After FEMA denial, Small Business Administration loans offer new avenue for Whitman County fire recovery

The Small Business Administration will offer federal disaster low-interest loans to individuals and businesses affected by devastating wildfires in Washington last summer.

The Tuesday announcement comes just a day after Whitman County residents were denied individual assistance by the Federal Emergency Management Agency. Individual assistance would have provided grants, among other opportunities to residents. Public assistance from FEMA, to help repair damage to public infrastructure, was approved by President Joe Biden last week.

“We went from extremely ecstatic to extremely despondent to extremely ecstatic again,” said Malden Mayor Dan Harwood.

Both the denial of individual assistance funds and the quick response from the Small Business Administration were not a surprise to leaders of the recovery efforts in Malden and Pine City, where 80% of residents lost their homes.

Hank Cramer, with Washington State Emergency Management, has warned residents that it was unlikely FEMA would offer individual assistance.

“In every conversation I’ve had either with a local official or a citizen or with a local charitable group, I’ve said I would be very surprised if there were an IA declaration,” Cramer said. “Hope for it, ask for it, but plan for what you’re going to do in the likely scenario that you don’t get it.”

In the decade that Cramer has worked for the state on disasters, there has been only one instance where individual assistance was approved, the 2014 Oso landslide that killed 43 people.

“An individual assistance declaration is very hard to get,” Cramer said. “The criteria are not objective and the threshold is very high.”

To appeal the FEMA decision, the state would have to present new information on the fire damage, Cramer said.

“I don’t believe there are new facts,” Cramer said.

An appeal would also require the SBA to step back, he said. Gov. Jay Inslee’s office said it does not plan to appeal the FEMA decision.

While Cramer and many Whitman County residents are disappointed, the denial opens up options with Small Business Administration loans.

“Anyone who lost a home that was either uninsured or underinsured should get in touch with the Small Business Administration right away,” Cramer said. “They will give loans to people with less than perfect credit. They give loans to people who cannot get a loan from a conventional bank.”

The SBA has assistance available in Adams, Asotin, Columbia, Franklin, Garfield, Lincoln, Spokane and Whitman counties, along with Benewah, Latah and Nez Perce counties in Idaho.

“SBA is strongly committed to providing Washington with the most effective and customer-focused response possible, and we will be there to provide access to federal disaster loans to help finance recovery for businesses and residents affected by the disaster,” wrote Tami Perriello, acting SBA administrator, in a statement Tuesday.

Loans are offered in three categories: business physical disaster, economic injury disaster, and home disaster.

The home disaster loans cover uninsured or otherwise uncompensated losses and are available for up to $200,000 for repair or replacement of real estate, and up to $40,000 for personal property. Renters can also apply for help replacing personal property.

Applicants must have a credit history, be able to show that they can repay the loans, and collateral. Loans are not declined for lack of collateral but applicants are required to pledge what they have available.

Home loan interest rates are 1.188% if the individual does not have credit available elsewhere and 2.375% with other available credit.

The average mortgage interest rate on a 30-year fixed rate loan in the United States is currently 2.98%, which is close to Washington’s average of 2.96%, according to Business Insider.

“We are encouraging everyone affected by the fire at whatever level, whether they have insurance, whether they don’t have insurance, whatever their situation is, to apply for assistance,” said Gerry Bozarth, a Spokane County emergency management specialist who is on loan to Whitman County to work on Malden disaster relief.

About 40-50% of Malden residents were uninsured at the time of the fire, with many of those residents unable to get insurance due to the state of their homes or unable to afford insurance due to high premiums or prohibitive repairs in order to qualify, Bozarth said. Residents who rebuild will likely be required to carry insurance either by their bank, the SBA or the non-profit who builds their home.

Even individuals who were insured, such as Scott Hokonson, executive director of the Pine Creek Community Long Term Recovery Group, could qualify for loans to help with costs beyond what their insurance will cover.

“I don’t want anyone to self-eliminate,” Hokonson said. “Even if you don’t think you qualify, it can help everybody.”

For those with an insurance gap, SBA could offer a loan for the difference and help with refinancing, Bozarth said. There are provisions if an individual would like to relocate outside of the area, Bozarth added.

The loan application will likely be used to help filter people to see who is going to have a gap left after either receiving a loan or being denied, Hokonson said.

Many charitable organizations, including the long term recovery group, will use the denial as an indicator that an individual has exhausted their other options, Hokonson said.

“Being turned down for an SBA loan is actually okay because … being turned down for an SBA loan is something they use as a filter,” Cramer said. “The first question those charities will ask is, ‘Did they apply for an SBA loan?’ and ‘What’s the status?’ ”

A group of Mennonites out of Montana has already offered to come build at least two homes in Malden with volunteer labor, Bozarth said. More organizations are lined up to work with the long-term recovery group to help meet whatever needs arise, Hokonson said.

Caseworkers from the long-term recovery group are already in contact with residents and working to help develop their recovery plans. The caseworkers can help with everything from working with insurance, to finding stable temporary housing, to finding a part-time job, Hokonson said. They will help get information to residents on how to apply for the SBA loans, Hokonson said.

However, it’s ultimately up to the individual to steer their own recovery, Cramer said.

“That’s a very important component of long term recovery,” he said. “We teach case managers that the client has to be in charge of their own recovery.”

Cramer said his mentor told him years ago that he could give his clients the phone number for aid and hand them the phone, but they have to dial.

Still, the long term recovery group and the town of Malden plan to put up large signs outside of town with the phone number and website to apply for the loan program, along with mailing the information to all residents.

Due to the COVID-19 pandemic, the SBA plans to set up a virtual loan outreach center to help applicants via phone at 800-659-2955 or online at from 5 a.m. to 5 p.m. PST. The deadline to apply for property damage is April 12, 2021.

Applying for the loans is just the next step in the long recovery process for the Pine Creek Community, Harwood said. Ultimately, Harwood said he remains confident everyone will get their needs met.

“If a person doesn’t have the ability to get approved by the SBA, that is when our religious and other groups will come in and make sure these folks have got a home,” Harwood said. “No one is going to be left without a home that wants to be here.”