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SBA disaster loans

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The SBA is on small business owner’s side, and are doing what they can to be aware of the unique and specific challenges small business owners face, and help them find solutions to those problems. One problem that they have seen more and more in recent years is small businesses being negatively effected by natural disasters. Small businesses are losing inventory, customers, physical property and real estate, and so much more due to declared disasters, and are not in a financial position to recoup their losses, or qualify for financial help. Thus, the SBA created the SBA disaster loans program. This is set up to provide loans to small businesses that are affected physically, economically, or both by natural disasters. They are in place to cover the uninsured and under-insured losses, as well as economic injury caused by a declared natural disaster, such as a Tsunami.

SBA is trying to help small businesses who are negatively impacted by disasters to rebuild affordably. There are two loans in place, physical disaster loans, and economic injury disaster loans. Here is a look at what you would want to know about each:

SBA physical disaster loans

Physical disaster loans are available for all businesses, regardless of size, and can be up to $2 million. The money loaned is determined by an SBA representative who estimates the damage onsite, and provides a figure to the SBA for amount to be loaned. Borrowers can borrow up to 20% more than stated amount if they use it to not just replace and repair damage, but also protect themselves, and make changes to prevent future damage caused by like disasters. The money borrowed can be used for a number of things, to repair or replace real estate, equipment, inventory, machinery, etc.

SBA economic injury disaster loans
The economic injury loans are for businesses that may not lose something tangible like a piece of equipment, but who suffer economic injury due to the disaster, either because they lose clientele, or some other thing vital to their successful business. These loans can also be up to $2 million, and are used to meet financial obligations that are necessary, and that would have been met had the disaster not happened.

In order to see if your business is eligible for a disaster loan guaranteed by the SBA, and to apply, visit the SBA.gov website. The loans are most readily available to businesses who are unable to obtain the credit to rebuild and meet financial obligations from private sector lenders. Interest rates for the businesses that can’t get loans elsewhere will not exceed 4%. For those who are eligible for loans elsewhere, but opt for a SBA disaster loan, the interest rate will not exceed 8%. Of course, they won’t just take your word for it, the application process has a place to input whether or not you have sought credit elsewhere, and SBA will verify this.

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Posted by DK
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