If your business has been affected by a natural disaster—like a hurricane, wildfire, or mudslide—you might qualify for a Business Physical Disaster Loan from the U.S. Small Business Administration (SBA). Read on to learn more about SBA disaster loans for business owners, get details about how much you might be able to borrow, and learn about the application process.
If a natural disaster has damaged your business, you might qualify for a loan of up to $2 million from the SBA, depending on the cost to repair damage to the property. 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 the real estate damage).
You may use the loan proceeds to repair or replace real property, machinery, equipment, fixtures, inventory, and leasehold improvements. Though you can’t use the disaster loan to upgrade or expand your business, unless building codes require the upgrade.
(The SBA also offers two other types of loans for business who've suffered damage due to a natural disaster: Economic Injury Disaster Loans and Military Reservists Economic Injury Disaster Loans. To learn more about these types of loans, see Getting an SBA Loan After a Natural Disaster.)
A business or private, nonprofit organization may apply for a Business Physical Disaster Loan so long as the property is:
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. Usually, you’ll have to provide collateral—like a first or second mortgage on real estate—if the loan is over $25,000. If you don’t repay the loan, you might face foreclosure of your SBA disaster loan.
To apply for a SBA disaster loan to rebuild your business to its pre-disaster condition, go to the SBA website and click on “Apply Online.” If you’d rather submit your application in person, you can go to a Disaster Recovery Center where you can also get personal assistance from an SBA representative. You also may submit a loan application through the mail.
To learn more about Business Physical Disaster Loans, go to the SBA website. If you have questions about SBA disaster loans or the application process, call 800-659-2955 or send an email to firstname.lastname@example.org.
If you're having trouble making payments on an existing mortgage you have on your business due to a natural disaster and have questions about how foreclosure works or how to avoid a foreclosure, consider talking to a foreclosure lawyer.