By The Star Staff
The U.S. Small Business Administration (SBA) announced last week that it will waive the interest rate for the first year on new disaster loans and extend the initial payment deferment period automatically to 12 months.
“We must ensure that communities struck by disaster have the help they need to recover in the wake of natural disasters, and the Biden-Harris Administration is 100 percent focused on finding more ways to assist,” SBA Administrator Isabella Casillas Guzmán said. “Our zero-interest disaster loan and payment deferral solutions add new tools to our toolbox to help small-business owners gain flexibility as they work to invest, reopen, and get back to business.” “Disaster-impacted residents in Puerto Rico and Florida, and others facing disaster can count on the SBA to help in any way it can in the days and months ahead,” she added.
New disaster loan borrowers will now have up to one year from the date of the note to begin making payments, instead of the standard five months. Interest on the loan will not begin to accrue until 12 months from the date of the initial loan disbursement. Previously, interest began to accrue on all disbursed loan funds including during the initial payment deferment period.
Last week’s announcement will benefit disaster survivors and help them to decrease the overall cost of recovery by setting the interest rate to 0% for the first 12 months and reducing the overall amount of accrued interest they must repay.
Eric Perlloni, the SBA’s public affairs specialist, said the benefit includes those in Puerto Rico affected by Hurricane Fiona.
“It is important to reiterate that resources are still available in Puerto Rico to those business owners who have experienced economic losses from Hurricane Fiona,” he said. “With loans at an interest rate as low as 3.040% and up to 30 years to pay it off, the SBA offers entrepreneurs the opportunity to finance their recovery by providing working capital for the basic needs of their businesses.”
“Applications will be accepted until June 21, 2023,” Perlloni added. “We keep encouraging anyone interested to contact our customer service lines or visit any of our seven Business Recovery Centers located in: Arecibo, Barranquitas, Caguas, Fajardo, Mayagüez, Ponce and Yabucoa, to complete their application.”
SBA disaster loans offer individuals and businesses direct access to affordable financial assistance to help fully repair or replace disaster-damaged property. By offering affordable loans with no interest and no payments for the first year, and low fixed-interest rates for the remaining 30-year term, SBA is maximizing disaster survivors’ likelihood of a successful recovery and minimizing further financial hardship.
The extended deferment to 12 months is automatic and loan borrowers do not need to take any additional action. There is no prepayment penalty and borrowers can begin making loan payments during the deferment period if they choose.
The change is effective for all disaster loans approved in response to a disaster declared on or after Sept. 21, 2022, through Sept. 30, 2023. The effective date covers SBA disaster loans currently available for Hurricane Fiona and Hurricane Ian declared earlier this year. SBA does not have the authority to forgive interest that has already accrued on disbursed loan funds.
Borrowers who already received a loan for a disaster declared after the Sept. 21 effective date will also receive an automatic extension of their first payment due date to 12 months and 0% interest. The SBA will notify eligible borrowers of their loan modification and they will not need to submit a request to receive this automatic benefit.
As of Dec. 5, the SBA had approved $1.2 billion for residents and businesses impacted by hurricanes Fiona and Ian.