Any business or private, nonprofit organization that is located in a declared disaster area and has incurred damage during the disaster may apply for a loan to help replace damaged property or restore it to the condition it was in before the disaster. These entities may also apply for a working capital loan from the SBA to relieve the economic injury caused by the disaster.
Physical Disaster Loans
Physical Disaster Loan of up to $2 million to repair or replace damaged real estate, equipment, inventory and fixtures. The loan may be increased by as much as 20% of the total amount of disaster damage to real estate and/or leasehold improvements, as verified by SBA, to protect the property against future disasters of the same type. These loans will cover uninsured or under-insured losses.
Physical Disaster Loan proceeds may be used for the repair or replacement of the following:
- Real property
- Leasehold improvements
Economic Injury Disaster Loans
Small businesses located in a declared disaster area that have suffered economic injury because of a disaster (regardless of physical damage) may be eligible for an Economic Injury Disaster Loan (EIDL). Substantial economic injury is the inability of a business to meet its obligations as they mature and to pay its ordinary and necessary operating expenses.
EIDLs provide the necessary working capital to help small businesses survive until normal operations resume after a disaster. EIDLs of up to $2 million to meet necessary financial obligations – expenses the business would have paid if the disaster had not occurred. The interest rate on EIDLs cannot exceed 4% per year. The term of these loans cannot exceed 30 years.
The interest rate on both these loans will not exceed 4% if the applicant cannot obtain credit from other non-federal sources. Repayment can be up to 30 years, depending on the business’s ability to repay the loan. For businesses and nonprofit organizations with credit available elsewhere, the interest rate will not exceed 8% SBA determines whether the applicant has credit available elsewhere. If applicants are required to apply insurance proceeds to an outstanding mortgage on the damaged property, the applicant can include that amount in its disaster loan application