The Small Business Administration (SBA) offers a program in which is backs loans for certain disasters, known as “disaster loans.” These loans are meant to help businesses get off the ground and back on their feet after surviving a hurricane, flood, tornado or other event.
Two big questions are: What is a disaster? How do you know if you qualify or if a disaster loan is right for you?
What is a “Disaster?”
A disaster is generally an act of God that results in an area becoming a declared disaster area. For example, Hurricane Irene and Superstorm Sandy were both qualified as disasters. There are two types of loans available for those businesses that are located in these areas. The first and most obvious type is a Business Physical Disaster loan. It covers physical disaster losses that are not covered by insurance including equipment, inventory, machinery, fixtures, and land improvements.
Another type of disaster loan available to small businesses, many private nonprofits, and small agricultural cooperatives are Economic Injury Disaster Loans. These are designed to help those businesses that may not have suffered physically from the disaster but have still suffered financially as a result. This is most often due to the fact that business is failing due to the devastation suffered by the rest of the community.
What Can Disaster Loans be Used For?
Physical disaster loans can be used to repair or replace those items listed above that were lost or damaged as a result of a disaster, to the extent that they are not covered by insurance.
Economic Injury Disaster Loans can be used to meet normal financial obligations that could have been met had the disaster not occurred.
How to Find Disaster Loans?
All of these regulations and more information related to disaster loans can be found at SBA.gov. However, the loans themselves are not actually made by the SBA. Rather the agency backs the loans, thus mitigating risk to the lenders that actually approve and disburse the funds. This makes them more readily available in some ways, but also requires a much stricter application process.
Finding a lender that that offers SBA disaster loans can be overwhelming, but Biz2Credit can help. Our network of 1,200 lenders is full of those offering such loans, and we can help you find the perfect lender for your business if you have suffered damages. Visit Biz2Credit’s Disaster Loan page for more information.