Nevada County Picayune and Gurdon Times Newspaper Archive

Following Diasters And Storms

Following major disasters, the U.S. Small Business Administration (SBA) is the primary source of Federal funds for Long-term recovry assistance.

This assistance is in the form o low-interest loans, and is available to homeowners, renters, and non-farm businesses of all sizes, as well as private non-profit organizarions with property damaged by the disaster.

Renters may be eligible for loans of up to $40,000 to repair or replace their disaster damaged personal property. Homeowners may be eligible for up to $200,000 to repair or replace disaster damaged real estate, plus up to $40,000 to repair or replace their disaster damaged personal property.

Non-farm businesses of all sizes and private non-profit organizations may be eligible for up to $1.5-million to repair or replace business assets physically damaged by the disaster, including damage to buildings, machinery and equiment, furniture and fixtures, inventory, and other business assets.

In addition, small businesses which were not physically damaged but which suffered economic losses due to the disaster may also be eligible for SBA economic injury disaster loans (EIDLs). These working capital loans provide funds for necessary and ongoing expenses until business returns to normal.

The SBA's low-interest loan program was designed by Congress to enable those affected by unforeseen, catastrophic events to recover with as little adverse impact as possible. And Congress has given SBA some very powerful tools to make disaster loans affordable: interest rates as low as 4% repayment terms as long as 30 years, and, under very specific circumstances, refinancing of prior debts.

To ensure that disaster recovery is made affordable for each borrower, SBA analyzes the borrower's monthly budget, determines an affordable monthly payment, then writes the loan for the number of years needed. This is unlike conventional lenders, which generally set the maturity first and then calculate the payment. SBA's method makes recovery affordable for each borrower, and does not require other taxpayers to subsidize the recovery effort longer than necessary.

The recovery process begins when homeowners, renters, non-farm businesses, and private non-profit agencies with physical damage register with the proper disaster relief agency.

When a disaster is declared by the President, disaster victims should teleregister with the Federal Emergency Management Agency (FEMA). This important first step will open the door to a variety of Federal disaster relief programs designed to aid in the recovery process.

In cases of disasters which are declared by the Administrator of the SBA (which are usually more limited in scope), disaster victims should call the SBA directly, or visit one of the Temporary Disaster Offices which the SBA opens in disaster-affected areas. The appropriate telephone numbers will be made available through the local media.

Once they've registered, either by telephone or in person, the disaster victim will be given an SBA disaster loan application package to complete and return.

When SBA receives a completed disaster loan application, an SBA Loss Verifier will make an appointment to visit the disaster damaged property, and will determine the approximate cost to repair the disaster damage.

Because an SBA disaster loan is limited by law to restoring a home or business to its pre-disaster conditon, the amount of the loan is based on the amount of damages, less any recoveries received from other sources.

Suppose a home and its contents incurred $100,000 in damage during a disaster. If the owner received a grant of $3,000 (from another Federal agency, for example) and an additional $37,000 from his or her insurance company (for a total recovry of $40,000) then SBA can consider lending the uncompensated loss or $60,000.

Disaster loans make recovery affordable for the majority or borrowers. And by coordinating the disaster relief received from all sources, the Federal government provides disaster relief without asking taxpayers to provide more financial support than needed.