The Mail-Journal, Volume 11, Number 11, Milford, Kosciusko County, 10 April 1974 — Page 26

Provisions for loans by disaster victims

The following provisions apply to loans requested and made in areas declared to be a disaster area by the U.S. Small Business Administration (SBA): Home Loans 1 Purpose of loans. The repair, rehabilitation or replacement of property damaged or destroyed, without regard to whether or not the required financial assistance is available from private sources. This covers both personal and real property. 2 Financial Assistance Available. The maximum that SBA can lend to repair physical damage to a home is the amount of damage incurred less any insurance or other recovery. In no case may loans to repair physical damage to homes exceed $50,000. In addition, SBA may lend up to a maximum of SIO,OOO to repair or replace household goods and personal property. However, the maximum that SBA can lend one borrower for both purposes may not exceed $55,000 plus eligible refinancing. SBA disaster loans may be used to upgrade a home only when this upgrading is required by applicable codes or ordinances. This means that funds will not be provided by SBA which will increase the size of capacity of any structure. All items of personal property are eligible except those of a luxury nature, for example, objects of art. rare stamp or coin collections. pleasure boats, and the like 3 Loan Terms. Loans may be made for any period up to 30 years at a five per cent interest rate. However, maturities are limited to the period necessary’ based upon applicants ability to repay 4. Mortgage Refinancing. When the uninsured damage is 30 per cent or more of the pre-disaster fair market value of a home, prior mortgages on the damaged real estate may be re-financed but limited to an amount no greater than the disaster cause, damage or loss This amount of re-financing is in addition to the $55,000 maximum disaster loan stated above. 5. Loan Repayments. In addition to general repayment provisions, principle and-or interest payments on loans may be temporarily suspended for a period not to exceed three years when hardship exists. Business Loans 1. Purpose of loans. The repair, rehabilitation or replacement of property damaged or destroyed, without regard to whether or not the required financial assistance is available from private sources This covers real property, machinery and equipment, fixtures and inventory. 2. Financial Assistance Available. SBA may approve business disaster loans up to $500,000 directly* or as SBA’s share of a loan in participation with another lender This dollar limit includes the restoration of real property, equipment, furniture. and fixtures and eligible refinancing SBA may also approve a guarantee of up to 90 per cent of a commercial bank loan to restore disaster damage in addition to the $500,000 direct loan. All businesses that fall within SBA’s definition of small business may also be eligible for economic injury disaster assistance However, in the case of economic injury loans, per-

sonal, and-or business assets must be used by the applicant to the greatest extent feasible without undue hardship to alleviate injury incurred. In addition, private credit to the extent obtainable on reasonable rates and terms must be used prior to obtaining loan assistance from SBA. The economic injury and physical disaster assistance are combined in the $500,000 ceiling on the disaster office approval authority. The loans may be used to upgrade a business property only when upgrading is required by applicable codes or ordinances. Funds will not be provided to increase the size or capacity of any business facility. 3. Loan Terms. Business disaster loans to small business may be made for any period up to 30 years depending on the amount and type of loan and will bear a five per cent interest rate. However,' maturities are Km i ted to the period necessary based upon applicant’s ability to repay. 4. Re-financing. When uninsured damage is 30 per cent or more of the pre-disaster value, re-financing of business mortgages is authorized up to the amount of the uninsured damage on the property, real or personal, to be repaired or replaced. The amount of re-financing is included in the $500,000 maximum stated above, except for previous SBA disaster loans. Major Employers Under section 237 of the 1970 disaster relief act, SBA may make long term, low interest loans available to commercial, industrial, or other enterprises regardless of size, which are major sources of employment in stricken areas and has substantially ceased operations as a result of the disaster. A major source of employment is defined as il) a concern which employed 10 per cent or more of the entire work force of the community no larger than a county; (2) a concern which employed 10 per cent or more of the total work force within the major disaster areas; or (3) any business firm within the major disaster area which employed 1,000 or more people. There is no limitation on the size of loans made under section 237. The interest rate based upon a formula (not to exceed six per cent per annum) set by the secretary of the treasury. Use of Proceeds of Loan An SBA disaster loan may not exceed the actual tangible loss suffered by the disaster victims (except through the extent of permitted set refinancing) less any recovery from insurance or other sources such as a Red Cross grant. When a disaster victim does not know immediately how much of his loss will be recovered from insurance or other sources. SBA will consider making a loan for the full amount of the loss, provided the applicant will apply such other funds collected toward the re-payment of the loan. The borrower is obligated to use the proceeds of the loan for the purposes for which they were obtained. Further, if borrower deter mines to do the repair at his own labor, only the cost of materials may be financed by the loam. SBA is required by statute to determine that the funds are used appropriately and will require the borrower to furnish evidence

thereof. All funds over SIOO so dispersed but not used as intended to restore property to predisaster conditions must be returned to SBA and will be applied to the principle balance of the, note. Legislation provides that whoever wrongfully misapplies the proceeds of the loan shall be civilly liable through the SBA administration in an amount equal to one and one-half times the original principle amount of the loan. j General Provisions Generally, payments must be made in equal monthly installments including interest. The first payment usually is not due later than five months after dispersement. A different schedule may be arranged when a borrower's income is seasonal. SBA may limit any disaster loans through the amount the applicant apparently can repay as indicated by his past earnings, when appropriate. If it is necessary as set forth in SBA’s regulation to construct a new home, new business, or institutional facilities on a different site, the loan may be used for that purpose. In the case of a loan to an individual, the loan may be used to repair or replace damaged furniture and other household belongings as wel| as real estate. A business disaster loan may be used to repair or replace buildings, fixtures, equipment and inventory. A loan to a charitable institution or other non-profit

11SaSr 1 A W - ■ Bbi Bl LEGION RELIEF CENTER — ‘ Literally tons of food and clothing have come into the Legion in answer to our appeal,” so says Gus Luyben, commander of the Syracuse American Legion Post 223. In this photo, from left are Mrs. Terry (Corma) Schrock, Mrs. Eli (Barbara) Kauffman, and Legion clubroom chairman Wayne Coy who are holding some of the items that have come in answer to an appeal by the Legion. Articles began coming in at 9 a.m. Saturday, and since that time have flooded the large American Legion room. The appeal was in response to victims of the tornado that struck this area in its sweep across northern Indiana last Wednesday. Commander Luyben said two pick-up loads of items came from the Larwill community alone. Such items that are not claimed here will be taken to other Indiana towns where the tornado rendered hundreds homeless and without personal items of clothing, commander Luyben said.

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SENATOR, DISASTER RELIEF ASSISTANCE AGENT — U.S. Senator Birch Bayh, who visited the Atwood community late Friday afteroon, had with him Eugene E. Mora th, Jr., public assistance division of the Federal Disaster Assistance Administration, right. Both men are shown here at the Atwood community center where they spoke about the federal government’s plan for assisting stricken areas. In the center is WKJG-TV (Fort-Wayne) cameraman Ollie Strong.

organization may be used to repair or replace buildings, furnishings, machinery or equipment. A disaster loan may, in some cases, be used for debt payments where the funds are used to repay any temporary financing obu

Tornado victims can get property re-assessment

Turkey Creek township assessor Harry M. VanHemert advises all taxpayers who suffered losses in last week’s tornado and high winds that they may be eligible for survey and reassessment of real and personal property partially or totally destroyed by the disaster. A petition asking such review

tained prior to the approval of the SBA loan to start re-habilitation work. All types of damage resulting from physical disaster are covered by SBA disaster loans if an area has been declared a disaster area.

must be filed with the state board of tax commissioners. Assessor VanHemert and his staff will be available to assist such taxpayers. VanHemert urges those who qualify to contact his office located in The House in the Village in Wawasee Village for assistance.