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By Murray W. published 1-2-2020 updated 3-28-2020
When Louisiana had it's 2016 flooding 10's of thousands applied to FEMA and were told to apply for an SBA Disaster Loan. They said the loan would be a low interest loan. They never told you if you had good credit and good income you would be paying market rates that just may have sounded good because it was processed so quickly.
Interest rates in 2016 for Louisiana were from 1.59 to 6.5 percent. Loans below $25,000 could be secured by good income, good credit.
What the state didn't tell you was HUD would be available and may have been used in place of your SBA loan. But the state wasn't going to tell you, not directly. You may have learned that private loans are not counted as a Duplication of Benefits and a SBA loan is counted as a Duplication of Benefits.
The difference is if you want money now, today, and fast you go with SBA loans and pay it all back plus interest. If you can wait 1, 2, 3 or more years HUD CDBG-DR grants are going to be your best bet. Grants do not have to be repaid.
But, if you have good income and good create you could have applied directly to SBA lenders for your disaster loan and then had HUD CDBG-DR reimburse you for your loan repair or reconstruction amount. It might not have been a "Dollar to Dollar" reimbursement but if you had to reconstruct your home for $300,000 and HUD CDBG-DR reimbursed you $250,000 your new $50,000 mortgage would look much nicer.
For those that know this is just what happened. Those that understood a private loan was a better risk then a SBA loan. Both have to be repaid but one may be paid off with Federal Grant dollars later. This could happen years later, in Louisiana it was 17 months after the disaster the state started paying off private loans homeowners took to rebuild their homes. The state wasn't repaying SBA loans.
So, share with others the list of lenders the SBA uses for their loans. You may find it's safer for your long term recovery to not apply to the SBA and maybe not apply to FEMA. Just be sure you are informed correctly and that means you need to talk with HUD, SBA and FEMA to get the full story. Or just read more articles from homeowners like us that learned the hard way.
Resource links at the bottom will show current lenders.
From the SBA.Gov website:
Update: Most active lenders list for 2020