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<br />terest rate is based upon a formula <br />(not to exceed 6 per cent per annum) <br />set monthly by the Secretary of the <br />Treasury. <br />USE OF PROCEEDS OF LOANS <br />_ An SBA disaster loan may not ex- <br />ceed the actual tangible loss suffered <br />by the disaster victim (except to the <br />extent of permitted debt refinancing) <br />less any recovery from insurance or <br />other sources, such as a Red Cross <br />grant, a state grant, permanent mini- <br />repairs, etc. <br />When a disaster victim does not <br />know immediately how much of his <br />loss will be recovered from insurance <br />or other sources, SBA will consider <br />making a loan for the full amount of <br />the loss, provided the applicant will <br />apply such other funds, when <br />collected, toward repayment of the <br />loan. <br />The borrower is obligated to use <br />the proceeds of the loan for the pur- <br />poses for which they were obtained. <br />Further, if the borrower determines <br />to do the repairs with his own labor, <br />only the cost of materials may be <br />financed by the loan. <br />SBA is required by statute to deter- <br />mine that the funds are used <br />appropriately and will require the <br />borrower to furnish evidence thereof. <br />Any funds disbursed but not used as <br />intended to restore property to pre- <br />disaster condition must be returned to <br />SBA, and will be applied to the prin- <br />cipal balance of the note. <br />Legislation provides that <br />"whoever wrongfully misapplies the <br />proceeds of a loan shall be civilly <br />liable to the SBA administrator in an <br />amount equal to one and one-hall <br />times the original principal amount of <br />the loan." <br />Also, falsification of an application <br />or false certification of use of <br />proceeds may subject the applicant to <br />criminal penalties. <br />GENERAL PROVISIONS - <br />Generally, payments must be made in <br />equal monthly installments, including <br />interest. The first payment usually is <br />due not later than live months after <br />disbursement. A different schedule <br />may be arranged when a borrower's <br />income is seasonal. <br />SBA may limit any disaster loan to <br />the amount the applicant apparently <br /> <br />50 <br /> <br />