What Can I Use My SBA Disaster Loan For?

The Small Business Administration (SBA) disaster loan is a great resource for small businesses that have been affected by a disaster. But what can you actually use the loan for? In this blog post, we’ll go over some of the most common uses for SBA disaster loans.

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SBA Disaster Loans

The Small Business Administration (SBA) offers disaster loans to help businesses and homeowners recover from declared disasters. SBA disaster loans can be used to repair or replace the following:

What is an SBA Disaster Loan?

An SBA disaster loan is a loan made by the Small Business Administration to businesses and individuals who have suffered substantial economic injury as a result of a declared disaster.

The SBA offers two types of disaster loans:

-Home Disaster Loans: These loans are available to homeowners and renters who have suffered damage to their homes or personal property as a result of a declared disaster. Homeowners may borrow up to $200,000 to repair or replace their home, and renters may borrow up to $40,000 to replace damaged personal property, such as furniture or appliances.

-Business Disaster Loans: These loans are available to small businesses and private non-profit organizations that have suffered economic injury as a result of a declared disaster. Businesses may borrow up to $2 million to repair or replace damaged real estate, machinery, equipment, inventory, and other business assets.

How do SBA Disaster Loans work?

The loans are made at low- interest rates and long-term repayment options to qualifying survivors in designated disaster areas.

Who is eligible to apply for an SBA Disaster Loan?
-Most small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private nonprofit organizations of any size may apply for disaster assistance.
-Sole proprietorships and household businesses are not eligible for Physical Damage Disaster Loans but may receive Economic Injury Disaster Loans if their business is located in a declared disaster area.
-Most farmers and ranchers are eligible for both Physical Damage and Economic Injury Disaster Loans. Aquaculture enterprises are only eligible for Economic Injury Disaster Loans.

What can I use my SBA Disaster Loan for?

SBA Disaster Loans can be used for repair or replacement of your primary residence, business, or private non-profit organization. You may also use the loan to help with other expenses that are a direct result of the disaster, such as debris removal, temporary housing, and necessary repairs to utility services.

Eligible Uses for SBA Disaster Loans

Home and Personal Property Repairs

The first place to start is with your home and personal property. The goal of an SBA disaster loan is to help you rebuild or repair damage caused by the disaster. This can include your primary residence, a second home, or a rental property, as well as damages to personal property inside the home such as furniture and appliances.

Replacement of Personal Property

SBA disaster loans can be used to replace certain personal property destroyed or damaged in a declared disaster. SBA cannot duplicate benefits for which you are eligible from other sources, such as insurance proceeds, but disaster loans may be used to supplement these.

The cost of replacing any leased property is not eligible for SBA disaster assistance. However, if the lessee sustains damage to non-leased improvements on leased land or property that the lessee owns outright, the cost of repairing such improvements is eligible for SBA assistance.

The following is a list of common items that may be replaced with an SBA disaster loan:
-Household appliances
-Furniture
-Carpeting and flooring
-Clothing
-Tool sand equipment used in a business

Business Physical Damages

The costs of business physical damages or business property losses that occurred due to the major disaster are eligible for SBA disaster loan assistance. This can include real estate, machinery and equipment, leaseshold improvements, and inventory.

Economic Injury Assistance

Economic Injury Assistance:
-To pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact, and that aren’t covered by insurance.
-To cover working capital needs caused by the disaster. These needs may include inventory, supplies, accounting records, rent or mortgage payments and utility bills that continue after the physical damage has been repaired or replaced.