Even if you don't have a small business, if you've been affected by a natural disaster—like a hurricane, tornado, wildfire, or mudslide—you might qualify for disaster loan assistance from the U.S. Small Business Administration (SBA). SBA loans are available for homeowners, renters, nonprofit organizations, and business owners.
SBA provides low-interest, long-term loans if your home, personal property, or business has suffered physical damage, or if your business has suffered economic injury, due to a declared disaster. Here's a short explanation about each loan program, with more details below.
Homeowners and renters whose property was damaged as a result of a declared disaster may apply for a low-interest SBA disaster loan. If you qualify, you can use the loan proceeds to fix your damaged home or to repair or replace your personal belongings after a natural disaster.
Homeowners may apply for up to $200,000 to restore their primary residence to its pre-disaster condition. The total amount of the loan you may get depends on the cost to repair your home, less any insurance settlements or grants. Though, you might qualify for up to 20% more money if you agree to make improvements to the real estate that would reduce the risk of the property. (13 C.F.R. § 123.105).
Eligible homeowners and renters can borrow up to $40,000 to repair or replace personal property—like clothes, furniture, vehicles, or appliances—damaged or destroyed in a natural disaster. (13 C.F.R. § 123.105).
The interest rate on an SBA home or personal property disaster loan will not be more than:
The repayment period of the loan can be up to 30 years, which is determined on an individual basis and is based upon the borrower's repayment ability. (13 C.F.R. § 123.105).
A borrower generally has to provide collateral for loans over $25,000, which usually consists of a first or second mortgage on the damaged real estate. (13 C.F.R. § 123.11). (Learn about foreclosure of SBA disaster loans.)
If a natural disaster has damaged your business or nonprofit organization, you might qualify for a loan of up to $2 million from the SBA. (13 C.F.R. § 123.202). If you make improvements that reduce the risk of future property damage from another disaster, you might qualify for up to 20% more money (above the amount of real estate damage).
You may use the loan proceeds to, for example, repair or replace real property, machinery, equipment, fixtures, inventory, and leasehold improvements. However, you can't use the disaster loan to upgrade or expand your business unless building codes require the upgrade.
The interest rate for the loan will be based on whether the business is able to credit elsewhere but won't exceed:
The repayment period for the loan is up to 30 years, depending on the business's ability to repay the loan. You might have to provide collateral—like a first or second mortgage on real estate—if the loan is over $25,000. (13 C.F.R. § 123.11).
Businesses, nonprofits, and small agricultural cooperatives may qualify for a disaster loan from the SBA—up to $2 million—to help pay for ordinary and necessary operating expenses until normal operations resume if the business suffered economic injury as a result of a disaster. The loan amount is based on actual economic injury and the company's financial needs, whether or not the business suffered any actual property damage.
The interest rate won't exceed 4%. (13 C.F.R. § 123.302). The repayment period for the loan is up to 30 years. Generally, SBA will not require that you pledge collateral to secure an economic injury disaster loan of $25,000 or less. (13 C.F.R. § 123.11).
Loans up to $2 million are also available for eligible small businesses that can't meet ordinary and necessary operating expenses because an essential employee was called to active military duty in his or her role as a reservist. (13 C.F.R. § 123.506). These loans are intended to provide the working capital needed by a small business to meet its obligations until operations return to normal once the essential employee is released from active military duty.
The interest rate is 4%, and the loan repayment term is up to 30 years, depending on the borrower's ability to repay. SBA will not generally require that you pledge collateral to secure a loan of $50,000 or less. (13 C.F.R. § 123.11).
To apply for an SBA disaster loan, go to the U.S. Small Business Administration website. This site provides disaster loan application instructions and details about SBA disaster loan requirements.
Submitting an online application is the quickest way to get a decision about loan eligibility, though you may also apply via mail or in person at any Disaster Recovery Center. For more information or to find a Disaster Recovery Center near you, contact the SBA Customer Service Center at 800-659-2955 or send an e-mail to [email protected].
People who've gone through a natural disaster might also qualify for help from the Federal Emergency Management Agency (FEMA). Learn about different types of FEMA assistance and whether you qualify at DisasterAssistance.gov's "Find Assistance" website.
If you're struggling to make your existing mortgage payments—or you've already fallen behind in payments—after a natural disaster, you can learn about foreclosure relief in Help for Homeowners Facing Foreclosure After a Natural Disaster. If you're facing a potential foreclosure and have questions about the process, wish to fight the foreclosure, or want to learn about ways to avoid foreclosure, consider talking to a foreclosure attorney.