In response to the severe storms and flooding that occurred in North Texas in late August, the Small Business Administration (SBA) is offering low-interest federal disaster loans to those affected.
The SBA acted under its own authority to declare a disaster in response to a request the agency received from Gov. Greg Abbott on Sept. 13. As a result, assistance is now available in Tarrant County, along with Collin, Dallas, Denton, Ellis, Kaufman and Rockwall counties.
“SBA’s mission-driven team is ready to help small businesses and Texans affected by the severe storms and flooding,” said SBA Administrator Isabella Casillas Guzman. “We are committed to providing federal disaster loans quickly and efficiently, with a customer-centric approach, to help businesses and communities recover and rebuild.”
Beginning Monday, September 19, SBA Customer Service representatives will be available at the Dallas (6200 E. Grand Ave.) and Balch Springs (4732 Shepherd Lane.) Disaster Loan Centers to answer questions about the SBA disaster loan program, explain the application process and help individuals complete loan applications. The centers are open from 9 a.m. to 6 p.m., and no pre-registration is required.
Ahmad Gore, lead economic development specialist/public information officer for the SBA’s DFW District, explained that businesses of all sizes and private nonprofits can borrow up to $2 million to repair or replace damaged or destroyed real estate. machinery and equipment, inventory and other business assets. SBA can also award additional funds to businesses and homeowners to help with the cost of improvements to protect, prevent, or minimize the same type of disaster damage in the future.
For small businesses, small farming cooperatives, small aquaculture businesses, and most private nonprofits of all sizes, the SBA offers Economic Injury Disaster Loans (EIDLs) to help meet working capital needs caused by from the disaster. Economic damage relief is available regardless of whether the business has suffered property damage.
Interest rates can be as low as 3.04 percent for businesses, 1.875 percent for private nonprofits and 2.188 percent for homeowners and renters with terms up to 30 years. Loan amounts and terms are determined by the SBA and are based on each applicant’s financial situation.
Above explained credit agreements:
- Credit History – Applicants must have a credit history acceptable to the SBA.
- Repayment – applicants must demonstrate the ability to repay all loans.
- Collateral is required for physical loss loans over $25,000 and all EIDL loans over $25,000.
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“The SBA takes real estate as collateral when it is available. The SBA will not deny a loan for lack of collateral, but it does require you to pledge what is available,” Gorey said.
As for interest rates, Gorey said: “By law, interest rates depend on whether each applicant has credit elsewhere. An applicant does not have credit available elsewhere when SBA determines that the applicant does not have sufficient funds or other resources, or the ability to borrow from non-government sources, to provide for his or her own post-disaster recovery. An applicant who the SBA determines has the ability to provide for his own recovery is considered to have available credit elsewhere. Interest rates are fixed for the term of the loan.’
The interest rates applicable to this calamity are:
- Home Loans – no credit available elsewhere, 2.188%; credit available elsewhere 4.375%.
- Business loans – no loans available elsewhere, 3.040%; credit available elsewhere, 6.080%.
- Non-profit organizations – no credit available elsewhere, 1.875%; credit available elsewhere 1.875%.
- Economic Damage Loans – For Business and Small Agricultural Services, No Credit Elsewhere, 3.040%; credit available elsewhere is not available. For non-profit organizations, without credit available elsewhere, 1.875%; credit available elsewhere is not available.
The law allows loan terms up to a maximum of 30 years. However, the law limits businesses with credit available elsewhere to a maximum term of seven years, Gorey noted, adding that the SBA determines the amount of installments and the corresponding maturity based on each borrower’s ability to repay.
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Gore said loan limits are $2 million for business and EIDL, subject to certain qualifications and requirements. However, if a business is a primary source of employment, the SBA has the authority to waive the $2 million statutory limit. SBA regulations limit home loans to $200,000 for the repair or replacement of real property and $40,000 for the repair or replacement of personal property.
Applicants can apply online, get additional disaster assistance information and download applications at https://disasterloanassistance.sba.gov/.
Applicants may also call the SBA Customer Service Center at (800) 659-2955 or email [email protected] for more information. For people who are deaf, hard of hearing, or speech impaired, dial 7-1-1 to access telecommunications relay services.