As of Oct. 12, the federal government has distributed $23.4 million in disaster loans to Vermonters affected by the July floods.
The disaster loans, administered through the U.S. Small Business Administration, are not only open to businesses. Homeowners, renters, landlords and private nonprofits are also eligible, according to Arleace Green, a spokesperson for the SBA disaster office.
Washington County — the site of several hard-hit communities, like Barre and Montpelier — tops the state in the amount of loans distributed so far, with more than $13 million given out, according to data Green provided.
For comparison, the Federal Emergency Management Agency has given out almost $21.7 million in grants through its Individuals and Households Program, according to its website.
In fact, FEMA and SBA work in concert with each other to distribute their different types of aid depending on income eligibility, the amount of money needed and other factors.
SBA provides two different types of disaster loans. The first are physical disaster loans — which businesses, nonprofits, homeowners and renters can all apply for — that provide money to repair or replace flood-related damage, including personal property. That program has a deadline of Oct. 31, the same as the FEMA individual assistance deadline, Green said.
The second type of loans are economic injury loans, which are specific to businesses and nonprofits. These are designed to replace revenue that was lost while the entity was closed or the area was recovering from flooding.
Green said the administration uses a business’ sales history prior to and after the disaster to figure out how much a business is eligible for — up to $2 million. The deadline for economic injury loans is April 15, 2024, allowing businesses to spend additional time figuring out how much they might have lost.
SBA’s physical disaster loans are available in each of the nine counties that FEMA has declared eligible for individual assistance: Caledonia, Chittenden, Lamoille, Orange, Orleans, Rutland, Washington, Windham and Windsor counties.
In addition, it has approved a single county – Addison – for physical disaster loans, even though it’s not eligible for FEMA individual aid at this point, according to Green. Economic injury loans are available statewide.
FEMA also sometimes refers applicants for individual aid to the SBA to apply for a loan instead. Applicants in that situation must apply for a loan and be rejected to be eligible for certain types of FEMA assistance, according to the FEMA website. Even if you don’t apply for an SBA loan, you may be eligible for other FEMA assistance.
Green said she would encourage Vermont homeowners and renters to apply through FEMA first, even if they might be interested in an SBA loan, because it helps keep a record of the entire process between the two agencies.
FEMA has a limit of $41,000 for home repair costs that it will grant to individuals or households. The SBA has a much higher limit, including $200,000 for repair costs and $40,000 in personal property replacement, and will consider a 20% increase on an approved loan for flood mitigation work, Green said. Businesses have a limit of $2 million for physical damage-related loans.
But of course, that money does need to be paid back. Green said that disaster loans come with 0% interest and $0 in payments owed for the first year after an applicant gets a loan.
After that, interest rates vary. Nonprofits have a flat interest rate of 2.375%, but for homeowners and businesses, the exact interest rate could be higher if the applicant has credit available elsewhere, according to the SBA website. For homeowners, it’s between 2.5% and 5%. For businesses, it’s between 4% and 8%.
In July, some business owners in hard-hit Montpelier complained about the lack of grant options available, saying that loans were not a sufficient option for businesses that might still be struggling under debt racked up during the Covid-19 pandemic.
SBA will not consolidate disaster loans with other loans, Green said via email, but will “determine if the Businesses or Survivors can afford to pay back the money for the current and past loans.”
Lastly, Green advised applicants to read their response letter carefully to look for opportunities for “reconsideration,” similar to the FEMA appeals process. SBA might reject an applicant for having poor credit, for example, but give the applicant a window to pay off a debt and review their application again. SBA will also reconsider the amount loaned if an applicant discovers more damage.
SBA has two locations Vermonters can visit to get in-person help with their applications: The Barre Auditorium in Barre, and the Ludlow Community Center, which is scheduled to close down Oct. 21, Green said.
“I understand that people here are very self-sufficient, and they’re used to, you know, strapping their boots up and getting to work to get back to normal,” she said. “But sometimes you need help, and this is their money. So we encourage them to go ahead and get this money.”
