Opening a business is a risk that bold entrepreneurs make despite the odds of it falling. Many factors go into separating a successful small business from one that ends up closing. One factor that can unexpectedly shut a company is a disaster. An extreme storm or fire could devastate a business and spin its future into financial ruin.
There is help! Business owners can work with the Small Business Administration (SBA) to secure their future with a business loan. Keep reading to learn more about how the SBA can help you if your business experiences damage from a disaster.
Wait, What is an SBA Business Disaster Loan?
The SBA helps business owners and homeowners to recover from disasters. In most cases, the SBA guarantees loans that other lenders finance. On the other hand, the SBA disaster loan lends funds directly to borrowers.
There are a few loans that relate to business owners. We’ll focus on the business physical disaster loan. This loan offers funds to offset any losses a business would endure that wouldn’t be covered by insurance. The funds can be used to repair or replace assets, including property, equipment, fixtures, inventory, and more. Businesses and most nonprofits are eligible to apply for a business physical disaster loan.
There are several different interest rate caps for the various loans the SBA helps businesses secure. The business physical disaster loan has a cap of 4% for businesses that have no other credit options. For those with access to outside credit, SBA caps the loan at 8%.
Eligibility Requirements for the Business Disaster Loans
There are guidelines for ensuring your business will be able to secure a business disaster loan. The first step to determining your eligibility is whether a declared disaster impacted your area. Some examples of disasters that have been declared in the past include hurricanes, droughts, flooding, thunderstorms, wildfires, and more. See a list of declared disasters here and the SBA’s disaster press releases here.
The second step to qualify depends on the type of loan. For the Business Physical Disaster Loan, a business of any size and most nonprofits may apply. For the Business Economic Injury Disaster Loan, the organization must be a small business, a small agricultural cooperative, or a private nonprofit (most qualify). Additionally, the latter loan requires companies not to be able to get financing through other means.
Moving Forward with Your Business’s Disaster Recovery
When you are ready to move forward with your direct SBA loan, you can begin the application process online, at a disaster center, or by mailing in your documents. Jarvis Construction has been helping business owners recover their damaged and even ruined property since 1979. We are happy to support our local community and our larger area by helping people get their businesses back up and running.