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Catalog of Federal Domestic Assistance

Program Descriptions

59.008:  Physical Disaster Loans

Popular Name:  7(b) Loans (DL)

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

PROGRAM AND AWARD	FINANCIAL AND INFORMATION CONTACTS
ELIGIBILITY REQUIREMENTS	FINANCIAL AND ADMINISTRATIVE INFO.
APPLICATION AND AWARD PROCESS	INFORMATION CONTACTS
RELATED PROGRAMS	ASSISTANCE CONSIDERATIONS
PROGRAM ACCOMPLISHMENTS	POST ASSISTANCE REQUIREMENTS

59.008 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.

59.008 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:  From 7 to 21 days depending on complexity of case and availability of resources.

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.

Criteria for Selecting Proposals:  Not applicable.

Examples of Funded Projects:  Not applicable.

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 1999, average loans were: $17,740 (Home); $51,160 (Business).

59.008 RELATED PROGRAMS:

• 10.404 Emergency Loans;
• 59.002 Economic Injury Disaster Loans;
• 83.100 Flood Insurance.

59.008 PROGRAM ACCOMPLISHMENTS:

59.008 FINANCIAL AND ADMINISTRATIVE INFO:

Federal Agency:  SMALL BUSINESS ADMINISTRATION

Type of Assistance:  Direct Loans; Guaranteed/Insured Loans.

Obligations:  (Loans) FY 99 $728,109,300; FY 00 est $1,100,000,000; and FY 01 est $934,000,000 (NOTE: Obligations include funds for 59.002 and 59.008.)

Budget Account Number:  73-1152-0-1-453.

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.

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

59.008 INFO 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. Phone: (202) 205-6734. Use the same number for FTS. E-Mail address: disaster.assistance@sba.gov.

(See Appendix IV for more contact info.)

59.008 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.

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.

59.008 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.