In January, FEMA announced a shift in policy that would allow houses of worship access to federal funds to rebuild after disasters. The recently passed Bipartisan Budget Act of 2018 assured funding for this new policy. After a string of hurricanes devastated communities across the United States last year, causing $306 billion in damage, churches damaged by such natural disasters can now access federal funding as they look to repair and rebuild.
Because access to these FEMA resources is new for most churches, we’re laying out what churches need to know in order to use this new benefit.
National Flood Insurance Program
The foundation of disaster aid is insurance. Most homeowner and commercial insurance policies exclude flood coverage, but houses of worship can purchase commercial policies through the National Flood Insurance Program (NFIP) if they are part of a participating community. This is not a new benefit for houses of worship, but it’s important that churches understand the importance of this first line of defense. Started in 1958, the NFIP is the largest federal insurance program, covering 5 million properties. It has 22,308 participating communities and has paid out over $9 billion in claims to date. These policies are available in both high- and low-risk areas, even if you’ve had prior flood damage. The NFIP website lists all participating communities, and the policies can be purchased through local insurance agents. It’s important to note that an NFIP policy has to be purchased at least 30 days before an event in order to be able to make a claim after.
Access to these funds does not require a presidential declaration of disaster—only two or more acres or properties that have experienced flood damage. Coverage limits depend on the policy, but they can go up to $250,000 toward building repair and $100,000 toward building contents.
SBA Disaster Loans
After disaster damage has occurred, churches now have the option to turn to the Small Business Administration (SBA) Disaster Assistance program for federal aid. This program is the primary form of federal assistance for privately owned property damage, providing loans to churches and faith-based non-profits. These funds are only available following a presidential declaration of disaster.
While 80 percent of these loans go to individuals for primary residence repairs, churches, non-profits, and religiously affiliated schools can apply for Business Physical Disaster Loans. These loans offer up to $2 million for real estate repairs, and can also be used to repair and replace furniture, fixtures, etc. The interest rate offered to nonprofits is fixed at 2.5 percent, and collateral is required for loans over $25,000. The SBA will not decline a loan for lack of collateral, but it will ask for whatever collateral is available.