won’t help? The National Association of Government Guaranteed Lenders, a trade association for banks and other institutions, sent detailed objections to the loan rules in a comment to the SBA, and went so far as to argue that disaster funding shouldn’t be their job, writing: “providing loans to assist such individuals and entities is an inherently governmental function and is a role unsuited to private commercial lenders.”

But on the ground, it’s not clear how big an obstacle that really is. In Baton Rouge, Nicole Gould said that a local bank quickly said it could lend her father the emergency money he needed — even without the government guarantee. She’d originally tried to help her father apply for disaster loans from the SBA, but gave up on trying to fill out the forms after spending hours on them and getting only halfway through. “There's not enough time to spend on a 10-hour application,” she said. “We just talked to the banker and he promised us the lending is on and their rate is going to be very close to 4 percent anyway. They already have the first mortgage on the property. They have a vested interest in the property succeeding.”

The state of Louisiana has had good luck working with local banks as well. After Katrina, the state set up a temporary bridge loan program to help small businesses recover. Like the Immediate Disaster Assistance Program, the Louisiana program worked through private-sector lenders. Its terms were slightly better than the federal program: The SBA law offers banks an 85 percent repayment guarantee; Louisiana offered 100 percent. The program delivered $10 million in loans to 407 small businesses within three weeks.

The idea does require some community spirit on the part of banks: Even with a 100 percent loan guarantee, “It’s not going to make the banks any money,” said Adam Knapp, who was the policy director for the Louisiana Economic Development agency at the time and now is the CEO of the Baton Rouge Area Chamber,. “They are doing it out of their goodwill.”

The NAGGL did not respond to a message asking for further comment on its objections to the loan program.

By all accounts, the SBA has improved its processes for responding to natural disasters in recent years. It has been quick to set up field offices in the region and put out information for how affected businesses can apply for loans. But the flooding in Louisiana is putting the agency to its first major test since Sandy. Through Thursday, the agency had received 801 applications for its traditional business disaster loans. So far it has approved only 92 for a total of $7.9 million; it declined 243, with 415 still pending. (51 were withdrawn.) Carol Chastang, a spokesperson for the agency, said the applications are being processed within five days — not quite 36 hours, but far better than the SBA’s processing times after Sandy. However, keeping up that pace will be critical as more small-business owners file their applications. The agency received nearly 15,000 applications after Sandy. While the numbers aren’t expected to reach that high in the Baton Rouge region, Knapp estimates that 12,000 small businesses were affected, so the number of applications could rise considerably in the coming weeks.

“Getting cash out within about a week is really the time frame you want,” said Michael Hecht, the president of Greater New Orleans, a regional economic development group.

So the complaints do seem to have improved at least one part of the disaster lending program. As for the quicker emergency loan program launched in 2008? The short answer is that it’s been punted: The SBA has told Congress what the problems are, so in theory the impetus for fixing them falls on Congress. Potential solutions to make it more appealing to banks include increasing the loan guarantee and loosening restrictions on the loan term and associated fees, which would require changes to the law. In November, Congress passed legislation, sponsored by Velázquez, that made small changes to the traditional disaster loan program and gave businesses affected by Sandy another chance to apply for aid, but did not address the loan programs created under the 2008 legislation.

In response to questions about whether Congress was considering changes to the program, Velázquez said in a statement, “We should look carefully at potential changes to improve these other disaster loan initiatives, encourage private sector involvement and create more options for businesses impacted by disasters. It is inexcusable that the agency has taken 8 years and still hasn't been able to get this program off the ground. If legislative changes are necessary, we can look into them and I would hope my Republican colleagues would be open to such an effort, but regardless the agency needs to make this initiative a priority." Any changes will ultimately be up to the committee chairman, Steve Chabot (R-Ohio), and Republican leaders in Congress. Chabot's staff said they were awaiting another GAO report in October.

Meanwhile, in Baton Rouge, the community is coming together to help each other in any way it can. D’Agostino, who has worked with small businesses in the region for almost 30 years, said he and his staff drove around handing out Visa gift cards and household goods like toothbrush and toothpaste—the small items that are critical for people to get their lives back on track but are easily overlooked. He offered small businesses a computer with Internet and a phone to call suppliers, cancel deliveries and inform customers their orders would not arrive on time.

“It’s a monumental thing,” he said, adding, “This is not going to be a short process.”

After publication, Rep. Velázquez's office provided an additional statement on the need for the Small Business Administration to prioritize the emergency loan program. The story has been updated to include it.

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