MILLERSBURG - U.S. Rep. Lou Barletta, R-11, on Tuesday announced his intention to introduce the Disaster Loan Fairness Act of 2013, similar to legislation he authored in the previous Congress.
Announced at a press conference in front of a small business in this northern Dauphin County community, the act would reduce interest rates on Small Business Administration (SBA) disaster loans for homeowners, renters and businesses through a discounted, market-based system.
"As our part of Pennsylvania has seen very recently, natural disasters can strike without warning and cause loss of life, significant property damage and disruption in the local economy," Barletta said at Cathy's Critters, according to a press release from his office. "Too often, there is an insufficient market for private disaster loans, so victims are forced into SBA loans with higher interest rates. This is an additional financial drain on people and businesses already suffering and we should do something about it."
Under the proposal, the interest rate for borrowers with no credit available elsewhere would be half of the prevailing rate, with a maximum interest rate of 4 percent. Borrowers with credit available elsewhere would be eligible for loans at three-quarters of the prevailing rate with a maximum rate of 4 percent. The bill also requires the SBA to report to Congress in one year whether the program resulted in more loan applications, more approvals of loans and lower default rates.
"Small businesses like Cathy's Critters are often one major disaster from shutting their doors because of damage, lost inventory and time lost in clean-up and repairs," Barletta said. "For these people - and homeowners and renters - there should be a more affordable avenue to recovery. More attractive SBA loans are one way to help them."
"The United States sent $215 million to Pakistan for flood relief at 0 percent interest on a no-payback loan," Barletta said. "If we're doing that, we ought to be able to help Americans facing flood disaster as well."