H.R. 9159: Protect Our Homes Act

This bill would create a new Small Business Administration (SBA) loan program for homeowner associations and similar residential community organizations to help pay for repairs and disaster-related protection measures in shared areas of homes, townhouses, and condominiums.

What the program would do

The SBA would be allowed to make supplemental disaster loans to eligible residential community organizations, called covered entities. These organizations would include groups made up of the owners of homes in a residential community that manage shared property such as common areas, roads, clubhouses, or other shared spaces.

The loans could be used for two main purposes:

• Repair loans: to repair, rebuild, or replace common areas damaged by a natural disaster or act of God, such as flooding, wind, or fire.
• Mitigation loans: to pay for measures that reduce future disaster damage to property that was already damaged or destroyed in a recent disaster.

Who could qualify

To qualify for a supplemental loan, a covered entity would first need to have already reached the normal SBA disaster loan limit that applies to that disaster. In other words, these loans are meant as an added source of help after the usual disaster lending limit has been used up.

The bill defines eligible properties as residential communities made up of houses, townhouses, or condominiums, where the association or similar organization manages shared areas for the residents.

Loan terms and limits

• Maximum amount: Up to $500,000 for most borrowers.
• Higher limit for major employers: If the borrower is a major source of employment in the disaster area, the SBA could approve a larger amount, at least up to $2,000,000 or another amount the Administrator sets under existing law.
• Interest rate: The rate could not exceed a formula tied to the federal government’s borrowing rate, plus one-quarter of 1 percent.
• Repayment period: Loans could run for up to 30 years.
• Collateral: For loans of $14,000 or less, the SBA would not require collateral, unless the Administrator sets a higher threshold for major disasters.
• Deferment: The SBA could delay principal and interest payments the same way it can for existing SBA disaster loans.

Definitions and scope

The bill limits repair loans to damage caused by a natural disaster or act of God, excluding damage caused by intentional, willful, or reckless conduct. “Recent disaster area” is defined broadly and can include areas affected by a major disaster, a USDA-recognized natural disaster, another disaster the SBA determines occurred, or a federal emergency, as long as the disaster happened within the past five years and the state governor and SBA agree that local businesses or nonprofits suffered economic injury and need help.

Relevant Companies

None found