Considering An SBA Disaster Loan?

An SBA disaster loan is what you need if your business or enterprise has experienced physical damage due to a catastrophe, hurricane and other forms of disaster. This particular financial assistance loan is offered by the US Small Business Administration to businesses that have suffered damages in areas that have been declared by the government as disaster sites. The SBA disaster loan, which can amount to as much as $1.5 million, can be used to replace or repair damaged properties to their original condition before the disaster struck.

It is important to stress that this financial assistance is not a dole out. This is a loan, so you need to pay the amount at a specified period of time. You also need to accept the fact that your loan has interest. However, the interest rate is usually dependent on your capability to obtain credit from other sources, particularly non-federal agencies.

Requirements for SBA Disaster Loans


In addition to the three copies of the filled up application form, you will be required to show your income tax return for two years. The agency also requires applicants to submit documents, such as financial statements that will prove the ability of the person to pay the loan. It is also important that you are able to furnish the agency with your application within 60 days from the date that your state, city or town has been declared as a disaster area, if you are going to apply for physical disaster loans. In some cases, you may also be required to provide collateral for the loan.

Restrictions on SBA Disaster Loans

If you were unable to file you income tax return, then you will not be eligible for this type of loan. However, if you can furnish the agency with a certificate that you have been approved for an extension by the IRS, then there will be no problem. In case you were unable to comply with your previous loan requirements, particularly with other SBA loans, you can not avail of this type of loan facility. Lastly, if your business was able to secure full insurance coverage of the damage, then you may be unable to get approved for such disaster loan.

Rates Applicable to SBA Loans

In general, the interest rate is usually dependent on the availability of collateral and also your ability to secure loans from institutions other than SBA and other federal agencies. If you are able to secure credit from other sources, the interest rate applicable to your SBA disaster financial assistance should not exceed the rate being charged by private institutions or 8 percent, whichever is lower.

However, if you are a nonprofit organization or you cannot get credit from other sources, the maximum interest rate applicable to your loan is 4%.

Loan Maturity

The actual maturity of the loan is usually determined by considering your ability to repay the SBA loan. The maximum maturity of SBA secured disaster loans is 30 years. However, if you can secure credit from other companies or non-federal agencies, the maturity of your debt will not go beyond 3 years.