the aftermath of a hurricane or an earthquake, help will come.
But it can be a trial grasping its extended hand when you
are all but wiped out.
When the president declares a federal
major disaster, two agencies take the lead in providing aid
to homeowners and renters who are uninsured or underinsured:
the Federal Emergency Management Agency and the Small Business
And there are plenty of people without
adequate insurance: standard homeowners' and renters' policies
don't cover damage caused by floods or earthquakes. In hurricane-prone
states, standard homeowners' and renters' policies don't cover
all windstorm damage.
Even if you're covered, your policy might
not replace all your losses. FEMA and SBA can fill the gaps.
Disaster survivors often find the agencies' procedures
frustrating and confusing. Most victims understand the difference
between grants and loans -- you have to repay loans, but not
grants -- but they are flummoxed by the fact that you fill
out an SBA loan application to get a FEMA grant.
Many disaster victims are surprised by
the extent of the Small Business Administration's role because
the agency's name is misleading. Despite its moniker, the
Small Business Administration helps homeowners and renters
as well as businesses recover from disasters. The SBA, not
FEMA, distributes low-interest loans to homeowners and renters
for permanent repairs.
Of course, the SBA lends money to damaged businesses, too.
Businesses cannot get grants.
FEMA hands out grants to pay for temporary
and permanent housing repairs, for rent while homes are being
repaired and for replacing some kinds of personal property.
Because you have to fill out just one
application for SBA loans and FEMA grants, the government
gets brownie points for streamlining the process. But many
people are confused when they are told to fill out an SBA
loan application so they can get a grant from FEMA.
The federal government takes the position
that homeowners and renters should pay what they can afford.
So people are given loan applications, and if they don't qualify
for an SBA loan because of inability to repay, they might
qualify for a FEMA grant.
-- Posted: Nov. 16, 1999