How SBA Loans Can Save Your Property After a Natural Disaster

The SBA has special loan programs to help individuals and businesses after a natural disaster.

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.

Types of SBA Disaster Loans

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 damage, due to a declared disaster.

The following types of disaster loans are available:

SBA Home and Personal Property Loans

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 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).

Loan Terms

The interest rate on an SBA home or personal property disaster loan will not be more than:

  • 4% for applicants who are unable to obtain credit elsewhere, or
  • 8% for those who are able to obtain credit elsewhere, like from a bank. (The SBA determines whether an applicant has credit available elsewhere). (13 C.F.R. § 123.104).

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.)

SBA Business Physical Damage 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.

Loan Terms

The interest rate for the loan will be based on whether the business is able to credit elsewhere, but won’t exceed:

  • 4% for businesses and nonprofit organizations unable to obtain credit elsewhere, or
  • 8% for businesses and nonprofit organizations with credit available elsewhere. (Again, the SBA determines whether the applicant has credit available elsewhere.) (13 C.F.R. § 123.203).

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).

SBA Economic Injury Disaster Loans

Businesses, nonprofits, and small agricultural cooperative 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.

SBA Loan Terms

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).

SBA Military Reservists Economic Injury Disaster Loans

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.

Loan Terms

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).

How to Apply for an SBA Disaster Loan

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 disastercustomerservice@sba.gov.

Getting Additional Help

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.

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