A Quick Look at the Different Types of SBA Disaster Loans
SBA Disaster Loans are offered by the US Small Business Administration to help businesses cover the financial gaps in insurance coverage or other resources in order to recover from a disaster. To apply for the loan, your business must have experienced economic or physical damage in the disaster. Other then that, your company should also be located in an SBA declared disaster area to qualify for the funding. Below are the three types of SBA Disaster Loans that a business can avail to cover its damages.
SBA Business Physical Disaster Loans
This loan program is designed by the SBA to help businesses replace or repair the damages in their property that are not covered by insurance. The loan amount available with an SBA Business Physical Disaster loans can go up to $2 million and the interest rates usually range from 4% to 8%. The loan term can be as long as 30 years with monthly repayment schedules. However, in order to qualify for the funding, your business should have suffered physical damages because of the disaster as well as be located in an SBA-recognized disaster area. Not only that, but you should also have a personal credit score of 600+ and pledge collateral in order to qualify for the loan.
SBA Economic Injury Disaster Loans
This program is designed by the SBA to offer working capital loans to businesses affected by a disaster. It involves short to medium terms, and the interest rate on the loan amount is usually set at 4%. The funding is aimed at helping businesses that have experienced considerable economic damages and can offer up to $2 million to meet with their standard operating costs. Note that in order to qualify for the SBA loan, your business must have suffered a significant financial loss because of the disaster. You should also be able to show your ability to repay the loan to get the funding approved by the agency.
SBA Military Reservists Economic Injury Loans
This loan program is designed by the SBA to help businesses cope with their loss of revenue when one of their main employees is called up for active military service. The agency offers up to $2 million to meet with the normal operating expenses in such cases. The interest rate on the loan amount is generally set at 4% here and it involves short to medium repayment terms. In order to qualify for the funding, your business should have suffered the loss of an important employee because he/she was called for active military duty, and his/her absence led to an inability to meet your company’s day-to-day operational costs.