Special to Atmore News
The U.S. Small Business Administration (SBA) reminds businesses of all sizes, private nonprofit organizations, homeowners and renters that September 20 is the deadline to apply for physical damage disaster loans for damage caused in June by Tropical Storm Claudette.
Anyone in the declared counties in Alabama — Escambia, Tuscaloosa, Baldwin, Bibb, Conecuh, Covington, Fayette, Greene, Hale, Jefferson, Monroe, Pickens and Walker — with damages caused by Tropical Storm Claudette on June 19, 2021, should apply for the disaster loan program. The declaration also covers Escambia, Okaloosa and Santa Rosa counties in Florida.
The filing deadline to return applications for physical property damage is Sept. 20, 2021. The deadline to return economic injury applications is April 22, 2022.
Those located in a declared disaster area may be eligible for financial assistance from SBA, which supplied the following information regarding such assistance:
Disaster loans 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.
• Home Disaster Loans – Loans to homeowners or renters to repair or replace disaster-damaged real estate and personal property, including automobiles.
Credit requirements
• Credit history – Applicants must have a credit history acceptable to SBA.
• Repayment – Applicants must show the ability to repay all 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.
Interest rates
By law, the interest rates depend on whether an 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 nongovernment 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:
Loan types
No Credit Available Elsewhere — Home Loans, 1.625 percent; Business Loans 2.880 percent; Non-Profit Organizations 2.000 percent.
Credit Available Elsewhere — Home Loans, 3.250 percent; Business Loans, 5.760 percent; Non-Profit Organizations, 2.000 percent.
Economic Injury Loans, No Credit Available Elsewhere — Businesses & Small Agricultural Cooperatives 2.880 percent; Non-Profit Organizations 2.000 percent. Those with credit available elsewhere are not eligible for Economic Injury Loans.
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 7-year term. SBA sets the installment payment amount and corresponding maturity based upon each borrower’s ability to repay.
Loan limits
• Business Loans – The law limits business loans to $2,000,000 for the repair or replacement of real estate, inventories, machinery, equipment and all 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 for their own recovery from non-government sources, as determined by 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.
Restrictions 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.
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 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.
Refinancing help
• 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 the refinancing of existing liens or mortgages on homes, up to the amount of the loan for real estate repair or replacement.
Applicants may relocate
You may use your SBA disaster loan to relocate. The amount of the relocation loan depends on whether you relocate voluntarily or involuntarily.
Insurance requirements
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.
How to apply
Applicants may apply online, receive additional disaster assistance information and download applications at https://disasterloanassistance.sba.gov/ela. Applicants may also call SBA’s Customer Service Center at (800) 659-2955 or email disastercustomerservice@sba.gov for more information on SBA disaster assistance. Individuals who are deaf or hard of hearing may call (800) 877-8339.
Completed applications should be mailed to U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.