SBA Approves $2B in Hurricane Sandy Loans

NEW YORK ( TheStreet) -- More than five months after Hurricane Sandy slammed into the East Coast, the U.S. Small Business Administration has approved more than $2 billion in disaster loans to residents and businesses affected by the 100-year storm, roughly double the amount of disaster loans approved as of the end of January.

As of April 5, approximately 30,000 home-disaster loans had been approved by the SBA for a total of $1.8 billion. Roughly 2,500 business-disaster loans have been approved for a total of $260 million, the SBA said on Friday.

Following Hurricane Sandy, eight states -- New York, New Jersey, Connecticut, Rhode Island, Maryland, Virginia, West Virginia and North Carolina -- as well as Puerto Rico, received federal disaster declarations following Hurricane Sandy.

At the end of January, the SBA had approved a total of 16,192 disaster loans worth $1.1 billion to individuals and businesses suffering damage from Sandy. At that time just 793 business disaster loans, worth $84 million, had been approved.

The current numbers rank Hurricane Sandy as the third-largest hurricane disaster event needing SBA assistance and is soon on its way to becoming the second largest hurricane disaster as determined by the SBA.

The SBA approved a total of 160,807 disaster loans for $10.9 billion following the Gulf Coast hurricanes of 2005 (Hurricane Katrina, Rita and Wilma). The SBA approved 59,499 loans for $2.2 billion after Hurricane Charley, Frances and Jeanne hit Florida in 2004.

Sandy disaster assistance is expected to surpass the 2004 Florida hurricane trio before the end of the month, an SBA spokeswoman says

In an interesting side note, the second largest natural disaster, in terms of SBA-disaster lending, was the Northridge (southern California) earthquake of January 1994. The SBA approved 124,692 disaster loans for a total of $4 billion related to the earthquake.

However, Small businesses in Sandy storm-ravaged areas, particularly the ones with so much damage that they are still unable to operate, have had a difficult time finding funding to get back on their feet. Many have gone out of business. (It is estimated that 40% of small businesses never re-open after a being hit by a natural disaster.)

Meanwhile, other businesses -- either denied by the SBA or unwilling to take on more debt -- have decided to rebuild on their own, with the help of their communities and what little, if any, grant money they can find.

Many business owners have complained about the SBA's stringent guidelines for business-disaster loan approval.

"Since Hurricane Sandy struck the East Coast in October, SBA has worked diligently to approve loan applications and get money into the hands of storm victims as quickly as possible," SBA Administrator Karen Mills said in the release Friday. "We remain committed to helping those individuals and communities affected by Hurricane Sandy rebuild stronger and to providing support for long-term recovery."

To qualify for a disaster loan, the SBA reviews the applicant's repayment ability, credit and overall financial situation to make a decision on the loan approval. Businesses must show repayment ability to qualify for the disaster loan, and the business must be located in the county that was declared a federal disaster area, the SBA says.

The announcement comes as the deadlines to file applications for physical disaster loans are extended again in New York to April 13 and New Jersey to May 1.

-- Written by Laurie Kulikowski in New York.

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