What Are SBA Disaster Loans?

While the primary mission of the Small Business Administration is to support entrepreneurs, with special programs focused on women, veterans, low-income, and minority business owners, this agency also offers low-interest loans to assist business owners, homeowners, and renters after a disaster. No matter where you fall in the insurance spectrum — whether you’re covered well, are underinsured, or have no protection — FEMA recommends applying for an SBA loan to cover gaps in insurance coverage or to provide bridge funding before the insurance check arrives.

• The Economic Injury Disaster Loan Program (EIDL) provides financial assistance to both small businesses and private, nonprofit organizations that are located in a declared disaster area. NOTE ALL BUSINESS OWNERS – THIS FORM REQUIRES 3 YEARS OF REVENUES BY MONTH (2017-2019)
• Coverage depends on the amount of economic injury sustained.
• That includes things that don’t cause property damage, such as COVID-19, but still result in a massive loss of demand due to circumstances beyond your control or that interrupt your ability to conduct business.
• Coverage for an economic injury disaster loan is capped at $2 million, but the amount you can finance is based on the actual economic injury you’ve sustained after a disaster.
• So if sales have dipped because people simply can’t get to your storefront location or the area was closed, but your property isn’t damaged, for instance, an economic injury disaster loan may be able to help you cover costs associated with the loss of business.
• Repayment terms will be dependent on your ability to repay the loan.

• The SBA is expecting small businesses to run into problems in a number of different areas, including:

1. Capital access
2. Workforce capacity
3. Inventory and supply chain shortfalls
4. Facility remediation and clean-up costs
5. Insurance coverage issues
6. Demand changes
7. Marketing needs

• Economic Injury Disaster Loans offered for COVID-19-affected businesses can be used to pay debts, payroll, accounts payable, and other expenses related to difficulties caused by the virus.
• Note that you must not have other sources of credit available to qualify for these loans.
• The interest rate for these loans is 3.75% for small businesses and 2.75% for nonprofits.
• They have a maximum term length of 30 years, though the exact terms will vary, depending on your circumstances.