Catastrophic weather events like the one that was experienced by many communities in Eastern Kentucky at the end of July show us the best of humanity – people pitching in to bring supplies, muck out houses, cook meals, provide shelter, and sometimes just a listening ear. Unfortunately, it also attracts the worst elements of society – predators seeking to defraud and use those at their most vulnerable.
Predatory lenders and scammers often pop up after disasters to take advantage of businesses and homeowners in need of cash. Some examples of abusive practices include:
- High interest loans for repairs – Borrowers may be offered a loan to get repairs started while waiting on insurance or other payments. Often these lenders will ask for a post-dated check, auto lien, or ask you to sign over a future tax return.
- Payday / quick loans – The average effective interest rate for a 14 day payday loan in Kentucky is 469%. Deceptive practices include high fees that obscure how much borrowers are actually paying for a loan. There are also very high penalties for late repayment. Consumers will often get caught in a cycle of debt to these lenders that drains them of income.
- Contractor prepayment – Unscrupulous contractors will ask for a “direction to pay” form that allows the homeowner’s insurance to pay for repair work even if it is not completed. Payment should not be expected until the work is completed and meets the homeowner’s satisfaction.
- Fees to apply – Anyone offering to help you apply for assistance for a fee is trying to profit from your loss. There are plenty of organizations available to help you for free.
There are both federal and local nonprofit lenders who want to help you get back on your feet.
- The Small Business Administration (SBA) offers low interest loans to homeowners, nonprofits, and businesses.
- If you are denied a loan from the SBA, there are local Community Development Financial Institutions (CDFIs) that are nonprofit lenders and offer low-interest, low-fee loans for businesses and consumers.
- In Eastern Kentucky, these organizations offer loans to businesses, local governments, and nonprofits:
The Foundation for Appalachian Kentucky is offering small grants to individuals, businesses and nonprofits.
- Individuals/families impacted by flooding can apply to receive $250 plus $50 for every child in the household. Create an account and apply here or call the Foundation at 606.439.1357.
- Businesses and nonprofit organizations impacted by flooding can apply to receive up to $10,000 to aid flood recovery efforts. Businesses and nonprofit organizations apply here.
- We’ve listed several more grants and other resources here for businesses owners and nonprofit leaders here.
Experiencing a natural disaster is a life-changing event. In the aftermath, the natural impulse is to try to get back to normal as quickly as possible. It is this vulnerability that predators take advantage of. Please contact the local nonprofit resources named above to help you sort through your options.