That means offering up a home, car or other property as collateral and having it seized if the loan isn’t repaid. It’s not unfamiliar territory for business owners looking to borrow money, but in the wake of a disaster like Sandy it can seem like a bridge too far.
Small business advocates say they have seen applicants back out of the loan process, in many cases citing a dissatisfaction with the regulations that are part and parcel with borrowing money from the federal government.
A bill designed to address that concern, the Small Business Disaster Reform Act of 2013 (S. 415), was this week approved by the Senate Committee on Small Business and Entrepreneurship with a vote of 11-6. It would take the pressure off borrowers seeking $200,000 or less to use their homes as collateral and make some changes to how Small Business Development Centers can operate in the aftermath of a disaster.
The bill still has several big hurdles to clear before it gets anywhere near the President’s desk. An identical House of Representatives bill, H.R. 1974, needs to make its way out of committee before the measure has legs to stand on in Congress. Still business counselors, borrowers and other experts say any update to the SBA disaster loan program would be a welcome development.