SBA disaster loans are available to homeowners, business owners and tenants needing emergency financial help to recover from devastating local disasters, including floods, earthquakes and fires. The U.S. Small Business Administration(SBA) provides guaranteed loans to qualifying borrowers in federally announced disaster areas. In order to apply for SBA loans, a business owner or renter needs to be in one of the designated disaster zones. This is based on the location of the company on the date of the disaster. An SBA representative will visit the location to discuss the loan program and offer information on how to get approved and receive funds.
Because the SBA has an established process for loan approval and claim reimbursement, most borrowers can obtain SBA disaster loans with little or no delay. The Small Business Administration disaster loans are also easily accessible online. There are detailed instructions, along with application forms, providing the needed documents to facilitate loan processing. In addition, there are service fees, which are standard with all eidl second round SBA loans, and no prepayment penalty. Since these loans are backed by the full faith and credit of the United States government, all applications are subject to review for compliance with applicable federal programs.
After reviewing the details of your financial hardship, the lender will either approve or deny your loan request. If you are approved for SBA disaster loans, you must pay all loan fees and obtain pre-approval for the loan amount. If your loan amount is approved, interest rates will usually be fixed for a reasonable period of time. In addition, you may be assessed with late-payment fees if you miss a payment. These charges are normally included in the monthly loan balance.
To provide assistance to small business owners in the unfortunate circumstance that they have to declare a disaster in their business, the Small Business Administration offers several programs. The Commercial Loan Program and the Disaster Loan Program are the two most commonly available SBA disaster loans.
The Commercial Loan Program is designed for qualified applicants who need emergency funding to assist in the payment of short-term payroll obligations, including invoices, bills and other financial obligations. For this program, borrowers must meet eligibility requirements and agree to repay a specific percentage of the loan.
The Disaster Loan Program is targeted at providing funds to applicants in situations where the lender determines that the borrower has suffered an exceptional financial loss or disaster. Although the lender will evaluate the type and cause of the loss, the Disaster Loans are available for all types of disasters including fires, storms, earthquakes and acts of terrorism. Because these loans are specifically tailored to meet the unique needs of businesses, applicants must meet very strict lending criteria. Typically, recipients of SBA disaster loans can receive approval within a matter of hours.
The Small Business Administration also offers another solution for companies in need of cash during a declared disaster. The Disaster Loan Program offers an Alternative Emergency Cash Loan program to provide companies with up to $7500. For most borrowers, this is the equivalent of a normal commercial loan with fixed interest rates and repayment terms. There are a few SBA-approved lenders who do not require applicants to have good credit. If you meet the stated criteria for eligibility and you wish to apply for one of SBA’s disaster loans, you’ll need to contact the agency.