The SBA Disaster Assistance Loan and its Benefits to Your Business
Wildfires and earthquakes in the Southwest, hurricanes throughout the Gulf Coast, plus tornados or flash flooding in the Midwest can all potentially have devastating impacts on business owners every year.
The U.S. Small Business Administration (SBA) offers what is called its Disaster Assistance Loan, a lending program that’s available in the event your business insurance or funding from the Federal Emergency Management Agency (FEMA) doesn’t cover all damages to your business from disastrous weather. While you may be familiar with the lending program, it shouldn’t fall on deaf ears. It’s always wise to inquire about before (and certainly after) severe weather strikes your region, and your business.
In the event your business suffers a lot of damage from disastrous weather, an additional loan may feel like an extra burden on top of your existing one. Short-term business loans, commercial property loans, or payments to a direct lender are all common. Nonetheless, considering the Institute for Business and Home Safety reported that an estimated 25 percent of businesses don’t re-open after a major disaster, the SBA states that this lending program is a viable option so you can weather through needed repairs and other damage to your business.
How can it help your business?
According to the SBA, its Disaster Assistance Loan offers two lending programs, including its Business Disaster Loan and Economic Injury Disaster Loan. The former allows applicants to apply up to a maximum of $2 million for the coverage of damage or replacement of property, inventory, machinery or equipment and business assets.
It’s available to large and small businesses as well as non-profits including churches and private universities. What’s more, it can also be used for building of retaining walls, the installation of sump pumps, clearing out overgrown landscaping, or adding a safe room and elevating select property to resist damage of future extreme weather.
The SBA’s Economic Injury Disaster Loan is similar to the Business Disaster Loan as you can apply for up to a maximum of $2 million. However, according to the SBA, it’s specifically devised for small business, agricultural coops, aquaculture businesses, and nonprofits to assist with working capital or operating expenses through a recovery period. It’s also worth noting that businesses are eligible for the Economic Injury Disaster Loan regardless if they have suffered from property damage.
Having a readily available emergency business plan before – and more importantly after – a disaster strikes is just smart business. Your first step is to inquire about the certain stipulations and what you qualify for just to ensure your business can survive the impacts of natural and disastrous weather.