Can I Apply for a Disaster Loan For My Small Business?

If you operate a small business or business located within a declared disaster area, you may qualify for loan support from the Federal Small Business Development Agency (SBA). According to the SBA disaster loan assistance, there are three types of disaster loans: home disaster loans, business disaster recovery loans, and economic damage disaster loans (EIDLs).

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Disaster Property Damage Recovery Business Loans: Available to businesses of any size to repair or replace business property, including real estate, inventory, supplies, machinery and equipment, that was damaged by the disaster, says the SBA. Charities, private universities, churches and other non-profit organizations are also eligible

Business loans can apply to a combination of physical and economic injuries and are limited to $2,000,000. This limit implies all disaster loans to a business for each disaster.

Economic Damage Disaster Loans: These are working capital loans available to small businesses and non-profit organizations to help them meet their ordinary and necessary financial obligations and assist them during the disaster recovery period. Loans are limited to $ 2 million and apply only to economic damage determined by the SBA, less business interruption insurance and other qualified financial assistance. EIDL assistance is available only to those who are unable to fund their own recovery.

ARE THERE ANY RESTRICTIONS ON LOAN ELIGIBILITY?

The SBA disaster loan assistance says there are some restrictions on who qualifies for a loan:

Ineligible Property: Secondary homes, personal pleasure boats, airplanes, RVs, and similar properties will not be admitted unless used for commercial purposes. Properties such as antiques and collections qualify only to the extent of their functional value. The quantities for gardening, swimming pools, etc., are limited.

Default - Applicants who have not met the above SBA loan terms do not qualify.

ARE THERE ANY REQUIREMENTS FOR CREDITS?

Here are some other requirements for eligibility, according to the SBA:

• Credit history: The SBA considers credit history.

• Repayment: The SBA requires the applicant to demonstrate the ability to repay the loan.

• Collateral: Applicants for loans for physical losses greater than $ 25,000 in disaster declarations and for all EIDL loans greater than $ 25,000 must provide collateral, for which the SBA says real estate is allowed. The SBA will not reject a loan for lack of collateral but requires the applicant to provide what is available.

WHAT ARE THE INTEREST RATES?

Legally, interest rates depend on whether each applicant has credit available elsewhere, says the SBA. If the SBA determines that you have the ability to finance your own recovery, you are considered to have available credit elsewhere.

For applicants who cannot obtain credit elsewhere, the interest rate will not exceed 4%. For those who can get credit elsewhere, the interest rate will not exceed 8%, according to the SBA.

WHAT ARE THE TERMS OF THE LOAN?

The maximum term of an SBA loan is 30 years. However, the law restricts businesses with credit available elsewhere to a term of three years a disaster loan assistance will help you to understand this. The SBA sets the instalment payment amount and the corresponding maturity on a case-by-case basis.

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