B05_73351018R0010_Attachment_5_SOP_50_30_9.pdf

SBA SOP 50 30 9

Disaster Assistance

Program

Office of Disaster Assistance

U.S. Small Business Administration

SMALL BUSINESS ADMINISTRATION

STANDARD OPERATING PROCEDURE

SUBJECT:

Disaster Assistance Program

S.O.P. REV

SECTION

NO.

30 9

INTRODUCTION

1. Purpose: To establish policy for the Disaster Assistance Program.

2. Personnel Concerned: All SBA personnel involved in administering the SBA Disaster Assistance Program.

3. Directives Cancelled: SOP 50 30 8 and all Numbered Memos issued reflecting changes to 50 30 8.

4. Originator: Office of Disaster Assistance

AUTHORIZED BY:

James E. Rivera Associate Administrator for Disaster Assistance

EFFECTIVE DATE

05/31/18

PAGE

SBA Form 989 (5-90) Ref: SOP 00 23

This form was electronically produced by Elite Federal Forms, Inc.

50 30 9 i Effective Date: May 31, 2018

Contents

CHAPTER 1

PROGRAM INTRODUCTION

1.1. OVERVIEW

1.2. AUTHORITY

1.3. CHANGES AND EXCEPTIONS TO POLICY AND SOP REQUIREMENTS

1.4. TYPES OF DISASTER DECLARATIONS AND OTHER ASSISTANCE

1.5. GENERAL RULES OF APPLICATION AND MEANING

1.6. ORGANIZATION

1.7. IMPROPER PAYMENTS

1.8. REFERRAL TO THE OFFICE OF INSPECTOR GENERAL (OIG)

1.9. SAFEGUARDING INFORMATION

1.10. GENERAL GUIDANCE REGARDING AUTHORIZED REPRESENTATIVES

1.11. DOCUMENTING ALL CONTACTS

1.12. CASE FILE DOCUMENTATION

1.13. CONGRESSIONAL INQUIRIES

CHAPTER 2

ORIGINATING THE LOAN APPLICATION

2.1. FEMA REGISTRATION

2.2. AUTOMATED OUTREACH

2.3. INITIAL DISASTER SURVIVOR CONTACT

2.4. INTERVIEW TOPICS

2.5. DISASTER LOAN APPLICATION PACKAGES

2.6. PRE-APPLICATION INTAKE

2.7. FILING AN APPLICATION

2.8. FILING PERIOD

2.9. THE GRACE PERIOD

2.10. ISSUING APPLICATIONS AFTER THE GRACE PERIOD

2.11. ACCEPTING APPLICATIONS AFTER THE GRACE PERIOD

2.12. FIELD SCREENING

2.13. APPLICATION INTAKE

ii Effective Date: May 31, 2018

CHAPTER 3

LOAN ELIGIBILITY APPLICANT ELIGIBILITY FOR HOME & BUSINESS DISASTER LOANS

3.1. APPLICANTS GENERALLY ELIGIBLE

3.2. PRIVATE NON-PROFIT ORGANIZATIONS

3.3. RESTRICTIONS ON APPLICANT ELIGIBILITY

3.4. APPLICANTS GENERALLY INELIGIBLE

3.5. EQUAL CREDIT OPPORTUNITY ACT (ECOA)

3.6. CHARACTER DETERMINATION

ELIGIBILITY OF PROPERTY FOR PHYSICAL DISASTER LOANS

3.7. GENERAL ELIGIBILITY RULE

3.8. LOCATION OF PROPERTY

3.9. ESTABLISHING OWNERSHIP

3.10. PRIMARY RESIDENCE ELIGIBILITY

3.11. AGRICULTURAL PROPERTY

3.12. REPAIR OR REPLACEMENT COST ELIGIBILITY FOR STRUCTURES

3.13. MANUFACTURED HOUSING ELIGIBILITY

3.14. LAND ELIGIBILITY

3.15. LANDSCAPING AND RECREATIONAL IMPROVEMENTS/FACILITIES

3.16. HOME LOAN PERSONAL PROPERTY ELIGIBILITY

3.17. BUSINESS CONTENTS ELIGIBILITY

3.18. VEHICLE, PERSONAL VESSEL, AND PERSONAL AIRCRAFT ELIGIBILITY

3.19. COMMERCIAL VESSEL AND AIRCRAFT ELIGIBILITY

3.20. ALTERNATE USE OF LOAN ELIGIBILITY

3.21. UPGRADING

3.22. INELIGIBLE PROPERTY

3.23. CONDOMINIUM ELIGIBILITY (INDIVIDUAL UNITS AND CONDOMINIUM

3.24. CONDOMINIUM UNIT OWNERS

3.25. ASSOCIATION APPLICATIONS

3.26. OTHER ASSOCIATION ELIGIBILITY

3.27. REFINANCING

3.28. RELOCATION

3.29. PROTECTIVE DEVICES AND MITIGATION MEASURES

iii Effective Date: May 31, 2018

ECONOMIC INJURY DISASTER LOANS

3.30. ECONOMIC INJURY DISASTER LOAN (EIDL) ELIGIBILITY

3.31. ELIGIBLE EIDL LOAN AMOUNT

3.32. SIZE DETERMINATION

CHAPTER 4

ELIGIBLE LOAN AMOUNT

4.1. VERIFICATION OF DAMAGE

4.2. REQUESTING REVERIFICATION

4.3. DETERMINATION OF AMOUNT OF PHYSICAL LOAN ELIGIBILITY

CHAPTER 5

CREDIT

5.1. CREDIT INFORMATION

5.2. CREDIT BUREAU REPORTS (CBR)

5.3. BUSINESS CREDIT REPORTS

5.4. DISCUSSION OF CREDIT CONTENT WITH APPLICANTS

5.5. ADVERSE CREDIT HISTORY

5.6. COLLECTIONS, CHARGE-OFFS, and FORECLOSURES:

5.7. LACK OF CREDIT HISTORY AND DIRECT CHECKS

5.8. PRIOR OR EXISTING SBA LOAN HISTORY

5.9. BANKRUPTCY OR REORGANIZATION

5.10. DELINQUENCY ON FEDERAL OBLIGATIONS WITH A JUDGMENT LIEN

5.11. DELINQUENCY ON FEDERAL OBLIGATIONS WITH NO JUDGMENT LIEN

5.12. CREDIT COUNSELLING SERVICES

5.13. MORTGAGE MODIFICATIONS

5.14. LAWSUITS AGAINST THE APPLICANT

5.15. CHILD SUPPORT

CHAPTER 6

LOAN MAKING DECISION

6.1. LOAN MAKING PROCESS:

6.2 DOCUMENTING INCOME AND REPAYMENT ABILITY

6.3. OBTAINING TRANSCRIPTS

6.4. CONFLICTING FTR INFORMATION

6.5. THE FIXED DEBT METHOD (FDM)

iv Effective Date: May 31, 2018

CHAPTER 7

LOAN DECISION

7.1. AUTHORITY TO APPROVE, DECLINE, WITHDRAW, OR MODIFY LOAN APPLICATIONS

7.2. LOAN PROCESSING ROLES AND RESPONSIBILITIES

7.3. COMPANION AND ASSOCIATED FILES

7.4. TELEPHONE CONTACT UPON COMPLETION OF PROCESSING

LOAN APPROVAL

7.5. LOAN AMOUNTS

7.6. MAJOR SOURCE OF EMPLOYMENT WAIVER OF LENDING LIMIT

7.7. ROUNDING OF DOLLAR AMOUNTS

7.8. LIMITED LOAN AMOUNTS/LOSS IN EXCESS OF LENDING LIMITS

7.9. INTEREST RATES

7.10. LOAN TERMS, INSTALLMENT PAYMENT AMOUNTS

7.11. COLLATERAL REQUIREMENTS

7.12. GUARANTEE REQUIREMENTS

7.13. HAZARD/OTHER INSURANCE REQUIREMENTS

7.14. FLOOD INSURANCE REQUIREMENTS

7.15 EFFECT OF FLOODPLAIN MANAGEMENT (EXECUTIVE ORDER 11988) AND

WETLANDS PROTECTION (EXECUTIVE ORDER 11990) REQUIREMENTS (SEE 13 CFR

§120.172)

7.16. ANTI-DISCRIMINATION COMPLIANCE REQUIREMENTS

7.17. REQUIREMENTS FOR REAL ESTATE REPAIR

7.18. GENERAL LOAN REQUIREMENTS FOR LARGE LOANS (GREATER THAN $1

MILLION)

7.19. LOAN AUTHORIZATION AND AGREEMENT (LAA)

7.20. CONDITIONAL COMMITMENT LETTER

7.21. OBLIGATING LOAN FUNDS

7.22. NOTIFICATION TO BORROWER OF LOAN APPROVAL

7.23. WITHDRAWAL OF APPLICATIONS

7.24. REACCEPTANCE OF WITHDRAWN APPLICATIONS

7.25. DECLINE OF APPLICATIONS

7.26. FAIR CREDIT REPORTING ACT

7.27. DECLINE OF BUSINESS/EIDL (B/E) LOANS

v Effective Date: May 31, 2018

7.28. RECONSIDERATION OF DECLINED LOAN APPLICATIONS

7.29. RECONSIDERATION WHEN MAJOR SOURCE OF EMPLOYMENT (MSE)

DETERMINATION WAS DENIED

7.30. RECONSIDERATION OF DECLINE FOR EXCEEDING APPLICABLE SIZE STANDARDS

7.31. APPEAL OF RECONSIDERATION

CHAPTER 8

MODIFICATIONS TO THE LOAN

8.1. ADMINISTRATIVE CHANGES AND LOAN MODIFICATION

8.2 LOAN DECREASE AND CANCELLATION

8.3. REINSTATEMENT OF CANCELLED LOANS

8.4. INCREASES IN PHYSICAL AND ECONOMIC INJURY LOANS

8.5. DISASTER LOAN SERVICING RESPONSIBILITY

CHAPTER 9

LOAN CLOSING AND DISBURSEMENT

9.1. ROLES AND RESPONSIBILITIES

9.2. CLOSING

9.3 LOAN CLOSING DOCUMENTS (LCD)

9.4. LOAN DISBURSEMENT PROCESS

9.5. CLOSING DEADLINES & EXTENSIONS

9.6. GENERAL GUIDELINES

9.7. LOAN CONDITIONS

9.8. AGREEMENT OF COMPLIANCE

9.9. REQUIREMENTS FOR REAL ESTATE REPAIR

9.10. INSURANCE REQUIREMENTS

9.11. COLLATERAL REQUIREMENTS

9.12. TITLE SEARCH AND TITLE POLICY

9.13. EVIDENCE REQUIRED FOR PREVIOUSLY DISBURSED LOAN FUNDS

9.14. REFINANCING

9.15. EIDL/MREIDL DISBURSEMENTS

9.16. ESCROW ACCOUNTS AND/OR CONTROLLED ACCOUNTS

9.17. LOAN MODIFICATION AND ADMINISTRATIVE CHANGES

APPENDIX 1

vi Effective Date: May 31, 2018

INDEX TO FORMS AND REPORTS

APPENDIX 2

ACRONYMS AND DEFINITIONS

APPENDIX 3

TYPES OF FIELD ASSISTANCE CENTERS

APPENDIX 4

SBA MINIMUM INCOME LEVELS

APPENDIX 5

APPLICATION FORMS

APPENDIX 6

FILING REQUIREMENTS

DISASTER HOME LOAN APPLICATION (INCLUDING SOLE PROPRIETORSHIPS)

Filing Requirements

REQUIRED FOR ALL LOAN APPLICATIONS:

APPENDIX 7

CITIZENS, NONCITIZEN NATIONALS, AND QUALIFIED ALIENS

APPENDIX 8

MILITARY RESERVIST ECONOMIC INJURY (MREIDL)

POLICIES AND ELIGIBILITY

APPENDIX 9

HOW TO MAKE A SIZE DETERMINATION

APPENDIX 10

ECONOMIC INJURY DISASTER LOAN (EIDL)

APPENDIX 11

RIGHT TO FINANCIAL PRIVACY

APPENDIX 12

IRS FORM 8821/4506-T TRANSCRIPTS VERIFICATION PROCESS

APPENDIX 13

CREDIT ELSEWHERE GUIDELINES FOR DISASTER HOMES AND BUSINESS LOANS

HOMES

BUSINESSES

APPENDIX 14

REASONS FOR WITHDRAWAL OF APPLICATION

vii Effective Date: May 31, 2018

APPENDIX 15

REASONS FOR DECLINE OF APPLICATION

APPENDIX 16

USE OF LOAN PROCEEDS

APPENDIX 17

CATALOG OF OPTIONAL LOAN AUTHORIZATION TEXT

APPENDIX 18

CANCELLATION CODES

APPENDIX 19

AFFILIATE

INDEX

Effective Date: May 31, 2018

CHAPTER 1

PROGRAM INTRODUCTION

1.1. OVERVIEW

In the wake of hurricanes, floods, earthquakes, wildfires, tornadoes and other physical disasters, the U.S. Small Business Administration (SBA) plays a major role. Through its Office of Disaster Assistance (ODA), SBA provides financial assistance to businesses of all sizes, most private non-profit organizations, homeowners, and renters following a declared disaster. In addition SBA provides eligible small businesses necessary working capital to help overcome the economic injury of a declared disaster. SBA’s disaster loan program is the only form of assistance not limited to small businesses. Financial assistance is in the form of low-interest, long-term loans.

The disaster assistance program is customer driven. The people coming to you for assistance have been through a traumatic experience from which they may not have recovered. You are there to help, not to further discourage them. It is absolutely essential that you exercise tact, compassion, and professionalism at all times.

1.2. AUTHORITY

A. Section 7(b)(1) of the Small Business Act, as amended, authorizes the Agency's Physical Disaster Loan Program. SBA can make loans to repair, rehabilitate or replace property, real or personal, damaged or destroyed by or as a result of natural or other disasters as defined by the Small Business Act.

B. Section 7(b)(2) of the Small Business Act, as amended, authorizes the Agency's Economic Injury Disaster Loan (EIDL) Program. SBA can make loans to eligible small businesses, eligible non-profit organizations, and eligible small agricultural cooperatives located in a disaster area that suffered substantial economic injury as a result of the disaster.

C. Section 7(b)(3) of the Small Business Act, as amended, authorizes the Agency’s Military Reservist Economic Injury Disaster Loan (MREIDL) Program. SBA can make loans to eligible small businesses that suffered or are likely to suffer substantial economic injury as a result of an essential employee being ordered to active military duty during a period of military conflict.

D. Section 7(b)(2)(B) of the Small Business Act, as amended, authorizes the Agency to make loans to eligible small businesses’, small agricultural cooperatives, and most private non-profits that suffered substantial economic injury as a result of a natural disaster as determined by the Secretary of Agriculture.

NOTE: You can find additional program guidance in Title 13 of the Code of Federal Regulations (13 CFR), Part 123.

Effective Date: May 31, 2018

1.3. CHANGES AND EXCEPTIONS TO POLICY AND SOP REQUIREMENTS

Disaster loan policies and guidelines cannot anticipate all of the circumstances, questions or needs that may arise in any given disaster. Therefore, these policies and guidelines may change without advance notice. Headquarters (HQ) notifies the Disaster Assistance Centers (generally, through a numbered memo) of all changes. A policy exception is any recommended action not in full compliance with this SOP. Only the Associate Administrator for Disaster Assistance (AA/DA) can approve exceptions.

1.4. TYPES OF DISASTER DECLARATIONS AND OTHER ASSISTANCE

There are six types of disaster declarations:

A. Presidential: This activates SBA's physical and EIDL programs. Some other forms of Federal, State, or other assistance that may be available in addition to SBA loans are:

1. Under a Declaration for Individual Assistance (IA):

a. The Rental Assistance and Home Repair Program (HA) – administered by Federal Emergency Management Agency (FEMA), the coordinating agency for all disaster assistance.

b. The Individuals and Households Program (IHP) FEMA and the states have flexibility on the delivery of this type of grant assistance. There is an overall cap on grant assistance for any one disaster (adjusted annually in October), excluding grant monies for permanent housing construction.

c. Grant and/or loan programs administered by state or regional entities, as available.

d. Services provided by volunteer agencies, as available.

2. Under a Declaration of Public Assistance (PA): FEMA Public Assistance (PA) grant program for state, local and tribal governments and certain private non-profits (PNPs) that provide essential services of a governmental nature.

B. Administrative (Agency): This activates SBA’s physical and EIDL programs. Generally, the only other assistance in addition to SBA is from volunteer agencies.

C. Secretary of Agriculture (SecAg): This activates SBA's EIDL program.

D. Governor's Certification (7(b) (2) (D)): This activates SBA's EIDL program.

1. Secretary of Commerce: Under §308(b) of the Interjurisdictional Fisheries Act of 1986, the Secretary of Commerce may make a determination that eligible small businesses have suffered substantial economic injury as a result of commercial fishery failures or fishery resource disasters. In the event of such determination, SBA’s EIDL program can only be activated under a Governor’s Certification.

E. Military Reservist Economic Injury Disaster Loan (MREIDL) Program: This activates SBA’s MREIDL program.

Effective Date: May 31, 2018

1.5. GENERAL RULES OF APPLICATION AND MEANING

A. Guidance regarding processing of loan applications, actions, or requirements on loan terms and conditions shall, unless specifically excluded, be equally applicable to original processing actions (to include all forms of reconsideration) and to post-approval actions such as loan modifications. Guidance of a general nature, including file documentation, staff conduct, and matters regarding dealings with external entities, shall be applicable to all ODA staff and official matters.

B. The following should be applied in any reading of this SOP:

1. The terms “applicant” and “borrower,” whether singular or plural, shall be deemed interchangeable terms as applicable under the facts;

2. All references to official titles or positions shall be deemed to include any person “acting” in the capacity under a properly authorized line of succession document;

3. All references to official titles, position, or signatory authority shall include formally named designees under an authorized delegation of authority, an authorized Disaster Credit Management System (DCMS) responsibility access, or other written designation approved by competent authority.

4. All references to the declared area or the declared disaster area shall be deemed the same as disaster event or disaster footprint.

1.6. ORGANIZATION

A. Associate Administrator for Disaster Assistance (AA/DA):

The AA/DA plans, directs, and administers the Agency's disaster lending programs. The AA/DA's office and staff, located in Washington, D.C.,. The Office of Disaster Assistance (ODA) serves all U.S. states, territories, possessions, commonwealths, and the District of Columbia.

B. The Disaster Assistance Centers:

There are nine offices located nationwide. Each office is supervised by a Director and operates the disaster program under the direction of AADA.

1. The Disaster Assistance Customer Service Center (CSC) located in Buffalo, NY is a national contact center providing services in support of ODA program delivery, which includes responding to customer inquiries on the toll-free customer service line (1-800-659-2955) and e-mails to the customer service mailbox (disastercustomerservice@SBA.gov).

2. The Disaster Assistance Processing and Disbursement Center (PDC) located in Fort Worth, TX is responsible for application processing functions, loan closing, and disbursement of loan proceeds.

3. The Disaster Assistance Field Operations Center East (FOC-E) is located in Atlanta, GA and the Disaster Assistance Field Operations Center West (FOC-W) is located in Sacramento, CA. Each is responsible for SBA’s response and recovery mailto:disastercustomerservice@SBA.gov

Effective Date: May 31, 2018 operations, including establishing field presence, staffing Disaster Recovery Centers, Disaster Loan Outreach Centers, and Business Recovery Centers.

4. Office of Disaster Personnel (ODP) located in Herndon, VA, oversees the full-service personnel and resource management program including recruitment, staffing, benefits, pay and leave, performance, classification, etc.

5. The Administrative Services Center (ASC) located in Herndon, VA, is responsible for the full service administrative resource management program including support services, supply control activities, budget, procurement, travel, payroll, facilities management, and warehouse and storage facilities.

6. The Disaster Credit Management System (DCMS) Operations Center, located in Herndon, VA, is responsible for maintaining and updating the DCMS software, interfacing with other computer systems, and the computer hardware necessary to operate the system

7. The Damage Verification Center (DVC), located in Herndon VA is responsible for performing surveys/Preliminary Damage Assessments (PDAs) and conducting all original verifications of disaster losses.

8. The Office of Disaster Strategic Engagement and Effectiveness (ODSEE), located in Herndon, VA and Washington, D,C,, supports accomplishments of SBA and ODA’s strategic mission and goals through effective and efficient human capital programs

1.7. IMPROPER PAYMENTS

An improper payment is any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. Incorrect amounts are overpayments or underpayments that are made to eligible recipients. An improper payment also includes any payment that was made to an ineligible recipient or for an ineligible good or service, or payments for goods or services not received (except for such payments authorized by law). In addition, when an agency's review is unable to discern whether a payment was proper as a result of insufficient or lack of documentation, this payment must also be considered an improper payment.

Failure to follow the policies and guidance set forth in this SOP may result in an improper payment.

1.8. REFERRAL TO THE OFFICE OF INSPECTOR GENERAL (OIG)

In the course of your duties, you must immediately report any known or suspected improper activity directly to the Office of Inspector General (OIG) which may constitute waste, fraud, or abuse in the administration of, or participation in, disaster assistance programs. This includes program irregularities, misrepresentations, and bribery overtures (attempts or solicitations included). You must also refer cases to OIG when you have questions about the truthfulness or accuracy of any application or supporting data and information (including tax information), or any other false information provided by applicants, borrowers, or paid representatives, in the course of participation in any of the disaster assistance programs.

Effective Date: May 31, 2018

After a case is referred to OIG, SBA employees shall not make any statement about actions taken by the OIG (except as permitted by law), without the express consent of the Office of Inspector General.

To make a referral, contact the OIG Hotline at (800) 767-0385 or complete the on-line OIG Complaint Submission Form at https://www.sba.gov/office-of-inspector-general. You have the option to request confidentiality from OIG.

1.9. SAFEGUARDING INFORMATION

To ensure compliance with the Privacy Act and to safeguard the personal information of the disaster survivor, you must take appropriate precautions to ensure that personally identifiable information (PII) are handled in the appropriate manner. In addition you must verify that you are speaking with the applicant/borrower or their authorized representative prior to disclosing any information considered private or sensitive.

1.10. GENERAL GUIDANCE REGARDING AUTHORIZED REPRESENTATIVES

A. All Representatives:

SBA applications require a listing of anyone retained by an applicant as his/her representative, and the compensation to be paid. Pursuant to the Privacy Act of 1974 (5 U.S.C. 552a), you may only discuss the specifics of an applicant’s loan with an applicant or authorized representative as named in the application, or as authorized in writing by the applicant.

B. Paid Representatives:

SBA loan applications require a listing of paid representatives (attorneys, accountants, etc.) an applicant retains, and any present or future compensation for their services.

1. Reasonableness of Fees: The policy of SBA is to try to ensure that those who participate in its programs are not subject to fraud, dishonesty, or unnecessary or inappropriate representation that creates excessive fees or costs. We do not require applicants to engage the services of any professional to file an application. When an applicant engages a representative, the fees must be disclosed and SBA will review the fees charged in connection with preparing the application and assisting the applicant to obtain a loan to assess whether the fees are reasonable in relation to the services performed.

Reasonable fees are those which are for necessary and appropriate services actually performed, or for expenses actually incurred, and are comparable to those charged by other agents in that geographical area. Fees paid for services not directly related to the application process, such as preparation of tax returns and regular accounting fees, should not be included in the reasonability assessment.

a. For a routine application, fees generally should not be more than $500 for disaster home loans and $2,500 for disaster business loans.

Effective Date: May 31, 2018

b. If the representative’s fees exceed this amount you must:

(1) Advise the applicant that the representative must provide SBA and the applicant with a signed Compensation Agreement (SBA Form 159), and explain to the applicant that ODA needs to ensure that the applicant is not being charged excessive fees for the services provided;

(2) Forward the fee information to the ACDAP (Assistant Center Director Application Processing) for review.

c. The ACDAP in consultation as needed with the Assistant Center Director Accounts (ACDA) should review the fee information to determine whether the fees charged are reasonable in relationship to services actually performed (13 CFR Part103). The ACDAP may request that the representative provide an itemization or justification of services provided or expenses incurred. If fees are determined to be unreasonable, and cannot or will not be justified by the representative, the ACDAP or ACDA should advise the Center Director for the Processing and Disbursement Center (CD/PDC) who will make the final determination.

Any further action should be coordinated with HQ.

2. If the representative’s fees have not been disclosed you must ask the applicant the amount of fees they have agreed to pay and document the file accordingly.

NOTE: You should continue to process the case file, even in situations where fees exceed the limits identified above. Issues pertaining to compensation of the applicant/borrower’s representative should not preclude continued processing or disbursing the loan.

C. Representative Index:

The PDC will enter the appropriate information for all representatives listed on the application in the case file.

1.11. DOCUMENTING ALL CONTACTS

The efficient and timely processing, closing, and disbursement of files require you to have contact with applicants and other parties, whether in person, or by phone, e-mail or fax. Other parties may include applicant/borrower representatives, bankers, insurance agents/companies, contractors, attorneys, or public officials. Frequently these interactions provide information that is used in making disaster loan decisions or in the disbursement process. In all cases the fact and content of the conversation or exchange is relevant to the file history, and to subsequent users of the file.

A. All contacts must be documented in the case file. You must record each contact or attempt to contact the applicant/borrower, or other parties (as identified above), regardless of who initiates the contact.

Your documentation should consist of a summary of the conversation or exchange and

Effective Date: May 31, 2018 should include the name of each participant, the telephone number that was called or attempted and the result of the call, and a factual summary of the comments and statements made. Identify persons who are not the applicant by relationship or role (e.g., representative, banker, insurance agent, accountant, etc.).

B. E-mail correspondence should generally be initiated or requested by the applicant or borrower. E-mails should be scanned into the file to document the contact.

C. Text messaging to your personal mobile device is not an approved or appropriate manner of interacting with disaster loan applicants or borrowers.

1.12. CASE FILE DOCUMENTATION

A. Case File Maintenance:

1. Each document received must be scanned so the document can be stored electronically in the case file.

2. Original collateral documents will also be maintained in a separate collateral file.

3. After final disbursement of loan funds and ensuring files are complete; both the case file and the collateral file must be forwarded to the appropriate servicing office. All electronic files are archived.

B. Original Documents:

When you receive an original document (other than a loan closing document, e.g.

applicant/borrower’s deeds, abstracts of title, etc.) do not write on or mark the document.

1. Make a copy, mark it "copy”, and date-stamp the received date on the copy; and

2. Scan the date-stamped copy into the case file and return the original(s) to the applicant/borrower.

C. Official Correspondence:

Generally, we do not issue official correspondence without a date, printed (or typed) name, and organizational title (not the personnel classification) or department name.

1.13. CONGRESSIONAL INQUIRIES

A. Congressional inquiries generally go to Headquarters or the FOC-E and FOC-W and are answered directly, where appropriate. Each center must send a copy of all congressional inquiries and responses, or a record of telephonic congressional inquiries to the Office of Congressional and Legislative Affairs in SBA Headquarters, ODA, and appropriate district offices.

B. Center personnel who receive an inquiry from a Congressional office whether written or verbal, regarding a specific applicant/borrower must record the inquiry in the case file and immediately refer the inquiry to the appropriate FOC Supervisory Public Information Officer (PIO).

Effective Date: May 31, 2018

C. The need for a Privacy Act release arises when the Congressional office begins to ask for specific information on why a person is ineligible, the reasons for decline, withdrawal, etc.

D. SBA cannot release personal financial (or other) information about a loan applicant or borrower to a third party, including a Congressional office, without a Privacy Act release (see Appendix 11).

Effective Date: May 31, 2018

CHAPTER 2

ORIGINATING THE LOAN APPLICATION

2.1. FEMA REGISTRATION

FEMA Registration Process - Presidential Declarations:

A. Home loan inquirers who contact FEMA are registered.

1. In Presidential declarations, inquirers with a household income below the minimum income levels stated in the Income Test Tables (provided by SBA) are classified as Failed Income Test (FIT). They are referred by the FEMA registrar directly to Individuals and Households Program (IHP), bypassing the SBA process. For statistical purposes, FITs are not counted as SBA interviews.

2. Inquirers not classified as FIT are referred to SBA, and contacted via automated outreach (e-mails, calls, and letters, etc.) which results in the opportunity to apply for an SBA disaster loan.

B. Business loan (including EIDL) inquirers who contact FEMA are also registered.

However, because there are no FITs for business applicants, all inquirers are referred to SBA.

2.2. AUTOMATED OUTREACH

In Presidential declarations we use automated outreach (e-mails, calls, and letters, or any other means) to contact individuals and businesses referred from FEMA. This process informs the FEMA registrants of their referral to SBA for disaster assistance and provides options for obtaining a disaster loan application;

A. The recipients can elect to apply online via SBA’s Electronic Loan Application (ELA), apply in person at a field location, request SBA mail them a disaster loan application, or indicate that they are not interested in applying for a disaster loan and request that SBA not make any further contact.

B. If we receive no response or are unable to reach the disaster survivor during the automated outreach, we will mail them a letter with instructions on how to apply.

2.3. INITIAL DISASTER SURVIVOR CONTACT

A. Initial Interview Performed at any Disaster Assistance Center: This is your first contact with the disaster survivor. Their perception that SBA is ready to assist with a timely recovery through its loan program depends on how well you explain:

1. The program;

2. The application process;

3. The importance of fully complying with our filing requirements; and

Effective Date: May 31, 2018

4. The availability of free assistance in completing the forms at an assistance center or by calling the CSC.

B. During the Initial Interview:

1. Determine whether the applicant and the damaged property are generally eligible.

You cannot make final eligibility determinations at the initial interview stage.

However, if it is obvious that the applicant or the property is not eligible (e.g., the applicant does not own the property or the property is not located in a declared area) you should inform the applicant of the potential decline action and give them the opportunity to refuse the application.

2. Explain the application process in simple terms: After thoroughly explaining the program, advise the applicant you can assist with completing the Electronic Loan Application (ELA) or in rare cases a paper loan application on-site at the field location.

If the applicants cannot complete the electronic loan application on-site, instruct them to complete it and file by the filing deadline date.

NOTE: We cannot refuse to assist with an ELA or issue a paper application to a disaster survivor who has not registered with FEMA. If the disaster survivor has not done so, you should encourage them to register with FEMA and advise them of the potential assistance from programs other than SBA (when applicable).

3. Determine initial repayment ability (generally for home loan applications) A preliminary analysis will be performed to determine if the entire loan application should be completed by the applicant.

a. Using the SBA Form 700 questions contained in ELA to determine if applicants have household income(s) above the income test table threshold. For those applicants who have income above the threshold, a preliminary fixed debt method (FDM) will be performed to determine if they are likely to have repayment ability based on the stated income and stated debts from the application. If yes the remainder of the ELA application will then need to be completed.

b. If not, a summary decline will be issued. A summary decline is an SBA action usually resulting in immediate referral to FEMA’s IHP or other organizations.

This action is appropriate if repayment ability is not evident using the preliminary FDM approach during an individual interview or while screening a home loan application.

c. In Presidential declarations when a summary decline is warranted, the applicant must be notified in writing and referred to FEMA IHP. As appropriate, referrals to other organizations may be included.

d. In Agency Declarations, if other organizations (e.g. Mennonite Disaster Services, etc.) accept referrals from SBA, issue a summary decline with the appropriate referral.

e. Summary decline policies do not apply to Business or EIDL inquirers.

4. Disaster Home/Business Loan Inquiry Record (SBA Form 700): When assisting a

Effective Date: May 31, 2018 disaster survivor at a field location, you must document the interview and record essential information using SBA Form 700 information contained in ELA or in rare cases the paper version. All original paper SBA Form 700s and subsequent paper correspondence (summary decline notice, etc.) must be submitted to the PDC for retention.

NOTE: The information contained in SBA Form 700 must be completed regardless of whether the applicant has registered with FEMA in a Presidential declaration.

2.4. INTERVIEW TOPICS

A. Home, Physical Business, and Economic Injury Disaster Loans (EIDL): Use the fact sheet associated with the declaration as a guide to discuss the purpose of the program with the inquirer. You cannot make eligibility determinations at the interview stage, however, you will discuss general eligibility issues, the methods by which an applicant can apply (including online at disasterloan.sba.gov), loan limits (see paragraph 7.5), filing deadlines, as well as the following:

1. Types of Disaster Loans Available

a. Home Disaster Loans: Loans are available to homeowners to repair or replace disaster-damaged real estate and personal property, including automobiles. Loans are available to renters to repair or replace disaster-damaged personal property, including automobiles.

b. Business Physical Disaster Loans: Loans are available to businesses to repair or replace disaster damaged property owned by the business, including real estate, leasehold improvements, inventories, supplies, machinery and equipment.

Businesses of any size are eligible. Private non- profit (PNP) organizations such as charities, churches, private universities, etc. are also eligible.

c. Economic Injury Disaster Loans (EIDL): Working capital loans are available to assist small business concerns, small agricultural cooperatives, small businesses engaged in aquaculture, or most PNPs of all sizes in order to meet their ordinary and necessary financial obligations that cannot be met as a direct result of the disaster. These loans are intended to assist through the disaster recovery period.

(See paragraph 3.30 and 3.31 for further information on EIDL eligibility).

2. Credit Requirements: Applicants must have a credit history acceptable to SBA.

Generally, we review credit reports to determine if obligations, including any current or past Federal debts, have been or are being met.

3. Repayment: Applicants must show the ability to repay all loans: Issuing a loan application or completing an ELA does not mean it will result in an SBA approved loan. Generally, we analyze Federal tax return/income information to substantiate repayment ability. We may require additional documentation of income, such as paystubs, or a W-2, or by contacting the employer when an applicant has new employment within the last two years or in order to support a level of income different from the Federal tax return reported income. In the case

Effective Date: May 31, 2018 of a business applicant, one of the filing requirements is a hard copy of the most recent Federal tax return (FTR) for the applicant business is required or an explanation as to why it cannot be provided.

4. Collateral: Collateral is required for physical disaster loans and all EIDL over $25,000. SBA takes real estate as collateral when it is available. SBA will not decline a loan for lack of collateral, but requires the applicant to pledge the collateral SBA has determined is available.

5. Use of Internal Revenue Service (IRS) Tax Information Authorization Form/FTR. In areas that do not use FTRs, such as commonwealths, territories, or U.S. possessions, we require comparable documentation.

a. Home Loan Applicant: Applicants who submit only a home loan application are required to provide an IRS Tax Information Authorization form for themselves and are not required to provide a tax form for any affiliated business.

b. Business Loan Applicant(s):

The owner may be either an individual or entity and one form is required for each proprietor, each limited partner, each member who owns 20 percent or more interest, each general partner, each stockholder owning 20 percent or more voting stock, and each affiliate (see Appendix 19 for definition of affiliate).

(1) You must obtain financial information from each owner and principal, as defined below. Generally, it is not necessary to obtain financial information from non-owner managers unless they have voting or management control. An owner or principal may be:

(a) For sole proprietorships, the sole proprietor;

(b) For general partnerships, each general partner;

(c) For limited partnerships, each general partner and each limited partner who owns 20 percent or more interest in the applicant business concern;

(d) For corporations, each stockholder who owns 20 percent or more of the applicant’s voting stock; or

(e) For limited liability entities, each member who owns 20 percent or more interest.

(2) In some cases you must consider certain individuals or business concerns that exert control over the applicant to be principals even if anyone or all of them owns less than 20 percent.

NOTE: For further information about affiliation, refer to Appendix 19. If you are unclear as to whether affiliation exists, consult your supervisor.

6. Interest Rates and Loan Terms: The interest rates depend on whether the applicant(s) has Credit Available Elsewhere. An applicant does not have Credit Available Elsewhere when SBA determines the applicant does not have sufficient funds or other

Effective Date: May 31, 2018 resources, or the ability to borrow from non-government sources at reasonable terms, to provide for its own disaster recovery. An applicant, which SBA determines to have the ability to provide for his or her own recovery is deemed to have Credit Available Elsewhere. Interest rates are fixed for the term of the loan. Generally the loan terms are 15 or a maximum of 30 years. However, businesses with credit available elsewhere are restricted to a maximum 7 year term. SBA sets the installment payment amount and corresponding maturity based upon each borrower’s ability to repay.

7. Rental Properties/Extended Family: If the disaster damaged property is not the applicant’s primary residence, you should explore potential eligibility under rental property or extended family guidelines (see paragraph 3.1 O and P).

8. Secondary Home Ineligibility: A secondary home and its contents are not eligible for home loan consideration.

9. Condominium, HOA Units: If you are made aware that a home loan inquirer has damaged real property that is part of a condominium or homeowner’s association, you must follow the guidance provided in paragraphs 3.23 and 3.24.

10. Mitigation: Approved loans can be increased up to 20% of the verified physical loss for mitigation measures (not to exceed $200,000 for Home and the Legislative Limit for Businesses). Mitigation funds are to cover the cost of improvements designed to protect property and occupants against future damage. Examples of improvements include retaining walls, seawalls, sump pumps, safe room, etc. (See paragraph 3.29)

11. Refinancing: Refinancing of previous mortgages may be available only in certain cases where there has been substantial physical damage based on the uncompensated loss.

Interested inquirers should discuss refinancing eligibility with their Loan Officer (see paragraph 3.27).

12. Relocation: Generally, SBA loan funds may be used to relocate. However, by regulation SBA disaster loan funds may not be used to relocate voluntarily outside the business area where the disaster occurred. Interested inquirers should discuss the relocation eligibility with their Loan Officer (see paragraph 3.28).

13. Verification of Damage: An SBA Loss Verifier will estimate the cost to repair or replace the disaster damaged real property (including manufactured homes) and contents. Prior to either the interview or inspection an applicant may dispose of damaged property or debris for health and safety reasons or avail themselves of free or low cost disposal services. If practical, suggest (but do not require) pictures, written lists, or receipts for property prior to removal.

NOTE: There is no verification of damages when the loan application is only for an

EIDL.

14. Insurance Coverage and Proceeds: SBA is prohibited from providing assistance to applicants whose losses are covered by insurance or other compensation. You should ask if any insurance coverage was in force on the damaged property and if a settlement was received or is expected. If so, you should advise the applicant against voluntarily applying any insurance proceeds to reduce the existing mortgage(s). Explain that if the

Effective Date: May 31, 2018 proceeds can be used to repair or replace eligible damage or losses, we will deduct them from eligibility.

15. Insurance Requirements on Approved Loans: If a loan is approved, SBA may require the borrower to purchase and maintain flood insurance and/or hazard insurance.

16. Information Required: You must advise the inquirer of the filing requirements and advise them to comply with the filing requirements to prevent delays (See Appendix 6).

Advise the inquirer that if a loan is approved, additional information, such as proof of ownership, may be required.

17. Approved Loan Amount: Advise the inquirer that the loan amount is determined at the time of processing and that reductions to the eligibility are made when grants, insurance, and other funds are received and considered a duplication of benefits (DOB).

2.5. DISASTER LOAN APPLICATION PACKAGES

A listing of the forms contained in both the ELA and paper application packets for a home/sole proprietorship, business, and military reservist EIDL is in Appendix 5.

2.6. PRE-APPLICATION INTAKE

The DCMS Pre-Application Intake function captures data about the applicant to provide tracking from the moment of first contact. A Pre-Application record also allows SBA to provide a follow-up with registrants if SBA has not received an application.

A. On Presidential declarations, the Pre-Application record is generated through the download of FEMA registration information.

B. On Agency declarations, the Pre-Application record is generated by direct contact through the FOCs or CSC, resulting in direct entry to DCMS by the contacted office, or through the submission of an inquiry record (SBA Form 700 in ELA or in rare cases paper applications to the PDC from the field.

2.7. FILING AN APPLICATION

Both ELAs and paper applications can be filed in person at a field location where SBA is located.

Applicants can also complete and submit ELAs independently or mail paper applications directly to the PDC.

When completing an ELA at a field location, the applicant(s) has the option to complete the application themselves, or the CSR can assist in completing the application with information provided by the applicant(s).

2.8. FILING PERIOD

A. The deadline for returning completed loan applications (unless extended) is:

1. For physical loan, 60 days beginning the day after the date of declaration.

2. For economic injury disaster loan (EIDL), 9 months beginning the day after the date of

Effective Date: May 31, 2018 declaration.

3. For EIDLs pursuant to Secretary of Agriculture designations, 8 months from the Secretary's designation.

4. For MREIDL, the filing period begins on the date the essential employee receives a notice of expected call-up, and ends 1 year after the date the essential employee is discharged or released from active duty. AA/DA may extend the one year limit by no more than one additional year after finding extraordinary or unforeseeable circumstances.

NOTE: Official call-ups are the mechanism for determining the incident period for loan eligibility. Accordingly, loan requests for separate call-ups in the same fiscal year may require a new loan application. The Loan Officer should discuss with the applicant the benefits of filing a new application versus performing an increase on the existing application.

B. Extensions: FEMA or SBA may authorize extensions of the filing period.

2.9. THE GRACE PERIOD

We will accept applications postmarked (or submitted via ELA) within 15 days of the filing deadline (the “grace period”) without justification from the applicant.

A. You should include a “Notice of Grace Period” with application packages distributed beginning 10 days prior to the filing deadline, and extending through the end of the grace period.

B. If an applicant cannot return the application by the end of the grace period, you must advise the applicant to include a written explanation addressing the inability to meet the filing deadline with the application. You should also explain that the determination for accepting the late application will be made once it is received.

2.10. ISSUING APPLICATIONS AFTER THE GRACE PERIOD

If requested you may direct the applicant to ELA (within 45 days after the filing deadline) or issue an application after the grace period without further justification from the applicant. When issuing an application after the grace period, you should issue a “Notice of Late Application” with the application. You must advise the applicant to include a written explanation addressing their inability to meet the filing deadline and explain the determination for accepting the application will be made once it is received.

2.11. ACCEPTING APPLICATIONS AFTER THE GRACE PERIOD

A. Applications not received or postmarked within 15-days of the filing deadline require the applicant's written explanation for the late filing. The request may be accepted only if we determine the late filing resulted from substantial causes essentially beyond the applicant's control.

B. If the applicant does not provide sufficient justification for the late filing, advise the applicant

Effective Date: May 31, 2018 in writing that the late acceptance of the application has not been granted.

C. When a late application is received without a written justification or request for late filing, you should contact the applicant by phone or e-mail to determine the reason(s) for the late filing. If the late acceptance is justified, document the file and forward for final review. If attempts to contact are unsuccessful, issue a Notice of Late Application advising the applicant that we require a written request and explanation for the late filing.

D. The acceptance decision for a late application that has been denied two or more times must be made by the ACDAP.

2.12. FIELD SCREENING

Screening is the process of reviewing application submissions to determine if they are acceptable.

For applications received at a field location, every effort should be made to complete the screening while the applicant (or representative) is present.

Acceptable applications must meet all filing requirements (see Appendix 6).

A. For Electronic Loan Applications (ELAs):

1. Advise the applicant of any additional documentation needed to make the application “complete” as it is not considered acceptable until all filing requirements have been received. At field locations, obtain the appropriate IRS forms and other documents for filing.

2. Forward any collected documents to the PDC ELA section.

NOTE: An application is considered to be complete upon submission of a signed (electronically) electronic application and receipt of a signed (electronic or wet signature) IRS Form 4506-T and any other filing requirements. For those applicants who choose not to sign the application electronically, the application is considered complete with receipt of a signed IRS Form 4506-T and any other filing requirements. A wet signature will be obtained on the application at the time of loan closing.

B. For Paper Loan Applications:

1. Review the application to ensure all filing requirements have been met and the application form is substantially complete. The list of filing requirements can be found in Appendix 6.

a. If it is acceptable, mark the application with the date it was received by the Agency.

b. Complete the appropriate screening documents.

c. If it is unacceptable, advise the applicant to complete and/or provide any missing information.

NOTE: If you receive an application without a Social Security Number (SSN), advise the applicant that SBA requires a valid SSN and/or a valid Tax Identification Number in order to process an application and therefore the application is

Effective Date: May 31, 2018 unacceptable. Additionally, it is acceptable to have an application signed without a date.

2. Summary decline at screening: For home applications, screeners in the field determine the applicant’s ability to repay. The screener must apply both the minimum income test (see Appendix 4) and the preliminary fixed debt method approach (see paragraph

2.3 B 3). If the screener determines that the applicant’s income falls below the minimum income level, or the applicant lacks repayment ability, SBA must advise the applicant in writing of the decline decision, and refer the applicant to other sources of assistance as appropriate.

2.13. APPLICATION INTAKE

A. The following functions are performed during application intake (including ELA):

1. Input all incoming paper applications into DCMS.

2. Determine acceptability of application.

3. Check for duplicate applications.

4. Identify companion and associated applications.

B. Applications are checked to see that the application and Tax Information Authorization form(s) are substantially complete. Not all of the personal history questions as stated on the home application (except ELA) require a yes or no answer. If there is no response indicated the determination is that the applicant has answered the question as “no”. Applications lacking a social security number (SSN), signature or missing a significant amount of information are not acceptable and should be returned using the standard procedure.

C. Applications that are received using either a minor child as the applicant or the parent using the minor child’s SSN should be entered into the case file and they will be declined for eligibility and referred to FEMA for potential assistance. In Presidential Declarations, FEMA may provide assistance for minor children living in the home of an individual that does not qualify for assistance.

Effective Date: May 31, 2018

CHAPTER 3

LOAN ELIGIBILITY APPLICANT ELIGIBILITY FOR HOME & BUSINESS DISASTER

LOANS

3.1. APPLICANTS GENERALLY ELIGIBLE

Generally, eligibility for physical disaster loans resides with the legal entity or individual that owns the disaster damaged property (real property, manufactured home, contents, vehicle, etc.), subject to the limitations and restrictions within paragraphs 3.3, 3.4, and this paragraph.