| 9/24/05 Related
Articles:
Disaster Biz Loans
Disaster Business Loans
Home and Personal Property Disaster
Loans
Disaster Planning
SBA Disaster
FAQ
The Facts About...Disaster Assistance
Loans for Homes & Personal Property
If you are in a declared disaster area
and are the victim of a disaster, you may be eligible for financial
assistance from the U.S. Small Business Administration - even if you
don't own a business. As a homeowner, renter and/or personal-property
owner, you may apply to the SBA for a loan to help you recover from a
disaster.
This brochure describes the type of assistance available and answers the
most frequently asked questions about the SBA's disaster-assistance
program for individuals. Where practical,assistance with completing the
application will be available.
Assistance Available
As an individual, there is one basic
loan, with two purposes, available to you:
Personal Property Loan: This loan can
provide a homeowner or renter with up to $40,000 to help repair or
replace personal property, such as clothing, furniture, automobiles,
etc., lost in the disaster. As a rule of thumb, personal property is
anything that is not considered realestate or a part of the actual
structure. This loan may not be used to replace extraordinarily
expensive or irreplaceable items, such as antiques, collections,
pleasure boats, recreational vehicles, fur coats, etc.
Real Property Loan: A homeowner may
apply for a loan of up to $200,000 to repair or restore their primary
home to its pre-disaster condition. The loan may not be used to upgrade
the home or make additions to it. If, however, city or county building
codes require structural improvements,the loan may be used to meet these
requirements. Loans may be increased by as much as 20 percent to protect
the damaged real property from possible future disasters of the same
kind.
Note: A renter may apply only
for a personal property loan.
Insurance Proceeds: If you have insurance coverage on your
personal property/home, the amount you will receive from the insurance
company will be deducted from the total damage to your property in order
to determine the amount for which you are eligible to apply to the SBA.
If you are required to apply insurance proceeds against an
outstanding mortgage, the amount applied can be included in your
disaster loan. If, however, you voluntarily apply insurance proceeds
against an outstanding mortgage, the amount applied cannot be included
in your disaster loan.
If you have not made a settlement or
are having trouble reaching an agreement with your insurance company,
you may apply for a loan in the full amount of your damages and assign
any insurance proceeds to be received to the SBA.
Interest Rates on Loans: The law
requires a test of your ability to obtain funds elsewhere in order to
determine the rate of interest that will be charged on your loan. This
credit-elsewhere test also applies to applicants for both personal
property and real property loans.
Applicants Who Can Obtain Credit
Elsewhere: The interest rate to be charged is based on the cost of money
to the
U.S. government,
but will not be more than 8 percent per year.
Applicants Determined Unable to Obtain
Credit Elsewhere: The interest rate to be charged will be half of the
interest rate charged to applicants determined to be able to obtain
credit elsewhere, but will not be more than 4 percent per year.
Term of Loan: The maximum maturity, or
repayment term of an SBA loan, is set at 30 years. However, the SBA will
determine repayment terms on a case-by-case basis according to your
ability to repay.
Frequently Asked Questions About SBA Loans
Q. How much can I borrow?
A. The amount of money that the SBA will lend you will be based upon the
actual cost of repairing or replacing your home and/or personal
property, minus any insurance settlements or other reimbursements or
grants. The total loan amount is subject to the limits set out above.
Q. Must I use my own money or
try to borrow from a bankbefore coming to the SBA?
A. No.
Q. I already have a mortgage on my home. I can't afford a
disaster loan plus my current mortgage payment. Can the SBA refinance my
mortgage?
A. In certain cases, yes. The SBA can refinance all or part of prior
mortgages, 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); and 3) intends to repair the damage. An SBA disaster loan
officer can provide more detailed information on your specific
situation.
Q. What information do I need to submit
for a home and/or personal property loan?
A. The necessary information is specified
in the loan application. In all cases, it includes an itemized list of
personal property losses with the repair or replacement cost of each
item. It also includes permission for the IRS to give the SBA
information from your last two federal income tax returns. If you have
pictures of the damaged property, you can include them as well.
Q. Will the SBA check the losses I claim?
A. Yes. Once you have returned your loan application, an SBA loss
verifier will visit you to determine the extent of the damage and the
reasonableness of the loan request.
Q. How soon will I know if I qualify
for a loan?
A. That depends on how soon you file a
complete SBA loan application. The SBA disaster relief program is not an
immediate emergency relief program such as Red Cross assistance,
temporary housing assistance, etc. It is a loan program to help you in
your long-term rebuilding and repairing. To make a loan, we have to know
the cost of repairing the damage, be satisfied that you can repay the
loan, and take reasonable safeguards to help make sure the loan is
repaid. The SBA loan application asks for the information we need. The
faster you return it with all the needed information, the faster we can
work on it. We try to make a decision on each complete application
within seven to 21 days. Applications filed early can be completed in a
much shorter time. We process applications in the order received, so
file early. Be sure your application is complete; missing information is
the biggest cause of delay.
Q. How soon can I expect the money?
A. Loans over $10,000 have to be secured. We won't decline a loan just
because you do not have enough collateral, but we do ask for whatever
collateral is available. This means that after a loan is approved there
are other steps you must take. Usually, the security consists of a first
or second mortgage on the damaged real estate. After we approve the
loan, we will tell you what documents are needed to close theloan. You
return the loan-closing documents to us, we can order the checks. You
will receive the money in installments as you need it to repair or
replace the damage.
Q. Should I wait for my insurance settlement before I apply to
the SBA?
A. No. If you do not know how much of your loss
will be covered by insurance or other sources, the SBA will consider
making a loan for the full amount of the loss, up to our loan limits,
provided that you assign the insurance check to the SBA to reduce the
amount of the loan.
Q. I would like to get a
contractor's estimate for the cost of repairing damage to my home, but
I'm having trouble finding one. Should I hold up my application until I
get the estimate?
A. No. You might miss the deadline for
filing your application while waiting for a contractor's estimate. If
you have an estimate, include it. The SBA will verify any damage
estimates listed on your loan application. Also,the sooner you file a
completed application, the sooner the SBA can process it.
Q. If I receive a disaster loan, may I spend the money any way I
want? A. No. The disaster loan is intended to help you
return your property to the same condition it was in before the
disaster. Your loan will be made for specific and designated purposes.
Remember that the penalty for misusing disaster funds is immediate
repayment of one-and-a-half times the original amount of the loan. The
SBA requires that you obtain receipts and maintain good records of all
loan expenditures as you restore your damaged property and that you keep
these receipts and records for three years.
Q. If my home is completely
destroyed, can the SBA lend me money to relocate my home somewhere else?
A. If you are unable to obtain a building
permit to rebuild or replace your home at its original site, the cost of
relocating your home might be included in the loan amount. If, however,
you decide to relocate your home without being required to, an SBA loan
can be obtained only for the exact amount of the damage. SBA can not
make loans involving some relocations. An SBA disaster loan officer can
provide more detailed information on your specific situation.
Q. I am a farmer. My home was damaged, and so were my barns, fences,
and some of my crops. Am I eligible to apply for SBA assistance? A.
You may apply to the SBA for a loan to cover the damage to your home and
its contents only. But it may be in your interest to seek assistance
first from the U.S. Department of Agriculture for all your damage.
Q. Are secondary homes or vacation homes eligible for loans?
A. No, not as homes. They may be eligible for
business disaster loans under certain conditions
Q. Are there any other
limitations?
A. Yes. Generally, loans will
not be made for damage to personal pleasure boats, planes, recreational
vehicles, antiques, collections, etc. Also, amounts for landscaping,
family swimming pools, etc., are limited.
Q. Is there a minimum monthly payment, and
when would the first payment be due?
A. The SBA does not have a minimum monthly
payment. Payments vary depending upon income and expenses, size of
family and other circumstances that may affect your repayment ability.
Generally, the first payment is not due until five months after the date
of the loan.
Q. I had to remove debris from my property after the disaster. Can
this expense be included in my loan application? A. Yes,
but your own labor and that of family members cannot be included.
Amounts paid to others and any equipment rental can be listed as part of
repairs to realestate. Remember that the maximum loan limit on
realestate damage is $200,000, and debris removal is included in the
limit.
Q. May people over the age of 65 apply for help from the SBA?
A. Yes. Loans are made without regard to age.
Q. I've heard that SBA loan
applications are complicated and hard to complete. Is this true?
A. No. The application form asks you the
same information that any bank would request before lending you money.
If you need help, SBA disaster personnel are available to explain the
forms and give you assistance at no charge. You may use the services of
accountants or attorneys if you wish, but be sure they are reliable and
that their fees are reasonable. If you choose to use an attorney or an
accountant, you must report those fees on your SBA loan application
form.
Q. Are damages to cars and mobile homes eligible?
A. Generally, yes. The loan would be only for
uninsured losses.
Q. Do I need flood insurance to get a loan?
A. If you are in a special flood hazard area, you
must have flood insurance before we can disburse a loan. The amount of
insurance required is the insurable value ofthe property in the special
flood hazard area but not to exceed the maximum flood insurance
available under the National Flood Insurance Act.
Additional Reading:
Disaster Tax Relief
Physical
Disaster Business Loans
Related Articles:
Disaster Biz Loans
Disaster Business Loans
Home and Personal Property Disaster
Loans
Disaster Planning
SBA Disaster
FAQ
This original SBA article can be found
HERE |
