SBA doles out flood assistance

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By Correne Martin 

Business owners and non-profits, homeowners and renters in Crawford and Vernon counties affected physically or economically by the Aug. 17-Sept. 14 severe storms, floods, landslides and winds have a new type of assistance available to them. These entities may qualify for low-interest loans to repair or replace disaster damage not covered by insurance, or to meet financial obligations during this disaster recovery period. These opportunities are made possible through the U.S. Small Business Administration (SBA), which works hand-in-and with the Federal Emergency Management Agency in times of declared disasters. 

SBA Public Affairs Specialist Annie Mustafa-Ramos is currently in the region spreading the word about the SBA assistance. She said her office can also help in the local counties of Grant, Clayton and Allamakee with economic injury (working capital) only. 

She proudly proclaimed that this SBA assistance can cover more than just businesses and non-profits, as usual. She said homeowners and renters may use it to cover losses of personal belongings such as clothing, cars, carpet, computers, etc. up to $40,000. For those same applicants, the loans may cover up to $200,000 of structural damage. For business owners, small agricultural cooperatives and non-profits, the law allows such loans up to $2 million for physical injury and another $2 million toward economic injury, per individual application. 

Interested individuals must act fast, as Mustafa-Ramos said the application deadline for physical damages in Crawford and Vernon is Dec. 17. The deadline for economic injury in Crawford, Vernon, Grant, Clayton and Allamakee is July 18, 2019. Apply soon online or download applications at disasterloan.sba.gov/ela, call SBA’s disaster recovery center at (800) 659-2955 (800-877-8339 for deaf and hard of hearing), or email disastercustomerservice@sba.gov 

Credit may be extended at rates based upon whether the applicant had credit elsewhere or not, she added, but loan rates can be as low as 2 percent for homeowners and renters. 

More specific details about the assistance follow:

What types of disaster loans are available?

•Business physical disaster loans—Loans to businesses to repair or replace disaster-damaged property owned by the business, including real estate, inventories, supplies, machinery and equipment. Businesses of any size are eligible. Private, non-profit organizations such as charities, churches, private universities, etc., are also eligible.

•Economic injury disaster loans (EIDL)—Working capital loans to help small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, non-profit organizations of all sizes meet their ordinary and necessary financial obligations that cannot be met as a direct result of the disaster. These loans are intended to assist through the disaster recovery period.

•Home disaster loans—Loans to homeowners or renters to repair or replace disaster-damaged real estate and personal property, including automobiles.

What are the credit requirements?

•Credit history—Applicants must have a credit history acceptable to SBA.

•Repayment—Applicants must show ability to repay loans.

•Collateral—Collateral is required for physical loss loans over $25,000 and all EIDL loans over $25,000. SBA takes real estate as collateral when it is available. SBA will not decline a loan for lack of collateral, but requires you to pledge what is available.

What are the interest rates?

By law, the interest rates depend on whether each applicant has Credit Available Elsewhere. An applicant does not have Credit Available Elsewhere when SBA determines the applicant does not have sufficient funds or other resources, or the ability to borrow from non-government sources, to provide for its own disaster recovery. An applicant, which SBA determines to have the ability to provide for his or her own recovery is deemed to have Credit Available Elsewhere. Interest rates are fixed for the term of the loan. The interest rates applicable for this disaster are:

Physical damage loans

Home loans—2 percent, if no credit available elsewhere; 4 percent, if credit available elsewhere;

Business loans—3.675 percent, if no credit available elsewhere; 7.350 percent, if credit available elsewhere;

Non-profit—2.500 percent across the board;

Economic injury loans

Businesses and small ag co-ops—3.675 percent;

Non-profits—2.500 percent.

What are loan terms?

The law authorizes loan terms up to a maximum of 30 years. However, the law restricts businesses with credit available elsewhere to a maximum seven-year term. SBA sets the installment payment amount and corresponding maturity based upon each borrower’s ability to repay.

What are the loan amount limits?

•Business loans—The law limits business loans to $2,000,000 for the repair or replacement of real estate, inventories, machinery, equipment and other physical losses. Subject to this maximum, loan amounts cannot exceed the verified uninsured disaster loss.

•Economic injury disaster loans (EIDL)—The law limits EIDLs to $2,000,000 for alleviating economic injury caused by the disaster. The actual amount of each loan is limited to the economic injury determined by SBA, less business interruption insurance and other recoveries up to the administrative lending limit. EIDL assistance is available only to entities and their owners who cannot provide their own recovery from non-government sources, as determined by the U.S. SBA.

•Business loan ceiling—The $2,000,000 statutory limit for business loans applies to the combination of physical, economic injury, mitigation and refinancing, and applies to all disaster loans to a business and its affiliates for each disaster. If a business is a major source of employment, SBA has the authority to waive the $2,000,000 statutory limit.

•Home loans—SBA regulations limit home loans to $200,000 for the repair or replacement of real estate and $40,000 to repair or replace personal property. Subject to these maximums, loan amounts cannot exceed the verified uninsured disaster loss.

What restrictions are there on loan eligibility?

•Uninsured losses—Only uninsured or otherwise uncompensated disaster losses are eligible. Any insurance proceeds which are required to be applied against outstanding mortgages are not available to fund disaster repairs and do not reduce loan eligibility. However, any insurance proceeds voluntarily applied to any outstanding mortgages do reduce loan eligibility.

•Ineligible Property—Secondary homes, personal pleasure boats, airplanes, recreational vehicles and similar property are not eligible, unless used for business purposes. Property such as antiques and collections are eligible only to the extent of their functional value. Amounts for landscaping, swimming pools, etc., are limited.

•Noncompliance—Applicants who have not complied with the terms of previous SBA loans may not be eligible. This includes borrowers who did not maintain flood and/or hazard insurance on previous SBA loans.

Note: Loan applicants should check with agencies/organizations administering any grant or other assistance program under this declaration to determine how an approval of SBA disaster loan might affect their eligibility.

Is there help with funding mitigation improvements?

If your loan application is approved, you may be eligible for additional funds to cover the cost of improvements that will protect your property against future damage. Examples of improvements include retaining walls, seawalls, sump pumps, etc. Mitigation loan money would be in addition to the amount of the approved loan, but may not exceed 20 percent of total amount of physical damage to real property, including leasehold improvements, and personal property as verified by SBA to a maximum of $200,000 for home loans. SBA approval of the mitigating measures will be required before any loan increase.

Is there help available for refinancing?

•SBA can refinance all or part of prior mortgages that are evidenced by a recorded lien, when the applicant (1) does not have credit available elsewhere, (2) has suffered substantial uncompensated disaster damage (40 percent or more of the value of the property or 50 percent or more of the value of the structure), and (3) intends to repair the damage.

•Businesses—Business owners may be eligible for the refinancing of existing mortgages or liens on real estate, machinery and equipment, up to the amount of the loan for the repair or replacement of real estate, machinery, and equipment.

•Homes—Homeowners may be eligible for refinancing of existing liens/mortgages on homes up to the amount of the loan for real estate repair or replacement.

What if I decide to relocate?

You may use your SBA disaster loan to relocate. The amount of the relocation loan depends on whether you relocate voluntarily or involuntarily. If you are interested in relocation, an SBA representative can provide more details on your specific situation.

Are there insurance requirements for loans?

To protect each borrower and the agency, SBA may require you to obtain and maintain appropriate insurance. By law, borrowers whose damaged or collateral property is located in a special flood hazard area must purchase and maintain flood insurance. SBA requires that flood insurance coverage be the lesser of 1) the total of the disaster loan, 2) the insurable value of the property, or 3) the maximum insurance available.

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