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Title:

Disaster Loans


Description:

Disaster Assistance

Disaster assistance is money provided to individuals, families and businesses in an area whose property has been damaged or destroyed following a Presidential declared disaster; and whose losses are not covered by insurance. Loans may be available to businesses that have suffered an economic loss as a result of the disaster. Assistance is available from the Federal Emergency Management Agency (FEMA), the Small Business Administration (SBA), the Farm Services Agency (FSA), and state governments.

FEMA Disaster Assistance

The first step for those requiring assistance following a disaster is to contact FEMA and apply for assistance. FEMA assistance includes money for housing and essential expenses, such as food and clothing; and critical personal expenses, such as medication..

  • Disaster Assistance Available from FEMA

    Housing Needs

    • Temporary Housing (a place to live for a limited period of time): Money is available to rent a different place to live, or a government provided housing unit when rental properties are not available.

    • Repair: Money is available to homeowners to repair damage from the disaster to their primary residence that is not covered by insurance. The goal is to make the damaged home safe, sanitary, and functional.

    • Replacement: Money is available to homeowners to replace their home destroyed in the disaster that is not covered by insurance. The goal is to help the homeowner with the cost of replacing their destroyed home.

    • Permanent Housing Construction: Direct assistance or money for the construction of a home. This type of help occurs only in insular areas or remote locations specified by FEMA, where no other type of housing assistance is possible.

      Other than Housing Needs

      Money is available for necessary expenses and serious needs caused by the disaster. This includes:

      • Disaster-related medical and dental costs.

      • Disaster-related funeral and burial cost.

      • Clothing; household items (room furnishings, appliances); tools (specialized or protective clothing and equipment) required for your job; necessary educational materials (computers, school books, supplies).

      • Fuels for primary heat source (heating oil, gas).

      • Clean-up items (wet/dry vacuum, dehumidifier).

      • Disaster damaged vehicle.

      • Moving and storage expenses related to the disaster (moving and storing property to avoid additional disaster damage while disaster-related repairs are being made to the home).

      • Other necessary expenses or serious needs as determined by FEMA.

      • Other expenses that are authorized by law.

Disaster and Economic Injury Loans

SBA and USDA provide low interest loans to businesses and individuals 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.

  • Disaster Assistance Loans
    If you are in a declared disaster area and are the victim of a disaster, you may be eligible for financial assistance - even if you don't own a business.
  • Economic Injury Loans
    Money to assist small businesses, small agricultural cooperatives and non-profit organizations recover from economic losses resulting from physical disaster or an agricultural production disaster.

    If your small business or private, non-profit organization has suffered substantial economic injury, regardless of physical damage, and is located in adeclared disaster area, you may be eligible for financial assistance from the U.S. Small Business Administration.

    Small businesses, small agricultural cooperatives and certain private, non-profit organizations of all sizes that have suffered substantial economic injury resulting from a physical disaster or an agricultural production disaster designated by the Secretary of Agriculture may be eligible for the SBA's Economic Injury Disaster Loan Program. 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.

    An EIDL can help you meet necessary financial obligations that your business or private, non-profit organization could have met had the disaster not occurred. It provides relief from economic injury caused directly by the disaster and permits you to maintain a reasonable working capital position during the period affected by the disaster.

    The SBA provides EIDL assistance only to those businesses or private, non-profit organizations we determine are unable to obtain credit elsewhere. The SBA can provide up to $2.0 million in disaster assistance to a business. This loan cap includes both economic injury and physical damage assistance. Your loan amount will be based on your actual economic injury and financial needs.

    The interest rate on EIDLs cannot exceed 4 percent per year. The term of these loans cannot exceed 30 years. Your term will be determined by your ability
    to repay the loan.

    Q. How may I use an EIDL?

    A. The loan will provide you with operating funds until your business or private, non-profit organization recovers. To the extent you could have made payments had the disaster not occurred, you may use the loan to make payments on short-term notes, accounts payable and installment payments on long-term notes.

    Q. How much money may I borrow?

    A. You may request an EIDL for the amount of economic injury and operating needs, but not in excess of what your business or private, non-profit organization could have paid had the disaster not occurred. In determining your eligible amount, the SBA will look at :

    • the total of your debt obligations;
    • operating expenses that mature during the period affected by the disaster, plus the amount you need to maintain a reasonable working capital position during that period;
    • and expenses you could have met and a working capital position you could have maintained had the disaster not occurred.

    The amount of your economic injury does not automatically represent the dollar amount of your loan eligibility; the SBA will evaluate the information you provide and determine the reasonableness of your loan request.

    Q. Must I submit a personal financial statement with my loan application?

    A. Yes. The SBA must review your financial statement and one for each partner, officer, director and stockholder with 20 percent or more ownership. The SBA requires the principals of the business to personally guarantee repayment of the loan and, in some instances, to secure the loan by pledging additional collateral.

    Q. Must I sell assets that are not used in my regular business operations before I am eligible for an EIDL?

    A. The SBA will review the availability of such assets to determine if part or all of your economic injury might be remedied by using such assets. The business and its principal owners must use their own resources to overcome the economic injury to the greatest extent possible without causing undue hardship.

    Q. If I can borrow from a bank, am I still eligible for SBA assistance?

    A. Private credit sources must be used as much as possible to overcome the economic injury. The SBA can provide EIDL assistance only to the extent the business (and its principals) cannot recover by using its own resources and normal lending channels.

    Q. What are some prohibited uses of an EIDL?

    A. You may not use funds to pay cash dividends or bonuses, or for disbursements to owners, partners, officers or stockholders not directly related to the performance of services for the business. The SBA will not refinance long-term debts or provide working capital that was needed by the business prior to the disaster.

    Q. Is collateral required for an EIDL?

    A. Collateral is required for all EIDL loans over $5,000.  SBA takes real estate as collateral where it is available.  Applicants do not need to have full collateral; SBA will take what is available to secure each loan.

    Q. How long will I have to pay off the SBA loan?

    A. The SBA will assess your financial situation and will set loan terms based on your needs and repayment ability. The maximum maturity for disaster loans is 30 years.

    Q. What kind of documentation should I use to show my losses?

    A.In order for the SBA to compare your financial condition and operating results preceding the disaster with those during and since the disaster period,
    you must furnish balance sheets and operating statements for similar periods of time. The specific requirements are contained in the EIDL application form.

    Q. If I receive an EIDL, may I spend the loan money any way I want?

    A. No. An EIDL is intended to help you maintain a secure financial condition until your business or private, non-profit organization is back to normal. Your loan will be made for specific and designated purposes. Remember that the penalty for misusing disaster funds is immediate repayment of one- and-a-half times the original amount of the loan. The SBA require...

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