SBA increases loan limit for businesses affected by floods

WATERLOO, Jul 17, 2008 (Waterloo-Cedar Falls Courier - McClatchy-Tribune Information Services via COMTEX) -- SBCO | Quote | Chart | News | PowerRating -- There is more money available for Iowa's small businesses hit by recent flooding.

The U.S. Small Business Administration recently increased the cap on loans to individual businesses in Iowa from $1.5 million to $2 million, said Roger Busch, SBA spokesman.

Busch added that SBA had issued about 25,000 loan applications and approved more than $95 million for flood victims across Iowa.

He also said that those numbers might be a lot larger, were it not for some possible misunderstanding among many homeowners, renters and business owners in need of help.

SBA loan money is available to businesses at a rate as low as 2.678 percent and to homeowners and renters at 4 percent.

Loan money is at 8 percent for businesses and 5.375 percent for home-owners and renters who have credit available elsewhere or who have higher incomes, Busch said.

Most applicants are likely to qualify for lower rates, he said.

"I know a lot of concern was everybody thought they'd automatically get caught in that 8 percent category, rather than the 4 percent fixed rate," Busch said.

He said the only way a victim can find out whether they qualify for a lower rate is to apply.

"Really, until they apply with the SBA, there's just no way to tell until they go through the process to make that decision," he said. "SBA, with these federal low-interest rate loans is here to help businesses, and home-owners and renters, as well."

All of the lowest-rate loans carry repayment terms of up to 30 years; however, business owners who don't qualify for the lowest rate will have three years to repay their 8 percent loans, Busch said.

Applicants are not obligated to take the money once they are approved, Busch said.

"Basically if there's a shortfall and the insurance doesn't cover all the damages that you had and if you don't get enough funds, let's say, from other agencies like FEMA to cover the damages, then that low-interest loan comes into play," he said. "Not everybody's going to need it or want it, but we encourage everybody to take advantage of it while we're here and, at a later date, you can decide whether to take advantage of it or not."

Anyone not approved for a loan at any interest rate will, in most cases, be referred to the U.S. Federal Emergency Management Agency for "other needs" assistance, Busch said.

The federal government has set up a Disaster Recovery Center at the Black Hawk County Health Department, 1407 Independence Ave., Room 201.

The DRC is open from 8 a.m. to 7 p.m. Monday through Friday and 8 a.m. to 5 p.m. Saturday.

The SBA also has loan outreach centers in Waverly, Allison, Mason City, Charles City, Webster City, Decorah and, opening today, Garner. The phone number is (800) 659-2955.

Contact Jim Offner at (319) 291-1598

or jim.offner@wcfcourier.com

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