WASHINGTON – Today, Administrator Isabella Casillas Guzman, head of the U.S. Small Business Administration (SBA) and the voice in President Biden’s Cabinet for America’s 33 million small businesses, announced the Agency 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,” said Administrator Isabella Casillas Guzman. “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 Florida, Puerto Rico, and others facing disaster can count on the SBA to help in any way it can in the days and months ahead.”
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 begins to accrue on all disbursed loan funds including during the initial payment deferment period. Today’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.
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 September 21, 2022, through September 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 September 21 effective date will also receive an automatic extension of their first payment due date to 12 months and 0% interest. 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 December 5, 2022, SBA has approved $1.2 billion for residents and businesses impacted by Hurricanes Fiona and Ian.
Article Courtesy of the SBA