SBA's Disaster Loan Program Explained
by kmurray, Community Moderator
- Created: March 31, 2014, 11:53 am
- Updated: April 1, 2014, 9:38 am
Did you know that in the wake of a disaster, SBA provides low-interest disaster loans to homeowners, renters, businesses of all sizes and private, nonprofit organizations? In the aftermath of hurricanes, floods, earthquakes, wildfires, tornadoes and other disasters, SBA is the primary source of money from the federal government for long-term recovery assistance.
Am I eligible?
SBA’s Disaster Loan Program is not exclusively for small businesses. These low-interest, long-term loans are available for damage to private property owned by individuals, families, businesses of all sizes and private nonprofits not fully covered by insurance.
While property owners usually have some insurance coverage, often it does not cover all losses or even the type of hazard that caused the damage. And that’s where a disaster loan comes into play.
What can I use the loan for?
There are actually a few different types of disaster loans available. SBA can provide up to $2 million in disaster assistance for businesses. This includes loans to cover physical damage and economic injury losses. Some applicants will qualify for both an economic injury loan and a physical disaster loan. Meanwhile, the dollar limit for the combined loans is $2 million.
Physical damage is probably what you think of first when it comes to a disaster – the more tangible damages done during a disaster. Businesses and nonprofit organizations of all sizes can apply. A physical disaster loan can address losses not fully covered by insurance and can go toward repairing or replacing:
- Real property
- Leasehold improvements
Economic injury means that because of a disaster, you’re unable to meet your business obligations and pay ordinary and necessary operating expenses. So, an economic injury disaster loan (or EIDL) provides the necessary working capital (of up to $2 million) to help your small business or private nonprofit organization survive until normal operations resume after a disaster.
Renters can also apply for disaster loans of up to $40,000 to repair or replace their disaster damaged personal property (like furniture, rugs, clothing, appliances—anything damaged by the disaster). Homeowners may borrow up to $200,000 to repair or replace disaster damaged real estate, plus an additional $40,000 to cover personal property losses.
How does the process work?
- After a presidential disaster declaration, first register with FEMA. In most cases, you'll be referred to SBA for possible loan assistance. Then you should apply online, which is the fastest way to receive a decision about your loan eligibility.
- Your loan processing is next. SBA will conduct a credit check and an onsite inspection to determine your losses. A loan officer will work with you to approve or decline a loan.
- Generally, within five days of signing SBA’s loan closing documents, your first disbursement is made. A case manager will work with you to meet all your loan conditions and schedule the rest of your disbursements until you receive the full loan amount.
About the Author
Top Rated Articles
About This Blog
Loans, grants, taxes, and financial tips for your business.
- July 2014 (11)
- June 2014 (17)
- May 2014 (23)
- April 2014 (28)
- March 2014 (21)
- February 2014 (16)
- January 2014 (22)
- December 2013 (15)
- November 2013 (26)
- October 2013 (17)
- September 2013 (24)
- August 2013 (21)
- July 2013 (26)
- June 2013 (24)
- May 2013 (29)
- April 2013 (29)
- March 2013 (27)
- February 2013 (26)
- January 2013 (30)