Disaster

If your business property, real estate, inventories, supplies, machinery and equipment, or other items have been damaged in a declared disaster area, you may be eligible for low-interest financial assistance from SBA. Businesses of any size and most private non-profit organizations may apply to SBA for a loan to recover after a disaster.

Eligibility

• Up to $2 million to qualified businesses or most private nonprofit organizations to cover disaster losses not fully covered by insurance.
• Covers disaster losses not fully covered by insurance or other sources. If required to apply insurance proceeds to an outstanding mortgage on the damaged property, that amount can be included in your disaster loan application.
• Proceeds from insurance coverage on business property may be deducted from the eligible loan amount.

Use of proceeds

Loan proceeds may be used for the repair or replacement of the following:

• Real property
• Machinery
• Equipment
• Fixtures
• Inventory
• Leasehold improvements

Disaster loan funds may not be used to upgrade or expand a business, except as required by building codes. If you apply for mitigation assistance to make improvements that help reduce the risk of future property damage, you may be eligible for up to a 20% loan amount increase above the real estate damage, as verified by SBA. 

Terms

• First payment deferred for 12 months
• No interest accrual for the first 12 months 

For applicants unable to obtain credit elsewhere:

• The interest rate will not exceed 4%

For applicants who can obtain credit elsewhere:

• The interest rate will not exceed 8%

SBA will determine whether an applicant can obtain credit elsewhere.

Maturity

• Up to 30 years, depending on ability to repay the loan
• No pre-payment penalty or fees

Collateral requirements

• Collateral is required to the extent possible for physical damage loans over $50,000 in Presidential declarations and $14,000 in agency declarations.
• Real estate is the preferred collateral. Loans of $200,000 or less will not require the owner of the business to use their primary residence as collateral if it is determined the owner has other assets of equal quality and of a value equal to or greater than the amount of the loan.

How to apply

Apply online for an SBA disaster assistance loan. SBA’s inspectors will estimate the cost of damage once your application is completed and submitted.

If you have suffered substantial economic injury and are one of the following types of businesses located in a declared disaster area, you may be eligible for an SBA EIDL:

• Small business
• Small agricultural cooperative
• Most private nonprofit organizations

Eligibility

• Substantial economic injury means the business is unable to meet its financial obligations and pay its regular and necessary operating expenses
• Loss of expected profits or a decline in sales is not considered substantial economic injury
• EIDL provides the necessary working capital to help small businesses impacted by a disaster survive until normal operations resume
• EIDL assistance is available only to small businesses when SBA determines they are unable to obtain credit elsewhere
• Businesses must meet the following criteria to qualify for economic injury:
  • The business was directly impacted by the disaster
  • The business cannot cover expenses due to the disaster and/or debt payments
  • The business was physically located in the declared disaster area

SBA can provide loans to help cover the costs and expenses that your business would have been able to handle if the disaster did not happen. The EIDL amount will depend on how much financial impact you have experienced and your company’s financial needs, even if you didn’t suffer any property damage.

A separate SBA Disaster Assistance program known as business physical disaster loans covers property damage. A business may qualify for both an EIDL and a physical disaster loan. The maximum combined loan amount is $2 million. 

Use of proceeds

• Working capital and normal expenses such as the continuation of health care benefits, rent, utilities, and fixed debt payments
• EIDL funds cannot be used for expanding facilities, buying fixed assets, repairing physical damages, refinancing debt, paying out dividends or bonuses, or paying back loans to stockholders or principals

Terms

• First payment deferred for 12 months
• No interest accrual for the first 12 months
• The interest rate will not exceed 4%

Maturity

• Up to 30 years, with repayment term to be determined by ability to repay the loan
• No pre-payment penalty or fees

Collateral requirements

• Required for loans over $50,000
• Real estate is the preferred collateral. Loans of $200,000 or less will not require the owner of the business to use their primary residence as collateral if it is determined the owner has other assets of equal quality and a value equal to or greater than the amount of the loan.

Eligibility

• The maximum Military Reservist Economic Injury Disaster Loan (MREIDL) amount is $2 million.
• The amount of each loan is limited to the actual economic injury as calculated by SBA, business interruption insurance and whether the business and/or its owners have sufficient funds to operate.
• If your business is a major source of employment, SBA has authority to waive the $2 million statutory limit.
• Businesses with the financial capacity to fund their own recovery are not eligible for MREIDL assistance.
• Federal law requires SBA to first determine whether the credit necessary to accomplish full recovery is available from non-government sources without creating an undue financial hardship. 
• The filing period begins on the date the essential employee receives a notice of expected call-up and ends one year after the essential employee is discharged or released from active duty.

Use of proceeds

You can use proceeds for ordinary and necessary operating expenses.

You may not use proceeds:

• To cover lost income or lost profits
• In lieu of regular commercial debt, to refinance long-term debt, or to expand the business

Terms

• First payment deferred for 12 months
• No interest accrual for the first 12 months
• The interest rate is 4%

Maturity

• Up to 30 years, depending on ability to repay the loan
• No pre-payment penalty or fees

Collateral requirements

• SBA will not decline a loan for lack of collateral, but will require the borrower to pledge collateral that is available.
• Collateral is required for all MREIDL loans which are greater than $50,000.
• SBA accepts real estate as collateral when it is available.

Wind mitigation

Upgrade to building materials that can reduce high-wind damage to your roof and windows:

• Strengthen structures to protect against high wind damage.
• Brace or upgrade to wind-rated garage doors.
• Upgrade to pressure-rated windows.
• Install hurricane roof straps.
• Install a safe room or storm shelter built to Federal Emergency Management Agency guidelines.

Flood mitigation

Shore up your property and reduce the risk of flood damage:

• Seal a roof deck.
• Landscape your property to improve water runoff and drainage.
• Elevate structures.
• Relocate your home or business outside a flood plain
• Add a sump pump.
• Convert the lowest floor to a flexible space that is less likely to be damaged in a flood.

Wildfire mitigation

​​​​​Reduce your risk of damage from wildfires with fire-grade materials:

• Install a Class A fire-rated roof.
• Install 1/8” mesh screening over all vents to keep embers out of eaves and vents.
• Install non-combustible gutters, fences, and gates.
• Remove roof and gutter debris that can be ignited by airborne embers.
• Replace single-pane windows with dual- or multi-pane tempered glass windows.

Earthquake mitigation

Safeguard your home or business against the next earthquake:

• Strengthen and retrofit masonry buildings and concrete facilities that are vulnerable to ground shaking.
• Install window film to prevent shattered glass injuries.
• Anchor any rooftop-mounted equipment.

Hail mitigation

Upgrade your materials to protect against hail damage:

• Upgrade your building’s materials (for shingles, windows, skylights, and siding) to withstand significant impact.
• Install HVAC hail protection such as hail guards, shields, or wire mesh.
• Upgrade to steel gutters and downspouts, which are less likely to leak.

Prepare for emergencies

Prepare for emergencies with a three-step plan that allows you to prevent and prepare for disaster and know where to get aid if disaster strikes.