U.S. Rep. Lou Barletta, PA-11, introduced a bill that will lower the interest rate of all federal disaster relief loans -- to homeowners and to business owners -- to 1 percent. The bill has already attracted bipartisan support and cosponsors.
Rep. Barletta drafted the Disaster Loan Fairness Act of 2011 (H.R. 3042) in response to hundreds of constituents who've expressed concern about the high interest rates they're being charged as they're trying to rebuild from record flooding in Northeastern Pennsylvania.
Now, homeowners can receive a federal recovery loan as low as 2.6 percent. The U.S. Small Business Association currently offers recovering businesses a loan with an interest rate of 4 percent, or 6 percent if they can also receive credit from another source.
Rep. Barletta's Disaster Loan Fairness Act of 2011 would set the interest rate for all recovery loans (Home Disaster Loans, Business Physical Disaster Loans, and Economic Injury Disaster Loans) at 1 percent for the life of the loan. The rates would be effective for presidentially declared major disasters.
"I've talked to dozens of business owners in Luzerne and Columbia counties who've lost their shops, their inventory, their fixtures, and their equipment. I don't know any business owner who thinks a 6 percent -- or even a 4 percent government disaster recovery loan will help them get back on their feet," Rep. Barletta said. "My district has one of the highest unemployment rates in the state, and a rate higher than the national average. The people of the 11th District and Northeastern Pennsylvania need their jobs, and we can't afford for these businesses to close. We must be focused on helping businesses recover so they can save those jobs.
"I've also met homeowners who ask why the rate for their loans is so high. Many of these people have lost everything they own. They deserve a low interest rate so they can start rebuilding their lives without worrying about high interest rates," Rep. Barletta added. "When disaster strikes anywhere in the world, the United States is the first country to help rebuild. But now that a disaster occurred here in our own backyard, we must start rebuilding here. Let's help Americans first. We must restore American lives, save American businesses, and protect American jobs."
The 1-percent interest rate is retained merely to pay administrative costs for the loan.
Rep. Barletta's bill has attracted Democrat and Republican original co-sponsors, including Pennsylvania Representatives Tom Marino, R-10; Tim Holden, D-17; Mike Kelly, R-3; Mike Fitzpatrick, R-8; Joe Pitts, R-16; and Todd Platts, R-19; Rep. Don Young, Alaska-At Large, a 20-term incumbent and former chairman of the Transportation and Infrastructure Committee; and Rep. Peter Welch, a Vermont Democrat whose state was hit hard by flooding.