With the recent federal declaration of a natural disaster in the Colorado counties of Adams, Boulder, Clear Creek, Jefferson, El Paso, Larimer & Weld, residents and businesses within these counties may be eligible for special “physical disaster” financial assistance from the US Small Business Administration (SBA). Residents and businesses within these seven counties, along with the residents and businesses located in the contiguous Colorado counties of: Arapahoe, Broomfield, Denver, Freemont, Logan, Morgan, Pueblo & Washington, may also be eligible for special “economic injury” financial assistance from the SBA.
SBA Disaster Recover teams are en route to Colorado and should be established by early next week. Address locations will be updated once know but anyone can contact them via their local Small Business Development Center. The deadline for filing claims related to physical damage have been set at November 14th 2013 and the deadline for economic injury applications is June 16th 2014.
Several types of disaster loans are available:
Home Disaster Loans – Loans to homeowners to repair or replace disaster-damaged real estate or personal property. Renters are eligible for their personal property losses, including automobiles.
Business Physical Disaster Loans – Loans to businesses to repair or replace disaster-damaged property owned by the business, including real estate, inventories, supplies, machinery and equipment. Businesses of any size are eligible. Private, non-profit organizations such as charities, churches, private universities, etc., are also eligible.
Economic Injury Disaster Loans (EIDLs) – Working capital loans to help small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, non-profit organizations of all sizes meet their ordinary and necessary financial obligations that cannot be met as a direct result of the disaster. These loans are intended to assist through the disaster recovery period. EIDL assistance is available only to entities and their owners who cannot provide for their own recovery from non-government sources, as determined by the SBA.
All applicants must have a credit history acceptable to SBA and an ability to repay the loan. Collateral is required for physical loss loans over $14,000 and all EIDL loans over $5,000. SBA will take real estate as collateral when it is available but will not decline a loan for lack of collateral as long as an applicant pledges whatever collateral is available.
Specific interest rates or ranges of interest rates have been established for the Colorado disaster, and these are:
• Physical Damage Home Loans: 1.937% to 3.875%
• Physical Damage Business Loans: 4.000% to 6.000%
• Physical Damage Non-Profit Organization Loans: 2.875%
• Economic Injury Loans for Businesses and Small Agricultural Coops: 4.000%
• Economic Injury Loans for Non-Profit Organizations 2.875%
The SBA will set the payment amount and loan maturity based upon each applicant’s ability to repay. Maximum loan amounts are as follows:
Home Loans – $200,000 for the repair or replacement of real estate and $40,000 to repair or replace personal property. Subject to these maximums, loan amounts cannot exceed the verified uninsured disaster loss.
Business Loans – $2,000,000 for the repair or replacement of real estate, inventories, machinery, equipment and all other physical losses. Subject to this maximum, loan amounts cannot exceed the verified uninsured disaster loss.
Economic Injury Disaster Loans (EIDL) – $2,000,000 for alleviating economic injury caused by the disaster. The actual amount of each loan is limited to the economic injury determined by SBA, less business interruption insurance and other recoveries up to a lending limit. SBA also considers potential contributions that are available from the business and/or its owner(s) or affiliates.
Business Loan Ceiling – The $2,000,000 statutory limit for business loans applies to the combination of physical, economic injury, mitigation and refinancing, and applies to all disaster loans to a business and its affiliates for each disaster. If a business is a major source of employment, SBA has the authority to waive the $2,000,000 statutory limit.
Otherwise, only uninsured or otherwise uncompensated disaster losses are eligible. Any insurance proceeds which are required to be applied against outstanding mortgages are not available to fund disaster repairs and do not reduce loan eligibility. However, any insurance proceeds voluntarily applied to any outstanding mortgages do reduce loan eligibility.
Secondary homes, personal pleasure boats, airplanes, recreational vehicles and similar property are not eligible, unless used for business purposes. Property such as antiques and collections are eligible only to the extent of their functional value. Amounts for landscaping, swimming pools, etc., are limited.
If ultimately approved, an applicant may be eligible for additional funds to cover the cost of improvements that will protect the property against future damage. Examples of this might include retaining walls, sump pumps, etc. Mitigation loan money would be in addition to the amount of the approved loan, but may not exceed 20 percent of total amount of disaster damage to real estate and/or leasehold improvements, as verified by SBA to a maximum of $200,000 for home loans.