When disaster strikes, who helps communities pick up the pieces and rebuild? The U.S. Small Business Administration (SBA) plays a major role in assisting individuals and businesses after hurricanes, civil disturbances, earthquakes, floods, fires and other catastrophes. Don’t let the name confuse you—the SBA disaster loans are not for small businesses only. They help homeowners, renters, owners of businesses of all sizes and nonprofit organizations repair damaged property, giving disaster-ravaged economies a boost.
SBA disaster assistance is different from other SBA programs: loans become available as the result of some disaster declaration signed by the President or SBA Administrator. Availability of economic injury disaster loans for small businesses can also be triggered by crop or farm losses declared a natural disaster by the Secretary of Agriculture. The program keeps a low profile until it is needed, but once the declaration is signed, loan teams immediately spring into action, traveling to the recovery scene to provide on-site help with loan applications. Teams will stay in an area until he job is done.
SBA disaster loans cover uninsured losses. Usually, businesses can apply for up to $1.5 million. Up to $100,000 is available to homeowners for repairs to a primary residence, and renters and homeowners can apply for up to $20,000 for personal property losses. Interest rates can be as low as four percent, with loan terms extending up to 30 years.
Applying for an SBA disaster loan is similar in some ways to applying for a bank loan.
The SBA makes a decision about the borrower’s ability to repay the loan, although the lower interest rate and long loan term allow for some flexibility. The SBA understands disasters are unpredictable; home and business owners are frequently unprepared for such a situation. That is why the loans are offered.
The SBA disaster program is the agency’s largest direct loan program, and the only one that provides assistance beyond the SBA’s small business constituency. Since the SBA was created in 1953, more than 1 million disasters loans exceeding $17 billion have been approved.