An SBA Disaster Loan is a form of financial assistance by the Small Business Administration (SBA) to businesses and private non-profit organizations, homeowners, and renters located in regions affected by the declared disaster. This assistance comes as low-interest, long-term credit, providing support for faster recovery in an emergency. If insurance or funding from FEMA (Federal Emergency Management Agency) does not fully cover losses, you may qualify for this financing option. This federal assistance becomes available in regions stated in an official declaration.
Additional related forms include SBA Form 3305 (a volunteer award for outstanding contributions), SBA Form 3304 (a public official award), and SBA Form 3303 (an award for small business disaster recovery
General disaster loan terms are as follows:
There are different forms of lending options, depending on the nature of a cataclysm: Home and Property, Economic Injury, Military Reservist Economic Injury, Farm Emergency. In such tragic events, substantial damage and serious, often uninsured losses are suffered by the population. When local and state governments are overwhelmed by the outcome and are unable to provide adequate relief, the governor requests help from FEMA, SBA, etc.
An SBA Disaster Loan disbursement is made through a non-profit - a CDC - which then distributes funds to approved applicants. EIDL (Economic Injury Disaster Loan) is the most commonly provided loan type.
The SBA typically provides assistance within four weeks. Lending decisions are always based on the applicant’s credit score. After applying, a credit review will be the first step made by the SBA, followed by the inspection to verify incurred losses and summing up all eligible insurance recoveries. EIDL can be issued before insurance payments are received by the applicant. It takes approximately 5 days to receive an initial payment after your signed Loan Closing Documents are received by the loan officer.
A disaster loan - also called the "SBA Disaster Relief" - intends to finance recovery from the crisis. You can use the lent money to pay for repair or replacement of damaged property, mortgage or lease payments, equipment, inventory, as well as paying for other obligations and operating costs.
SBA Disaster Loan requirements are fairly strict. To qualify, you need to have a minimum credit score of 620-680, depending on the application type and what regional lender you will be working with. Acceptable credit score ensures a safer loan repayment rate, although these terms are often tough for people and organizations. Advances under $200,000 can be approved without a personal guarantee or collateral.
Homeowners and tenants need to submit an IRS Form 4506-T with their SBA Form 5C. This allows the SBA to access the applicant's tax return information. If you own a small business, file both SBA Form 5 and IRS Form 4506-T, complete a personal financial statement, attach a list of liabilities and provide a copy of the previous year’s Federal income tax return. Additional information may be requested depending on individual circumstances.