What Can an SBA Disaster Loan Be Used For?
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If you’re a small business owner who has been affected by a disaster, you may be wondering what an SBA disaster loan can be used for. Here’s a quick rundown of what these loans can be used for and how they can help your business recover.
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What is an SBA Disaster Loan?
An SBA disaster loan is a loan made by the Small Business Administration (SBA) to help businesses and homeowners recover from declared disasters.
SBA disaster loans can be used to repair or replace real estate, personal property, machinery, equipment, inventory, and business assets damaged or destroyed in a declared disaster. They can also be used to help make up for lost revenue and expenses incurred because of the disaster.
Disaster loans are available in both low-interest federal disaster loans and private disaster loans. Interest rates on federal disaster loans are as low as 3 percent for businesses and 2 percent for private non-profit organizations with terms up to 30 years. Loan amounts and terms are set by the SBA based on each borrower’s creditworthiness, ability to repay the loan, and other factors.
Private disaster loans are offered by banks and other lending institutions and generally have higher interest rates than federal disaster loans. They may also have shorter repayment terms.
What Can an SBA Disaster Loan Be Used For?
The SBA disaster loan can be used for a variety of purposes such as repairing or replacing your home, repairing or replacing your personal property, and providing working capital for your business. You can also use the loan to cover the cost of medical and dental expenses, as well as funeral expenses.
Home and Personal Property
You may use your loan to repair or replace your primary residence, secondary residence, or rental property. You may also use your loan to repair or replace personal property, such as automobiles, clothes, computers, and appliances.
Business Property
Business property can be covered with an SBA disaster loan. This can include the building your business is located in, as well as equipment and inventory. The loan can also be used to help replace any property that was lost as a result of the disaster.
Economic Injury
The U.S. Small Business Administration (SBA) disaster loans are the primary form of Federal disaster assistance. They are available to eligible small businesses and private non-profit organizations to help alleviate economic injury caused by a declared disaster.
These working capital loans may be used to pay fixed debts, payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact. The loan amount is based on your economic injury and your company’s financial needs, regardless of whether the business is owned or operated for profit.
