A group of Bremen residents gathered at Bremen Elementary School one evening last week, to talk with representatives from U.S. Sen. Rand Paul’s office about persistent hurdles they are facing as they try to navigate the federal loan program meant to help them rebuild after the Dec. 10, 2021 tornado.
Sitting at tables in the school lunchroom, this group of neighbors recounted similar tales. After being denied by FEMA for assistance because they all carry homeowners insurance, they were directed to apply for low-interest federal loans through the Small Business Association.
Taking this advice, these homeowners who lost everything in the tornado, applied for SBA loans. Within weeks, they received letters of approval at an interest rate of just 1.4%. Contractors were hired, building plans were made, and work to rebuild their homes began.
Shortly after, the headaches also began.
Red tape
When Margaret Whitmer said she and her husband, Donnie, had to reapply for their SBA loan because they used the wrong color ink, Jason Hastert and Billy Matthews, the field representatives for Sen. Paul, chuckled before realizing she wasn’t joking. Others joined in to commiserate over making the same mistake of using a black ink pen. The SBA requires blue ink.
This was just the beginning of what has ballooned into a nightmare of red tape for the Whitmers. They applied for an SBA loan just days after the tornado, and about a month later they received a letter saying they had been approved.
“That sounded really good,” Margaret Whitmer said.
They received their first disbursement of $25,000 in March 2022. About six weeks later, they received a second disbursement of $21,000. They have not received any further funds from the $240,000 loan they were approved for.
Since early 2022, the Whitmers said they have had 10 caseworkers. Each time a new caseworker is assigned, there are new requests for further documentation. Each new caseworker tells the Whitmers they have to review the case before more funds can be disbursed.
“They’ve wore the word ‘review’ to death,” Margaret Whitmer said. Just a week ago, they received a call from the loan department. They had supplied their 2020 tax returns at the beginning of the process, but were told the SBA needed their 2021 returns because they had gone past the one-year mark. “I told them, that’s not our fault,” she said.
Liens but little funding
The Whitmers have spent all of the money from their insurance company, and all of the $46,000 from the SBA loan, plus their savings trying to rebuild.
When their contractor exhausted all available funds to use on their project, the Whitmers were frustrated with the SBA process and decided to go to their local banker for help.
Their banker called and told them they could not loan the couple any money, because the SBA had a lien against their property.
Maragret Whitmer said that was when she remembered getting a letter about the lien. With all the chaos created by being suddenly uprooted, they had forgotten all about it.
“They’ve got a lien against it, but we don’t have the money. We can’t go to the bank and get the money, because they’ve got a lien against it,” Donnie Whitmer said.
The Whitmers aren’t the only ones in this situation.
Dwight and Jaquita Harlan also have a lien placed on their property by the SBA, but they haven’t received a single penny from the agency, they said.
The Harlans said they were told they had to file a lien for the SBA at the courthouse before any funds would be disbursed. Dwight Harlan said due to some communication issues, they had to pay out-of-pocket to pull the first lien and refile, costing them around $200 for the process once it was done.
“We’re in the same boat they are,” Dwight Harlan said, gesturing toward the Whitmers. “We’ve spent all our insurance money, plus every dime we can scrape up, and they haven’t given us a thing.”
The Harlans discussed going to a bank for a loan more than a year ago, when the interest rate was around 3.5%. Since last year, rates have skyrocketed to more than 7%. Even if there wasn’t a lien on their home, the Harlans said they can’t afford to change course now, due to that increase.
“We’re also living in a FEMA trailer they brought us on July 23, that they’ve been asking me since July 24 when I’m moving out,” Jaquita Harlan said. She was honest with the people from FEMA and told them it was the SBA that was causing the delay.
More red tape
The Harlans said they have had two pieces of paperwork requested, as they get passed around to caseworker after caseworker – a requirement for building permits, which aren’t required in Muhlenberg County, and personal property insurance. They said their insurance company won’t provide them with personal property insurance until they have their home built enough to have locks on their doors.
“You have to have this insurance to get the first $25,000,” Jaquita Harlan said, “but you can’t build a house with locks on the doors with $25,000,” Dwight Harlan said, finishing her sentence.
Beth Ellis said she hasn’t heard from anyone at SBA since last October. She said she calls, leaves voice messages and emails, but no one replies.
“I can probably document 30 times I called and left voicemails,” Ellis said. “I’ve sent email after email.” She said she’s even tried to talk to someone higher up with the agency, to no avail.
Ellis said she has also received a partial disbursement of her SBA loan, and also has a lien placed on her property. She said she’d like to know how to repay the partial disbursement, so she can have the lien lifted and go to a bank for a loan. But no one has called her back.
Rising costs
Scott and Amy Layne have received their full disbursement from their SBA loan, but it was tens of thousands of dollars less than the SBA had originally approved. When they were told their loan was approved for $240,000 they set a budget to include that amount, plus their insurance payment. They later found out the SBA would subtract their insurance payment from the total amount they were approved for, leaving them short on funds.
“Every new contractor who comes out says it’s went up another $4,000,” Amy Layne said. The cost of building supplies keeps rising, leaving them with a shortfall in their budget.
A hand up
Dwight Harlan said when they were steered to the SBA, it seemed like it would be easy. They were approved right away, and he said they thought this would work, this would help them get back into a home of their own again. “But if we had locked in a loan then, with a bank,” he said, “we wouldn’t be sitting here today, still waiting.”
When caseworkers tell him, “We’re giving you this money,” he reminds them that they are not giving him anything. “It’s a loan with interest that we are paying back,” he said.
“To be clear,” Scott Layne said, “we’re not looking for a handout, We’re looking for a hand up.”
Beth Ellis said it’s hard not to want to give up. “I’m tired of jumping through their hoops. I can give them one thing, and they want 10 million other things. You follow the directions step by step by step, it doesn’t satisfy them.”
Donnie Whitmer said it just doesn’t feel like anyone at the SBA is working for the people who need these loans to rebuild. “Is anybody really concerned that you get to move your life forward? It’s just speed bump after speed bump.”
The representatives from Sen. Paul’s office said they could help by sending letters directly to the SBA on behalf of the residents, and encouraged the group to call the senator’s Bowling Green office and report their issues. There is a caseworker in that office who is working on the matter.
