Disaster Assistance Loans: Protecting Your Business

If your business has been damaged or your income from your business has been affected because of a natural disaster, you may be able to obtain disaster assistance from the SBA. There are several programs available to help both business owners and home owners and renters through the disaster assistance program. The loans that you might be eligible for as a business owner include:

  • Business Physical Disaster Loans. These loans can be used by businesses to repair property that was damaged during a disaster. Coverage can include, according to the SBA, real estate, inventories, supplies, machinery, and equipment. Businesses of any size, including non-profit organizations, are eligible for this type of loan.

  • Economic Injury Disaster Loan (EIDL). These loans can help you with disaster related cash flow issues. The purpose of the loans is to help you meet your financial obligations that you are no longer able to meet because your business is unable to generate revenue because of the disaster.

  • Mitigation Loans. Mitigation loans are designed to help you make improvements to your property that will protect it from being damaged from future disasters. Mitigation loans can add as much as 20% to your loan amount for the purpose of protecting your building and structures from future damage.

Qualifying for Disaster Assistance

I’m order to qualify for an SBA disaster loan, you must have an established credit history and a credit rating that meets SBA criteria. You must also demonstrate that you have the capability of repaying the loans. Most loans that total more than $14,000 (EIDL loans of more than $5,000) will require collateral. While the SBA will not necessarily deny your loan if you do not have enough collateral, you will be required to put up the assets you do have.

Interest rates are determined based on your ability to obtain credit elsewhere. If you could obtain the credit without the help of the SBA, your interest rates will be slightly higher than if you have no other loan source than the SBA disaster program. However, the interest rates are all quite reasonable.

Loan Terms

No disaster assistance loan can extend longer than 30 years, but the loan repayment does not necessarily have a fixed monthly amount. The amount you are required to pay each month will depend in great part on your ability to pay, and the payments may be graduated so that higher payments will be required at the end of the loan and lower payments at the beginning.

The SBA will require proof of damages before providing you with the loan, and if you live in a disaster prone area, you may be required to obtain the appropriate insurance before obtaining funding. However, the SBA disaster program does offer multiple types of business financing to meet your needs, particularly if you have been challenged by unexpected disaster related problems that have slowed or stopped your ability to generate revenue.