Disaster Loan Program
The disaster loan program, while available to home owners as well, can be accessed by small business owners whose premises have been damaged or destroyed by natural disasters for the purpose of repairs or rebuilding. There are three types of SBA Disaster Loan and you may apply simultaneously for all types which would apply to your situation. See below for details
- Replacement of uninsured stock destroyed by a natural disaster
- Covering operating expenses during a local or national economic crisis
- Covering operating expenses after the loss of an essential employee called to military service
- Credit score above 660
- Must demonstrate ability to repay the loan
- No recent bankruptcies, foreclosures, tax liens
- No excessive debt load from other sources
- For Business Physical Disaster Loans, your business must have suffered demonstrable physical loss or damage due to a natural disaster and be located in an SBA declared disaster area
- For Military Reservist Loans, you must demonstrate how the employee called to active service is essential to your operation and the financial impact of their temporary loss
PROS & CONS
- Set payments at regular intervals
- Can be used for a wide variety of purposes
- Relatively low interest rate
- Long repayment schedule
- Lengthy application process
- May carry early payment penalty
- Variable interest rates may increase
Disclaimer: The above information is provided as a guideline. Some loan conditions may fall outside of these parameters. We recommend that you speak with one of our advisors before taking any course of action based on this information.
SBA DISASTER LOANS IN DETAIL
The disaster loan program, while available to home owners as well, can be accessed by small business owners whose premises have been damaged or destroyed by natural disasters for the purpose of repairs or rebuilding. There are three types of SBA Disaster Loan and you may apply simultaneously for all types which would apply to your situation.
SBA Business Physical Disaster Loans (BPDLs). Available to both for-profit and non-profit businesses a BPDL is a long-term, low rate loan which may be used to repair or replace property damaged by a natural disaster, but only where that property is not already covered by insurance. Interest rate is set based upon the availability of alternate forms of credit. If alternative financing is available, the interest rate will be 8% and 4% if no other forms of financing can be obtained.
Note: Initial disbursement: $25,000. Total loan amount is based upon insurance coverage and construction progress.
SBA Economic Injury Disaster Loans (EIDLs). If your business has suffered a severe downturn due to a local or national economic crisis, an EIDL is a short to medium term loan which will provide funds to cover normal operating expenses during the recovery period. Also available to nonprofits, this loan might be used to cover rent or payroll, or to pay vendors.
SBA Military Reservists Economic Injury Loans (MREIDLs). Available businesses which have been adversely affected by an essential employee or employees being called to active military service, the MREIDL may be used to cover operating expenses until their return or replacement.