The four steps of recovery from a natural disaster |
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FEMA inspector will survey the damage and hand you an application for aid, if
one wasn't included in the packet you received in the mail. The application will
say it's for a Small Business Administration loan. Even if you don't own a business
and you wouldn't be able to repay a loan, fill out the application. It is used
to determine whether you qualify for grants that you don't have to repay.
If you apply for aid from the Small Business Administration, an inspector called a loss verifier will assess your property.
If power, gas, water or sewer lines were cut in the disaster, you'll have to deal with utility inspectors before service is restored.
Looking for loans
The Small
Business Administration, or SBA, will lend you money to pay for certain
uninsured losses if you can afford to repay the loan. You don't
have to spend your savings or apply for a loan at a bank as a condition
of borrowing from the SBA.
The SBA offers personal property loans
and real property loans. Interest rates vary, depending on how much it costs the
federal government to borrow money and whether you are able to get credit elsewhere.
A renter or a homeowner may apply for a personal property
loan. With it, the SBA will lend you up to $40,000 to repair or replace clothing,
furniture, appliances, automobiles, perishable food, even dentures and eyeglasses.
You can't use the money to replace extraordinarily expensive items such as that
antique Louis XIV desk or your collection of rare baseball cards.
Homeowners may apply for a real property loan. With it, the SBA will lend you up to $200,000 to repair or restore your primary home. You can't borrow from the SBA to restore your vacation cottage. (If you own rental property, you can apply for an SBA business loan.)
In some cases, the SBA will refinance your mortgage at a lower rate.
When you apply for an SBA loan, you give the Internal Revenue Service permission to give the SBA information from your previous
two years' tax returns. If you have been a tax cheat, you are likely to be ensnared when you apply for an SBA loan -- one reason not to evade taxes.
"We've gotten credit for getting a lot of people into the tax system," SBA spokesman W. Donald Waite says with a smile.
Other assistance is available
You have to repay SBA loans. You don't have to repay grants. And FEMA coordinates a gamut of grants.
First, FEMA gives out emergency grants for disaster-related medical, dental and funeral-related expenses not covered by insurance. If a loved one dies in a disaster and you don't have the money to pay funeral expenses, this grant is what you need. You might be referred to one of these grant programs when you make that initial call to register with FEMA.
FEMA will give property owners up to $15,000 for emergency repairs to make a structure fit for habitation.
The agency, together with the state government, gives out what are called Individual and Family Grants. These are given to people who are turned down for SBA loans because of inability to repay. They can be used for the same purposes as SBA loans.
FEMA also offers grants to state and local governments for "hazard mitigation" -- elevating houses above a flood plain, for example, or strengthening structures in earthquake zones.
Believe it or not, the IRS will ride to your rescue, too. You can file an amended return called a 1040X and deduct your disaster-related
losses against last year's income. This can be a lifesaver because it means you can get a hefty tax-refund check in a few weeks instead of having to wait until next year to file a return. If you can afford to wait, you can deduct your disaster losses against your current year's income.
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