SBA disaster loans are low-interest loans offered by the US Small Business Administration to individuals or businesses affected by a declared disaster. There are four main types of loans, including those for repairing homes and personal property, repairing businesses, covering economic damages, and covering economic damages caused by military reservist deployment. Loans can be used for a variety of purposes, and interest rates are typically 4 to 8 percent over 30 years. Nonprofit organizations and businesses of all sizes can apply.
SBA disaster loans are long-term, low-interest loans made to individuals or businesses by the US Small Business Administration (SBA) in areas where there is a declared disaster. These loans can be used for a variety of purposes, such as repairing damage or compensating for economic losses caused by a disaster. There are four main types of disaster loans: loans to repair homes and other personal property, loans to repair damage to businesses, loans to cover economic damages, and loans to cover economic damages caused by the deployment of a military reservist. SBA disaster loan applicants may apply for loans of variable amounts, depending on the specific type of loan. Typically, interest rates for disaster loans are 4 to 8 percent over 30 years.
These personal property or home damage loans can be made to renters or homeowners, even if they don’t own a business. Some of these loans are intended to be replaced by furniture, clothing, appliances, or other household items damaged or destroyed in a disaster. Other times, these loans are made to repair damaged homes or make improvements that would help prevent destruction in a future disaster. SBA disaster loans for homes and personal property generally cannot be used for rental properties, which can be covered by a commercial disaster loan.
Business disaster loans are made to business owners or nonprofit organizations to repair or replace destroyed buildings, machinery, inventory, or other property associated with the business or organization. A portion of the money from an SBA disaster loan could also be used to upgrade a property to protect against damage from similar disasters in the future. In addition, business disaster loans can be used to cover repairs to uninsured or underinsured properties. The SBA accepts applications from businesses or nonprofit organizations of all sizes, not just small businesses.
Other types of SBA disaster loans can cover economic losses caused by a disaster. These loans may be available only to small businesses or farms, but nonprofit organizations of any size may also apply. Once the application process is complete, an inspector will visit the applicant to assess the damage and determine loan details.
A final type of SBA disaster loan covers economic losses a business could suffer when a military reservist who is an essential employee is deployed, causing business interruption. These loans may be made only to small businesses determined by the SBA to be unable to finance their own recovery without financial assistance from the federal government.
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