Editor’s note: “Auditing the Storm: Disaster 4117” is a joint investigative series by Oklahoma Watch and KGOU Radio on how federal and state disaster aid is being spent in the wake of the violent tornadoes and storms of spring 2013.
The tornadoes, flooding and hail that struck Oklahoma last year left hundreds of millions of dollars in property damage, causing many home and business owners to seek help in the form of low-interest federal loans.
The U.S. Small Business Administration approved 929 applications for about $50 million in low-interest disaster loans for people, businesses and nonprofits, according to SBA data acquired for Oklahoma Watch by the nonprofit group Investigative Reporters and Editors.
Most applicants, 599, took out the loans, but often for much less than what was offered, SBA figures show.
The total amount loaned by the SBA was $21 million, or 42 percent of the approved total amount. All but 52 of the 929 applications were from individuals. About half of the total amount approved was for applicants in Oklahoma City and Moore, which took the brunt of the damage from the May 20 and May 31, 2013, storms.
The purpose of the disaster-loan program is to help owners recover from physical damage and, in the case of businesses, from economic harm.
Scott Burkhart, who first saw the shattered remains of his home in Moore during a TV newscast, took out an SBA loan of more than $30,000 after finding out he was underinsured.
SBA records show he was approved for up to $107,400. Burkhart said insurance covered his house, but not the belongings inside. He declined to say how much insurance covered.
Burkhart, whose family just moved back into their house last month, said he tried to reduce costs of rebuilding in order to take out a smaller SBA loan. His interest rate is less than 2 percent.
“Nobody wants to take out a loan on top of already paying a mortgage,” he said.
Others rejected the SBA loan offer to make repairs and relied instead on insurance, their own money, other assistance or charity.
“We filed for one (disaster loan), it was approved, and in the end we didn’t need it,” said Rob Harris, senior pastor at the First United Methodist Church in Moore, which sustained about $830,000 in damage to its roof and air conditioning units in the severe storms of May 31.
The SBA had approved a loan in September for the church that was third-largest amount for the Oklahoma disaster — about $360,000. But the United Methodist Committee on Relief, which also assisted victims from the May 20 tornado in Moore, helped cover the church’s costs, Harris said.
Businesses eligible for disaster loans included a jewelry store, a limousine service, a hotel, investment companies and a blind-cleaning firm, the data show.
Lewis Jewelers of Moore lost a factory near Interstate 35 in the tornado.
“It had all kinds of expensive jewelry-making equipment for us to do production work and it was very underinsured,” Tim Lewis, vice president of Lewis Jewelers, told KGOU Radio.
The company was approved for a disaster loan of up to $500,000. It ended up rejecting the loan because the 6 percent interest rate offered by the SBA was higher than what some banks were offering. The firm ended up not borrowing money and using its own cash to expand its nearby retail location, which will accommodate upgraded jewelry-making equipment.
Mark Randall, a spokesman for the SBA Office of Disaster Assistance, said the agency often encourages victims in declared disasters to apply for loans early even if they may not want the loan. Applying before the deadline ensures funds are available if they change their minds.
“A lot of times people don’t know what their insurance (payout) or exposure is going to be until after that (application) window,” Randall said, “so it’s better having to file and have it but not need it, rather than need it and not have it.”
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Oklahoma Watch is a nonprofit, nonpartisan media service that produces in-depth and investigative content on a range of public-policy issues facing the state. For more Oklahoma Watch content, go to www.oklahomawatch.org.
KGOU Radio is airing stories on Disaster 4117, with Kate Carlton Greer reporting as part of The Oklahoma Tornado Project. She contributed to this story.