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Aerial of severe flooding in the Watson area in Livingston Parish on Sunday August 14, 2016.

Checks will be issued starting Monday to 230 homeowners across the state who flooded in 2016 and were being denied federal recovery grants because of restrictions triggered by Small Business Administration loan approvals.

The first round of checks go to homeowners who were approved for an SBA loan, but declined or canceled the loan and have executed a grant agreement to receive funds from the Restore Louisiana Homeowner Assistance Program, known as Restore LA.

Another 800 residents who either declined or canceled their SBA loan, but have not yet signed a grant agreement with Restore LA will receive notices of their increased awards. The agency will work to finalize their grant agreements.

For others awaiting assistance from Restore LA, the process could take up to three more months as the state continues working to meet requirements of the U.S. Department of Housing and Urban Development and gain federal approval. 

Thousands of Louisiana residents affected by the floods had been prevented from tapping federal recovery dollars because they sought Small Business Administration loans that were viewed as a duplication of benefits.

Until Congress acted last fall, those restrictions effectively kept an estimated 6,000 families from tapping into recovery grants.

Louisiana received more than $1.7 billion from Congress to help the state rebuild after historic flooding damaged thousands of homes and businesses across the state. About $1.3 billion was set aside for people whose homes were damaged or destroyed, with 15,350 grant awards offered to homeowners through Restore LA totaling $554 million, according to its website.

The state spent the past several months preparing for HUD to issue formal parameters for carrying out the change regarding duplication of benefits, approved by Congress after intense lobbying from the Louisiana delegation. HUD unveiled its 44-page guidance for the state in mid-June.

The state had already begun identifying individuals who may be impacted by the change and newly eligible for assistance.

"We have been working with HUD to ensure the quickest possible delivery of funds to those homeowners who have been waiting so long for this assistance,” Pat Forbes, executive director of the Louisiana Office of Community Development, said Friday in a news release.

Homeowners "should have never been further victimized by this federal penalty in the first place," Forbes said. "We are continuing to do everything we can to work with HUD and speed up the release of funds for more homeowners."

For homeowners who drew money from their SBA loan, the federal agency is stipulating that the state must submit an amended action plan for HUD approval before Restore Louisiana can begin cutting checks to repay those SBA loan dollars.

The state plans to publish that document within a week. After the action plan is approved, it could take up to three more months before federal authorities sign off and Restore LA can then write checks for homeowners at or below 120 percent of the area median income.

Homeowners who earn more than 120 percent of the area median income must prove "hardship" to be reimbursed so high-income homeowners may only receive partial reimbursements of SBA loan funds.

At least 55% of all grant funds are required to go to low- and moderate-income homeowners, according to federal guidelines. 

Restore LA will send a survey to homeowners in the coming weeks to develop criteria for what is considered a hardship, the definition of which must be approved by the federal government. Each financial hardship case is expected to be considered and potentially approved individually. 

For a single person in East Baton Rouge and West Baton Rouge 120% of the area median income is $62,843. For a four-person household, which includes minors, 120 percent of the area median income is $89,775. See a full list of area median income by Parish here

Email Kristen Mosbrucker at kmosbrucker@theadvocate.com.