More than 26,000 forms distributed; only 6.4 percent returned
ANDOVER, MA – May 11, 2010 – (RealEstateRama) — U.S. Small Business Administration (SBA) officials have heard it all when it comes to homeowners who tell them why they aren’t going to apply for a low-interest disaster loan.
That’s why it is not surprising to hear only 1,729 of the 26,811 registered homeowners and renters in the seven disaster counties – Bristol, Essex, Middlesex, Norfolk, Plymouth, Suffolk and Worcester – that have been issued SBA applications for low-interest disaster loans have returned the forms to SBA.
“Even though the SBA has approved more than $13.5 million in low-interest disaster loans and 92 percent of that has gone to homeowners and renters, some homeowners and renters have misconceptions preventing them from applying,” said Kathy Cook, SBA public affairs specialist.
What she has heard and her responses are:
- “I want a grant, not a loan.”
The average FEMA grant is approximately $2,000, and the average SBA disaster home loan is more than $19,000, indicating many with basement flooding had significant damage.
- “I don’t need it, because I have insurance.”
By the time people realize that their homeowner’s insurance policy won’t cover everything, or that the basement they thought wasn’t too badly damaged actually has a bad mold infestation, it may be too late to apply to the SBA for help.
- “The damage to my basement wasn’t that bad.”
It’s possible that because it hasn’t been consistently warm yet in this area that the growth of mildew, a mold or fungus that can grow on everything and create a health hazard, hasn’t become obvious yet.
- “You’re the Small Business Administration and I own a home, not a business.”
People think that because the word “Business” is in the agency’s name, that the SBA doesn’t help homeowners, but that just isn’t true. SBA is a federal agency chartered by Congress to not only help businesses, but also to help homeowners repair or replace their disaster-damaged or destroyed homes.
More than 30,000 area residents have registered for Federal Emergency Management Agency (FEMA) assistance since the record-setting rainfall in mid-March caused severe flooding in large areas of Eastern and Central Massachusetts.
“The deadline is May 28 and after that we can’t do anything more to help,” Cook said, adding that “if a homeowner fills out the application they are under no obligation to accept the loan.”
Homeowners may apply for an SBA disaster loan for losses not covered by insurance. Loans may be for up to $200,000 to repair or replace a primary residence to its pre-disaster condition and up to $40,000 to replace damaged personal property.
The interest rate for an SBA disaster home loan can be as low as 2.625 percent, which is typically a much lower rate than a home equity loan or credit card loan. Also, SBA loans have repayment terms that may be offered for up to 30 years and may be offered without a requirement of collateral.
“Homeowners and renters unable to obtain a disaster loan from the SBA are referred to FEMA for additional grant consideration,” Cook said.
Cook urged homeowners and renters who sustained losses in the designated counties to obtain loan information and application forms by either calling SBA’s Customer Service Center at (800) 659-2955 (800-877-8339 for the hearing impaired), e-mailing disastercustomerservice (at) sba (dot) gov, or visiting SBA’s Web site at www.sba.gov/services/disasterassistance.