This story was published in partnership with The Weather Channel.
It was not the first time that Josefa Mendoza’s house had been flooded, but it was the worst. When the event coordinator, 47, fled her South Texas property with her children and grandchildren in June 2018 during a severe storm, the water inside had risen to the ground. to the size.
She was not entitled to assistance from the Federal Emergency Management Agency. So, like more than a million Americans since 2001, she applied for a federal disaster assistance loan from the Small Business Administration.
But most applicants do not get one.
Low interest loans are a major source of federal disaster assistance available to homeowners and tenants as well as small businesses – if they are eligible. The SBA approved about 609,000 of these loans in fiscal years 2001 to 2018, but refused about 860,000. This does not include loan applications that were withdrawn, tens of thousands of which were closed by the SBA. rather than at the request of the applicant.
As climate change increases the risk of more and worse disasters, the Center for Public Integrity wanted to know what happens after these efforts to get help. We acquired a dataset through a Freedom of Information Act application that details every disaster loan application approved, withdrawn and denied by the SBA over the past 18 years. It provides the first public look at disaster lending trends, as well as the reasons the SBA gave when it turned down applicants. We make the data available here.
“People hear a lot about FEMA. But the SBA is the primary source of homeowner assistance after most catastrophic disasters, ”wrote in an email Kathleen Bergin, a lawyer who teaches disaster law at Cornell Law School as an adjunct professor. “While FEMA grants are capped at around $ 33,000, qualified homeowners could access more than $ 200,000 in SBA loan assistance.”
The most common reasons for rejection – unsurprisingly – are financial. Ninety percent of SBA disaster loan refusals since 2001 have been for “bad credit history”, “lack of repayment capacity” or both.
Thousands of applicants, however, faced more unusual grounds for refusal. More than 4,500 applicants since 2001, for example, have been turned down “on moral grounds”. The SBA uses government records and information from an applicant’s personal history statement, among other sources, to “examine the behavior, candor, integrity and disposition of criminal actions.”
Last year was the biggest for the SBA’s disaster lending program since the fiscal year that began about a month after Hurricane Katrina – still the biggest costly US storm recorded – devastated New Orleans at the end of August 2005. In 2018, the agency both approved the most loans (110,000) and refused the most loans (117,000) since 2006. Grand total of SBA loans approved for recent hurricanes Harvey, Irma and Maria as of August 2019: over $ 6.8 billion.
This is likely to increase over time. A climate adaptation plan the SBA produced in 2014, which focuses in part on its Disaster Assistance Office, warned that “the increased number of severe weather events could increase the demand for ODA resources.”
Yu Xiao, associate professor of urban studies and planning at Portland State University, said one of the challenges of a program like the SBA’s is that it’s not always a good idea. to rebuild after a disaster – as much as applicants may want to stay put.
“If you were in their shoes, you would love to have some help from the federal government,” Xiao said. But rebuilding rather than moving can sometimes lead to more damage in the future, she said. “It’s sort of subsidizing households and businesses in this disaster area.”