Congressman Bill Owens announced today that he has signed on to bipartisan legislation to lower the interest rate on federal disaster relief loans provided to businesses and homeowners. Sponsored by Congressman Lou Barletta (R-PA), H.R. 3042 would set a fixed rate of 1 percent for all federal low-interest recovery loans. Owens also pressed the SBA during a Small Business Committee hearing to proactively lower the rates and provide immediate assistance to those affected by recent severe weather. This year, 48 states experienced more than 80 major disaster declarations -- the highest number on record.
"It is critical that homeowners and small businesses have the tools they need to open their doors and begin hiring again following the recent natural disasters that hit New York," said Owens. "Lowering the interest rates on disaster loans will allow New Yorkers to recover more quickly while encouraging economic growth in the region."
Currently, the Small Business Administration charges homeowners up to 2.6 percent while small business owners pay anywhere from 4 percent to 6 percent, depending on the availability of credit elsewhere. Only homeowners and small businesses in areas that received a major federal disaster declaration would be eligible for the 1 percent rate. The rate would retroactively apply to all disaster loans filed on or after January 1, 2011.
A number of constituents brought this issue to Congressman Owens' attention, reporting that current disaster loan rates are unaffordable, particularly if a loan was taken out following damage from recent spring flooding.
"We appreciate what Congressman Owens is doing for victims of natural disaster in our area," said Jay Town Supervisor Randy Douglas. "A lower fixed rate is needed, especially in this economy where many cannot afford a higher rate set at 4-to-5 percent."
By comparison, the average interest rate paid by the federal government on 5-year bonds is less than 1 percent.