KY tornado victims using savings to fund rebuilds they expected to get federal help for

For over a year, Dwight Harlan hasn’t had a place that’s felt like home.

His family’s home, like many others in the area, was severely damaged when a deadly tornado ripped through this piece of western Kentucky in December 2021. Before the tornado, Harlan’s home was paid off and he was just a couple years from retirement.

Since the tornado, Harlan, his wife and two grandchildren, lived with his daughter for two months, then spent five months in a FEMA-provided camper and finally moved into a state-provided trailer that sits on the same lot as their actual home, which is in the process of being rebuilt.

With two kids and two adults the space gets “pretty tight,” Harlan told the Herald-Leader in a February interview. He said he spends a lot of his free time in a nearby shed, building shelving for the totes that hold many of their belongings.

Just after the disaster, Harlan and multiple other families in the area applied and were approved for low-interest, disaster loans from the federal Small Business Administration, or SBA.

Harlan, who was approved for a $260,000 loan not long after the disaster, didn’t see any of the money until January — over a year later.

“It’s been 13 months they had lien on our property,” Harlan said. “And we just now got the first dime out of them. Everything that we have built has come out of our pocket, our insurance money and our savings.”

Multiple families in the area are in a similar situation. They hoped those government loans would provide a path to funding a rebuild, while incurring less debt. But the money from the loans has taken several months to get them, they said, forcing them to dive into long-held savings and other funds just to be able to keep construction going.

How does the SBA disaster loan program work?

The purpose of the SBA disaster loan program is to return damaged property to its pre-disaster condition as closely as possible, said Jay MacKenna, a public affairs specialist with the SBA. He could not speak on specific cases, but shared how the program works.

Usually the money from the loan is disbursed in stages, MacKenna said, mainly so the SBA can insure over time that the money is being put toward its intended purposes. The loan is meant to cover costs that might not be covered by insurance.

In the aftermath of the tornado, many in western Kentucky have found that their properties were underinsured. Margaret and Donald Whitmer, who have lived on their property since 1979, found out the insurance money they were going to get wouldn’t be enough to cover the cost of their rebuild. The Whitmers applied for the SBA loan and were told in January 2022 they were initially approved for a $240,000 loan with a 1.45% interest rate to be repaid over the course of 30 years.

“So with our insurance money and that loan, we’re thinking that, ‘OK, we’re gonna be able to build back what we had,’” Margaret said.

By the end of March they received their first disbursement of $25,000, followed by a second allotment of $41,000 about six weeks later. They said they never got another dime.

Last summer, frustrated by hearing nothing from the SBA and realizing they would have to halt construction without another disbursement, the Whitmers decided to call the SBA every Monday, waiting sometimes over an hour to speak with someone.

At times they were told they needed to submit more paperwork but mostly got the message that their case was still “in review.” Margaret also said their case manager changed several times and they would have to re-explain their predicament.

“We have exhausted all of our insurance money. We’ve pulled out of our savings. We’ve had financial help through some of the organizations in the area,” Margaret said in an interview in January. “And right now, if we don’t get any extra money from SBA, if we don’t get the balance fair, we’re gonna have to stop production, you know, we’re gonna have to stop progress on our house.”

The Whitmers went to a local bank to get another loan but were denied because the SBA had put a lien against their property. MacKenna said the SBA is required to put liens against property when they give out loans over $25,000.

MacKenna encouraged those with questions about their SBA loans to reach out to their case manager or their customer service line at 800-659-2955 or by email at disastercustomerservice@sba.gov.

The SBA, he said, wanted to encourage folks to “not give up” and reach out if they have questions or concerns. The administration is processing and disbursing loans to declared disasters all over the country, he said.

In response to the December 2021 tornadoes, the SBA has approved 655 loans for nearly $60 million, Jack Camp, an SBA public affairs specialist said in an email.

Seeking outside help

The Harlan and Whitmer families are near neighbors in Bremen. In the storm, 11 people died in the areas in and around the town, many of who were friends or neighbors to the families.

Both families have been part of a local tornado support group since the disaster and at those support meetings, frustrations with the SBA started to become a more common topic. In January, they joined two other families in seeking assistance from Sen. Rand Paul.

At the local elementary school, the four families met with representatives from Paul’s office to explain their problems. The office told them that they’d reach out to the SBA on their behalf, the Leader-News, a Muhlenberg County newspaper reported.

“Dr. Paul and our staff remain committed to doing all that we can to assist local and state officials as they continue to manage recovery efforts,” the senator’s office said in a statement to the Herald-Leader. “If you are a Kentuckian in need of assistance, you can reach Dr. Paul’s Bowling Green office at (270) 782-8303, and one of our staff members will be happy to help.”

The SBA will be responsive to any request made by an elected or public official, MacKenna said.

“We would certainly respond to that request by researching the application of that individual or business and provide a response with as much information as we can,” MacKenna said.

‘I want to be back in my home’

Not long after the meeting with Paul’s office, Harlan said they did get their first disbursement from the SBA. But prior to that, he said he’d already told the contractor working on his home to slow down.

But construction on their home, which when rising costs are included will cost around $500,000, has continued without much help from the SBA.

Harlan was originally planning on retiring this June but after having to use half of his 401K just to “keep the contractor from having to walk away,” he’s considered finding more work.

“I was really banking on that for our retirement,” Harlan said. “We’ll get by but it’s not going to be as comfortable as we thought.”

Friends have asked if they’re excited about getting a new house, Harlan said, adding that many in the tornado support group have gotten the same question.

“People aren’t excited because we weren’t planning on being in this situation. We weren’t planning on building a house and we were very happy where we were,” Harlan said, adding that they will be happy when they do get to move into their rebuilt home.

Harlan said in late February that the family had just received a disbursement of $145,000 — the vast majority of their loan and the rest of the construction money. After getting no disbursements in 2022, the family received $220,000 this year. There’s still $40,000 they’re yet to receive and Harlan said they should get it once their rebuild has lockable doors.

In late January, the Whitmers told the SBA they wanted to be done with the program. They negotiated a new loan with a local bank. The bank would pay off the $66,000 they got from the SBA and continue to fund their rebuild.

The interest on their new loan is 7.25%, Margaret said, a far cry from the low-interest 1.45% the SBA offers.

“We had to,” Margaret said, “because we were at the point that our contractor hadn’t been paid in a month and a half.”

Harlan said they were hoping to move back into their home by late spring or early summer. The Whitmers, who have been living in a rental home about a mile away from their property, were targeting a possible May move-in.

“I want to be back in my home,” Margaret said. “You know, I want to be back on my little corner.”