Physical Disaster Business Loans

Physical Disaster Business Loans!

Up to $1,500,000 ($1.5 million)!

Any business that is located in a declared disaster area and has incurred damage during the disaster may apply for a loan to help repair or replace damaged property to its pre-disaster condition. If your business has suffered physical damage as a result of a disaster, you may be eligible for financial assistance from the U.S. Small Business Administration.

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Questions and Answers About Physical Disaster Loans to Businesses

Q. What can I use the loan proceeds for?

A. Repair or replacement of real property, machinery, equipment, fixtures, inventory and leasehold improvements may be included in the loan. In addition, disaster loans to repair or replace real property or leasehold improvements may be increased by as much as 20% to protect the damaged real property against possible future disasters of the same type.

SBA loans will cover uninsured physical damage. If you are required to apply insurance proceeds to an outstanding mortgage on the damaged property, you can include the amount applied in your disaster loan.

Q. Is collateral required for these loans?

A. Loans of $10,000 or less do not require collateral. Loans in excess of $10,000 require the pledging of collateral to the extent it is available. Normally the collateral would consist of a first or second mortgage on the damaged business property. In addition, personal guaranties by the principals of a business are required. The SBA will not decline a loan for lack of collateral, but you must pledge available collateral.

Q. What information do I need to help me complete the loan application form?

A. Necessary information is specified in the loan application and includes:
(a) an itemized list of losses with your estimate of the repair or replacement cost of each item;
(b) a copy of certain federal income tax information (as specified on the application);
(c) a brief history of the business;
(d) personal and business financial statements.
(e) an estimate for repairing structural damage

Q. If my business is completely destroyed, can the SBA lend me money to relocate my business?

A. Yes. In certain circumstances, limited relocation costs can be included in the loan amount. Whenever relocation is involved, you should contact the SBA disaster office before making any commitments.

Q. Besides the damage to my property, my business suffered economically from the disaster. Do SBA loans cover these economic losses?

A. Yes they do, but only if you and your business do not have credit available elsewhere, and your business qualifies as small as defined by the SBA. The same application is used together with a supplementary form for the economic injury. The maximum amount the business and any affiliates may borrow for any one disaster is limited to $1.5 million for both physical damage and economic injury combined.

Q. Is flood insurance needed to get a loan?

A. If the business is in a special flood hazard area, or if the disaster damage was caused by flooding, it must have flood insurance before we can disburse a loan. If the business was legally required to maintain flood insurance but did not, then the SBA will not make a disaster loan.

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