Physical Disaster Loans (59.008)

 

Program

59.008 Physical Disaster Loans

 

Federal Agency

SMALL BUSINESS ADMINISTRATION

 

Authorization

Small Business Act of 1953, Section 7(b)(1), as amended, Public Law 85-536, 15 U.S.C. 636(B)(1); Disaster Relief Act of 1970, Sections 231, 234, 235 and 237, Public Law 91-606, 42 U.S.C. 4401; Public Laws 93-24, 94-305, 95-89, 96-302, 97-35, 98-166, 98-270, 99-272, 99-349, 100-590, 102-27, 102-395, and 103-75.

 

Program Number

59.008

 

Last Known Status

Active

 

Objectives

To provide loans to the victims of declared physical- type disasters for uninsured losses.

 

Types of Assistance

Direct Loans; Guaranteed/Insured Loans.

 

Uses and Use Restrictions

Loans made to homeowners, renters businesses of all sizes and nonprofit organizations to repair and/or replace damaged and/or destroyed real property and/or personal property to its pre-disaster conditions. Credit elsewhere test required for all applicants to determine interest rates. Loans to homeowners/tenants are made for up to 30 years. Limit of $200,000 for repair/replacement of real property; $40,000 for repair/replacement of personal property. The loan limit may be increased by 20 percent to provide protective measures from damages caused by physical disasters. The interest rate for homeowners/tenants who have credit available elsewhere is determined by a formula based on the cost of money to the U.S. Government, but not to exceed 8 percent. The interest rate for homeowners/tenants who do not have credit available elsewhere is one-half of the formula rate, but not to exceed 4 percent. Loans to business may not exceed $1,500,000. For businesses determined to be able to obtain credit elsewhere, the interest rate is based on a statutory formula, but not to exceed 8 percent, with maturities not to exceed 3 years. For nonprofit organizations determined to be able to obtain credit elsewhere, the interest rate is based on a statutory formula, with maturities not to exceed 30 years. For businesses and nonprofit organizations determined to be unable to obtain credit elsewhere, the interest rate may not exceed 4 percent, with maturities up to 30 years. Under certain circumstances, homeowners and businesses may be eligible for refinancing of existing liens. There are statutory restrictions on the use of funds for voluntary relocation. In the case of a Major Source of Employment, the $1,500,000 limitation on disaster loans may be waived. Provisions of Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994 apply.

 

Eligibility Requirements

Applicant Eligibility

Eligible applicants must have suffered physical property loss as a result of a disaster which occurred in an area declared as eligible for assistance by the President or SBA. They must also demonstrate an ability to repay the loan. Individuals, business concerns, charitable and nonprofit organizations are eligible to apply for assistance.

Beneficiary Eligibility

Individuals, business concerns, charitable and nonprofit organizations. Agricultural enterprises are ineligible.

Credentials/Documentation

List of realty and personal property to be repaired or replaced, financial statements, and a signed IRS Form 8821 to enable SBA to obtain tax return information from IRS for the 3 years prior to the disaster (only 2 years for homeowners and renters) and complete copies of Federal Tax returns for the past 3 years for business applicants.

 

Application and Award Process

Preapplication Coordination

This program is excluded from coverage under E.O. 12372. Whenever feasible, interviews are held with disaster victims and the program is explained. Assistance on filing of application is provided.

Application Procedure

Application is made on a standard form for either a home or business type loan and filed in a single copy with the nearest available SBA Disaster Area office or special disaster office. Only one copy required.

Award Procedure

Applicant is notified of approval by authorization letter from SBA Disaster Area or Special Disaster Branch.

Deadlines

Eligibility to file terminates 60 days from the date of the disaster declaration, or on other deadlines if extended.

 

Range of Approval/Disapproval Time

Appeals

Reconsideration can be requested of a declined application at any time within 6 months of the decline, and appeals within 30 days from the reconsideration decline action.

Renewals

Not applicable.

 

Assistance Considerations

Formula and Matching Requirements

Not applicable.

Length and Time Phasing of Assistance

Funds must be used within 6 months of authorization of the loan, unless extended.

 

Post Assistance Requirements

Reports

All borrowers must maintain records on how loan proceeds are used for 3 years after last disbursement.

Audits

Not applicable.

Records

Complete financial records must be maintained by business borrower.

 

Program Accomplishments

During fiscal year 2001, 23,541 loans were made for $859,890,100.

 

Financial Information

Account Identification

73-1152-0-1-453.

Obligations

(Loans) FY 02 $936,642,900; FY 03 est $1,007,000,000; and FY 04 est $814,000,000 (Note: Obligations include funds for 59.002 and 59.008.)

Range and Average of Financial Assistance

Direct home loans up to a $240,000 limit plus $200,000 additional in some special cases to refinance existing liens and $48,000 additional for protective measures. Direct business loans up to $1,500,000 with additional amounts available for major employment. In fiscal year 2001, average loans were: $17,740 (Home); $51,160 (Business).

 

Regulations, Guidelines and Literature

13 CFR Part 123; "Physical Disaster Business Loans," DA-2; "Disaster Loans for Homes and Personal Property," DA-1.

 

Related Programs

10.404, Emergency Loans; 59.002, Economic Injury Disaster Loans; 97.022, Flood Insurance.

 

Information Contacts

Regional or Local Office

For reference to the Disaster Area Office, see Appendix IV of the Catalog under the Small Business Administration.

Headquarters Office

Office of Disaster Assistance, Small Business Administration, 409 3rd Street, SW., Washington, DC 20416. Program Contact: Herbert Mitchell. Telephone: (202) 205-6734. E-Mail address: disaster.assistance@sba.gov.

Web Site Address

http://www.sba.gov/DISASTER

 

Examples of Funded Projects

Not applicable.

 

Criteria for Selecting Proposals

Not applicable.

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