SBA Strongly Urges Lenders to Provide
Deferment Relief to Borrowers in Disaster-Stricken Areas
Agency to Grant 12-month Deferments
In Stricken Areas On Loans It Holds
The U.S. Small Business Administration today urged 7(a) participating
lenders, 504 program Certified Development Companies and microlenders to provide
deferment relief for borrowers with SBA-backed business loans in the primary
disaster areas affected by Hurricane Katrina and contiguous parishes/counties.
The declared disaster areas may be found at
www.sba.gov/disaster,
and then go to the hyperlink titled "Hurricane Katrina SBA Disaster Notices and
Fact Sheets."
SBA Administrator Hector V. Barreto made the appeal as he announced that the
agency will provide relief to certain borrowers with SBA-serviced loans,
including SBA microlenders, with existing SBA loans in those areas.
"Small businesses are the backbone of our economy and will play a fundamental
role in the recovery of the Gulf Coast region," said Administrator Hector V.
Barreto. "We at the SBA are committed to providing them with the help they need
to get back on their feet, and a deferment can go a long way toward that goal.
We strongly encourage our lending partners to follow suit and try and
accommodate borrowers adversely affected by the events of Hurricane Katrina."
Effective immediately, the SBA is providing an automatic 12-month deferment
of principal and interest payments for SBA-serviced business and disaster loans
that were in regular servicing status on August 29, 2005, in those primary
counties/parishes designated as federal disaster areas. Interest will continue
to accrue on the loans involved.
Borrowers are being notified of the automatic deferment on their monthly
payment notices. After this automatic 12-month deferment period, SBA will review
borrower circumstances on a case-by-case basis to determine the nature and
extent of further relief that may be appropriate.
Borrowers located in counties contiguous to the primary counties/parishes in
the disaster areas who have suffered an adverse impact because of the disaster
may also be eligible for 12 months of principal and interest deferments on
SBA-serviced business and disaster loans, but these deferments will not be
automatic in those areas. Instead, these borrowers can ask the SBA for a
deferment, and the agency will evaluate those requests on a case-by-case basis.
SBA loan servicing personnel in those areas will respond to requests from
borrowers experiencing difficulty in making their loan payments and process
requested deferments of these payments.
SBA staff in district offices and servicing centers will advise lenders of
the need to accommodate borrowers adversely affected by Hurricane Katrina.
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