Questions & Answers About SBA Loans - WLOX.com - The News for South Mississippi

Questions & Answers About SBA Loans

If you're still having trouble recovering from Katrina, there are Small Business Administration loans that can help you tremendously and with rock bottom interest rates.

An unprecedented amount has already been approved in Mississippi for almost 27,000 homeowners and businesses totaling almost $2 billion. But there's a lot of confusion, rumors and questions about how the loans actually work.

At the Donal Snyder Center in Biloxi, they're still taking a lot of loan applications. For most people, this is their first SBA loan.

To clear up some confusion, we had a "Q & A" with John Martin.

Q: Are there any fees or closing costs on an SBA loan?

A: "There are no fees associated with the SBA loan. There are no points or closing costs of any type."

Q: What is the interest rate on the 30 year, SBA loans and is it fixed?

A: "The interest rate is 2.6% for homeowners and renters and it is fixed."

Q: Do you have to use it to renovate or rebuild in the same place?

A: "No, you can request relocation. The funds can be used to purchase or build a house somewhere else."

Q: What if you borrowed the money from a bank already to repair or rebuild? Can you use your SBA funds to pay off the bank loan?

A: "Yes, you could do that. You could use the SBA loan to pay off the bank loan."

Q: Does SBA help with mitigation?

A: "We offer mitigation loans. Your SBA loan can be increased by as much as 20% to mitigate, to build higher, to build stronger, to build more storm resistant."

Q: Is your money given to you in a lump sum, or in increments?

A: "The loan works like a construction loan. You'll get $10,000 soon after closing, and then we advance the rest of the money in draws as the work is completed."

Q: How do you get the money when you need it?

A: "What you do is submit receipts either the work that you've done or your contractor's and when they finish the work."

Q: Do you have to buy flood insurance to use SBA money to rebuild?

A: "If you're in a flood zone, SBA is going to require that you purchase flood insurance."

Q: What about business owners? Can the disaster SBA loans help them too?

A: "Businesses can apply for up to $1.5 million for physical losses. They can also apply for an economic injury disaster loan."

You have until April 10th to apply for an SBA loan. To learn more call, 1-800-659-2955 or click here to learn more about the SBA loan process.

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