HUD finally issues guidance on SBA loan DOB relief

John Dupont
U.S. Rep. Garret Graves

The U.S. Department of Housing and Urban Development issued long-awaited guidance on the Small Business Administration loans being considered a duplication of benefits for federal grant dollars available through Restore Louisiana.

The move came nearly nine months after lawmakers on Capital Hill gave near-unanimous approval of the legislation to end the DOB rule for disaster between 2012 and 2018.

The DOB has blocked thousands of residents throughout the state from receiving assistance through the relief package approved by Congress.

Louisiana will likely receive $230 million of the relief money from the flood events of 2016, which caused extensive damage in parishes across south central and southeast Louisiana.

The DOB fix will help those who have been denied on requests for the Restore Louisiana awards, which came from funds allocated through HUD, according to Congressman Garret Graves.

The holdup on the required federal guidance has blocked the fund distribution.

Members of the House and Senate continuously relayed information HUD, the Office of Budget Management and the Small Business Administration, but the issue remains stuck in park, said Graves, a Republican from Baton Rouge who represents District 6.

The state Office of Community Development has moved forward with HUD on an understanding of the requirements on the guidance, which will take effect once published in the Federal Register.

The state OCD began writing the Action Plan Amendment, as required through HUD, which will provide clarification on federal requirements and limitations.

Impacted homeowners from flood events of 2016 will receive notification about their accounts and additional documentation they may need to provide.

"The good news is that Restore Louisiana may be able to soon move forward with processing reductions in DOB in cases where homeowners declined the SBA loan amount they were approved for, regardless of income," said OCD Executive Director Pat Forbes. "Because the Program has been preparing for this for months, and we do not believe an APA is necessary for this portion of the guidance, homeowners who outright declined their SBA loan may expect to receive notification from the Restore Louisiana program in the coming weeks."

The Restore Louisiana program continues to work with Louisiana's Congressional delegation to get further clarification from HUD on these and other aspects of the guidance; however, below is the Program's current understanding of the guidance:

---For homeowners who declined or canceled the SBA loans they were approved for, the SBA loan amount they did not draw down will no longer be counted as a Duplication of Benefits for their Restore grant, regardless of income.

---The State must submit a substantial APA to HUD to be able to provide funds for repayment of SBA loan funds disbursed to homeowners. Once that action plan amendment is approved, the Program will be able to provide funds for repayment of the drawn down amounts of SBA loans for all households at or below 120 percent AMI.

---Households with income above 120 percent AMI may also be able to receive funds for SBA loan repayment if they can demonstrate a "hardship." The criteria for a hardship exception must be approved by HUD as part of the substantial action plan amendment. HUD will then need to approve homeowners' financial hardship justification on a case-by-case basis.