The SBA is a source for lending for businesses and individuals affected by major disasters. If you own a home, or a business, which was damaged by a disaster, you might be eligible for assistance from the SBA. In this article you’ll learn about the following:
- What’s an SBA disaster loan
- Interest rates and terms for SBA disaster loans
- Eligibility requirements for an SBA disaster loan
- The SBA disaster loan application process
What’s an SBA disaster loan?
The SBA lends directly to business owners, and individuals, impacted by a disaster, like a hurricane. This is the only business loan program offered by the government which lends directly to borrowers. In almost all other cases, the SBA simply guarantees loans that other lenders make. SBA disaster loans are directly being made to the end-user.
SBA Business Physical Disaster Loans: This loan lets business owners repair, or replace assets, like property, machinery, equipment, fixtures, inventory, etc. The loans are meant to offset losses not covered by your insurance. Businesses of any size, are eligible to apply for an SBA disaster loan.
Business Economic Injury Disaster Loans: These are working capital loans. They are meant to help businesses meet their financial obligations which they would have met if not for the diaster. Only small businesses, agricultural co-ops, and nonprofit organizations are eligible.
Home/Personal Property Disaster Loans: Homeowners are eligible to borrow directly from the SBA in order to repair, or replace, the value of their home and property. You don’t need to own a business in order to apply for these loans. You just need to be affected a declared disaster.
Military Reservists Economic Injury Loans: These are funds provided to small businesses to meet their operating expenses. The amount given is limited by the company’s interruption insurance and whether the owners have the funds needed to continue operating.
Express Bridge Loan Pilot Program: This allows qualified SBA 7(a) lenders with SBA express authority to give expedited disaster loans up to $25,000 during emergencies. In order for this to be active, the borrower must be in a federally declared disaster area.
SBA Loan Application Process
If you’re applying for a direct SBA loan, you can apply online, in person at a disaster center, or by mail. The SBA tries to process applications in 2-4 weeks. This is shortened if you’re applying for an SBA express loan. If approved, the administration sends you loan closing documents for you to sign. The loan can be adjusted after closing if there is a change in your circumstances, like repair costs, etc. For business loans, the SBA will make a disbursement of $25,000 within 5 days of approving the application.