VI. SMALL BUSINESS ADMINISTRATION DISASTER LOANS
SBA provides low interest disaster loans to homeowners, renters, businesses of all
sizes and private, nonprofit organizations to repair or replace real estate, personal property, machinery and equipment, inventory and business assets that have been damaged or destroyed in a declared disaster. In addition, it offers economic injury disaster loss loans to businesses affected by a disaster. This manual will deal exclusively with home and personal property loans. For more information on these types of loans and other SBA services, see
www.sba.gov and refer to 13 CFR § 123.1-123.108.
Home and Personal Property Loans As a homeowner, renter, and/or personal-property owner, your client may apply
to the SBA for a loan to help recover from a disaster. An application will be mailed to your client along with their notification of FEMA award (or notice of denial). In addition, SBA offers the option of filing home and business disaster loan applications through the Electronic Loan application available at
www.sba.gov.
Renters and homeowners alike may borrow up to $40,000 to repair or replace
clothing, furniture, cars, appliances, etc. damaged or destroyed in the disaster. Homeowners may apply for up to $200,000 to repair or replace their primary residence to its pre-disaster condition. The loans may not be used to upgrade homes or make additions unless such alterations are required by local building codes or authorities. Loans may be increased up to 20% of the total amount of disaster damage to real estate, as verified by the SBA, to make improvements that lessen the risk of property damage by future disasters of the same kind.
Interest Rates and Loan Terms For clients unable to obtain credit elsewhere, SBA loan interest rates will not
exceed 4%. After Tropical Storm Irene, for instance, borrowers who could not obtain credit elsewhere were able to obtain loans with interest rates of 2.5%. For those who can obtain credit elsewhere, the interest rate will not exceed 8%. The SBA determines whether an applicant has credit available elsewhere. The SBA offers loans with long- term repayments in many cases up to 30 years. Installment payment amount, maturity and other terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
Applying for a Disaster Loan SBA offers several options to apply for a Disaster Loan. Disaster loan
applications may be submitted through the Electronic Loan Application (ELA) at
www.sba.gov. Clients also have the option of submitting a paper application via mail.
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