Disaster Loans

Business Financing

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 requires that you keep receipts and good records of all loan expenditures for three years following receipt of your SBA loan. Q. May I expand my business facilities or purchase a new line of inventory with an EIDL? A. No. Q. If I show the SBA that I am not making a profit, is that enough to qualify me for an EIDL? A. No. Neither lack of profit or loss of anticipated sales alone is sufficient to establish substantial economic injury. Substantial economic injury occurs only when you cannot meet current obligations because of the disaster. Indicators of economic injury might be a larger than normal volume of receivables, a lower sales volume, slow inventory turnover, and the development of delinquencies in trade payables, current accruals and debt payments. Q. Are private, non-profit organizations eligible for an EIDL? A. Yes, except that religious and certain other private, non-profit organizations are not eligible. Q. How soon will I know if I get the loan? A. That depends on how soon you file a complete SBA loan application. We must calculate the amount of economic injury and the working capital and other needs of your business or private, non-profit organization. We must be satisfied that you can repay the loan out of business operations, and we must take reasonable safeguards to help ensure the loan is repaid. The SBA loan application asks for the information we need. Since we process applications in the order received, the faster you can return it with all the needed information, the faster we can work on it. We try to make a decision on each application within 21 days. Be sure the information in your application is complete; missing information is the biggest cause of delay. Q. How soon can I expect the money? A. Loans greater than $5,000 have to be secured. After we approve a request, we will tell you what documents are needed to close the loan. When we receive these documents, we can order the checks. You will receive the money in installments, as it is needed. Q. Is flood insurance needed to get a loan? A. If the applicant is in a special flood hazard area, it must have flood insurance before we can disburse a loan. If the applicant was legally required to maintain flood insurance but did not, a disaster loan will not be made

Farm Emergency Loans
Emergency loans to help producers recover from production and physical losses due to drought, flooding, other natural disasters, or quarantine.

Home and Property Disaster Loans

Physical disaster loans are for permanent rebuilding and replacement of uninsured or underinsured disaster- damaged privately-owned real and/or personal property. SBA’s physical disaster loans are available to homeowners and renters. Within For Homeowners and Renters, we’ll review:

• Home and Personal Property Loans

  If you are in a declared disaster area and are the victim of a disaster, you may be eligible for financial assistance from the U.S. Small Business Administration - even if you don't own a business. As a homeowner, renter and/or personal-property owner, you may apply to the SBA for a loan to help you recover from a disaster. This brochure describes the type of assistance available and answers the most frequently asked questions about the SBA's disaster-assistance program for individuals. Where practical,assistance with completing the application will be available. Assistance Available As an individual, there is one basic loan, with two purposes, available to you: Personal Property Loan: This loan can provide a homeowner or renter with up to $40,000 to help repair or replace personal property, such as clothing, furniture, automobiles, etc., lost in the disaster. As a rule of thumb, personal property is anything that is not considered realestate or a part of the actual structure. This loan may not be used to replace extraordinarily expensive or irreplaceable items, such as antiques, collections, pleasure boats, recreational vehicles, fur coats, etc. Real Property Loan: A homeowner may apply for a loan of up to $200,000 to repair or restore their primary home to its pre-disaster condition. The loan may not be used to upgrade the home or make additions to it. If, however, city or county building codes require structural improvements,the loan may be used to meet these requirements. Loans may be increased by as much as 20 percent to protect the damaged real property from possible future disasters of the same kind. Note:  A renter may apply only for a personal property loan. Insurance Proceeds: If you have insurance coverage on your personal property/home, the amount you will receive from the insurance company will be deducted from the total damage to your property in order to determine the amount for which you are eligible to apply to the SBA. If you are required to apply insurance proceeds against an outstanding mortgage, the amount applied can be included in your disaster loan. If, however, you voluntarily apply insurance proceeds against an outstanding mortgage, the amount applied cannot be included in your disaster loan. If you have not made a settlement or are having trouble reaching an agreement with your insurance company, you may apply for a loan in the full amount of your damages and assign any insurance proceeds to be received to the SBA. Interest Rates on Loans: The law requires a test of your ability to obtain funds elsewhere in order to determine the rate of interest that will be charged on your loan. This credit-elsewhere test also applies to applicants for both personal property and real property loans. Applicants Who Can Obtain Credit Elsewhere: The interest rate to be charged is based on the cost of money to the U.S. government, but will not be more than 8 percent per year. Applicants Determined Unable to Obtain Credit Elsewhere: The interest rate to be charged will be half of the interest rate charged to applicants determined to be able to obtain credit elsewhere, but will not be more than 4 percent per year. Term of Loan: The maximum maturity, or repayment term of an SBA loan, is set at 30 years. However, the SBA will determine repayment terms on a case-by-case basis according to your ability to repay. Frequently Asked Questions About SBA Loans Q. How much can I borrow? A. The amount of money that the SBA will lend you will be based upon the actual cost of repairing or replacing your home and/or personal property, minus any insurance settlements or other reimbursements or grants. The total loan amount is subject to the limits set out above. Q. Must I use my own money or try to borrow from a bankbefore coming to the SBA? A. No.  Q. I already have a mortgage on my home. I can't afford a disaster loan plus my current mortgage payment. Can the SBA refinance my mortgage? A. In certain cases, yes. The SBA can refinance all or part of prior mortgages, evidenced by a recorded lien, when the applicant: 1) does not have credit available elsewhere; 2) has suffered substantial uncompensated disaster damage (40 percent or more of the value of the property); and 3) intends to repair the damage. An SBA disaster loan officer can provide more detailed information on your specific situation.  Q. What information do I need to submit for a home and/or personal property loan? A. The necessary information is specified in the loan application. In all cases, it includes an itemized list of personal property losses with the repair or replacement cost of each item. It also includes permission for the IRS to give the SBA information from your last two federal income tax returns. If you have pictures of the damaged property, you can include them as well.  Q. Will the SBA check the losses I claim? A. Yes. Once you have returned your loan application, an SBA loss verifier will visit you to determine the extent of the damage and the reasonableness of the loan request.  Q. How soon will I know if I qualify for a loan? A. That depends on how soon you file a complete SBA loan application. The SBA disaster relief program is not an immediate emergency relief program such as Red Cross assistance, temporary housing assistance, etc. It is a loan program to help you in your long-term rebuilding and repairing. To make a loan, we have to know the cost of repairing the damage, be assured that you can repay the loan, and take reasonable safeguards to help make sure the loan is repaid. The sooner you return the completed loan application, the sooner the SBA can process the application. The SBA tries to make a decision on each application within 14 days. Make sure your application is complete; missing information is the biggest cause of delay. Q. How soon can I expect the money? A. Loans over $14,000 have to be secured. We won't decline a loan just because you do not have enough collateral, but we do ask for whatever collateral is available. This means that after a loan is approved there are other steps you must take. Usually, the security consists of a first or second mortgage on the damaged real estate. After we approve the loan, we will tell you what documents are needed to close the loan. You return the loan-closing documents to us, we can order the checks. You will receive the money in installments as you need it to repair or replace the damage. Q. Should I wait for my insurance settlement before I apply to the SBA? A. No. If you do not know how much of your loss will be covered by insurance or other sources, the SBA will consider making a loan for the full amount of the loss, up to our loan limits, provided that you assign the insurance check to the SBA to reduce the amount of the loan. Q. I would like to get a contractor's estimate for the cost of repairing damage to my home, but I'm having trouble finding one. Should I hold up my application until I get the estimate? A. No. You might miss the deadline for filing your application while waiting for a contractor's estimate. If you have an estimate, include it. The SBA will verify any damage estimates listed on your loan application. Also,the sooner you file a completed application, the sooner the SBA can process it.  Q. If I receive a disaster loan, may I spend the money any way I want? A. No. The disaster loan is intended to help you return your property to the same condition it was in before the disaster. 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 requires that you obtain receipts and maintain good records of all loan expenditures as you restore your damaged property and that you keep these receipts and records for three years. Q. If my home is completely destroyed, can the SBA lend me money to relocate my home somewhere else? A. If you are unable to obtain a building permit to rebuild or replace your home at its original site, the cost of relocating your home might be included in the loan amount. If, however, you decide to relocate your home without being required to, an SBA loan can be obtained only for the exact amount of the damage. SBA can not make loans involving some relocations. An SBA disaster loan officer can provide more detailed information on your specific situation.  Q. I am a farmer. My home was damaged, and so were my barns, fences, and some of my crops. Am I eligible to apply for SBA assistance? A. You may apply to the SBA for a loan to cover the damage to your home and its contents only. But it may be in your interest to seek assistance first from the U.S. Department of Agriculture for all your damage. Q. Are secondary homes or vacation homes eligible for loans? A. No, not as homes. They may be eligible for business disaster loans under certain conditions Q. Are there any other limitations? A. Yes. Generally, loans will not be made for damage to personal pleasure boats, planes, recreational vehicles, antiques, collections, etc. Also, amounts for landscaping, family swimming pools, etc., are limited. Q. Is there a minimum monthly payment, and when would the first payment be due? A. The SBA does not have a minimum monthly payment. Payments vary depending upon income and expenses, size of family and other circumstances that may affect your repayment ability. Generally, the first payment is not due until five months after the date of the loan.  Q. I had to remove debris from my property after the disaster. Can this expense be included in my loan application? A. Yes, but your own labor and that of family members cannot be included. Amounts paid to others and any equipment rental can be listed as part of repairs to realestate. Remember that the maximum loan limit on realestate damage is $200,000, and debris removal is included in the limit. Q. May people over the age of 65 apply for help from the SBA? A. Yes. Loans are made without regard to age. Q. I've heard that SBA loan applications are complicated and hard to complete. Is this true? A. No. The application form asks you the same information that any bank would request before lending you money. If you need help, SBA disaster personnel are available to explain the forms and give you assistance at no charge. You may use the services of accountants or attorneys if you wish, but be sure they are reliable and that their fees are reasonable. If you choose to use an attorney or an accountant, you must report those fees on your SBA loan application form.  Q. Are damages to cars and mobile homes eligible? A. Generally, yes. The loan would be only for uninsured losses.  Q. Do I need flood insurance to get a loan? A. If you are in a special flood hazard area, you must have flood insurance before we can disburse a loan. The amount of insurance required is the insurable value ofthe property in the special flood hazard area but not to exceed the maximum flood insurance available under the National Flood Insurance Act.

Military Reservist Economic Injury Disaster Loan
This loan program provides funds to eligible small businesses to meet its ordinary and necessary operating expenses that it could have met, but is unable to meet, because an essential employee was "called-up" to active duty in their role as a military reservist.

The Farm Service Agency also provides a disaster assistance guide for farmers and ranches for natural disaster losses, resulting from drought, flood, fire, freeze, tornadoes, pest infestation, and other calamities.

Employment Assistance

• Disaster Unemployment Assistance
  Learn about financial assistance for self-employed individuals who have lost their job due to a federally declared disaster.

Purpose

Disaster Unemployment Assistance provides financial assistance to individuals whose employment or self-employment has been lost or interrupted as a direct result of a major disaster declared by the President of the United States. Before an individual can be determined eligible for Disaster Unemployment Assistance, it must be established that the individual is not eligible for regular unemployment insurance benefits (under any state or federal law). The program is administered by states as agents of the federal government.

Eligibility

In order to qualify for this benefit your employment or self-employment must have been lost or interrupted as a direct result of a major disaster and you must have been determined not eligible for regular state unemployment insurance.

Payment will be made to unemployed U.S. nationals and qualified aliens, who as a direct result of a major disaster:

No longer has a job.

Is unable to reach the place of work.

Was to commence work and does not have a job or is unable to reach the job.

Has become the breadwinner for the household because the head of household has died or become incapacitated (If you became a breadwinner due to the death of a self-employed individual, you are considered an unemployed worker for DUA purposes).

Cannot work because of a disaster-incurred injury.

With exceptions for persons with an injury and for self-employed individuals performing activities to return to self-employment, individuals must be able to work and available for work, which are the same requirements to be eligible for state unemployment insurance benefits.

Benefits

Disaster Unemployment Assistance is available to individuals for weeks of unemployment beginning with the first week following the date the major disaster began and for up to 26 weeks after the major disaster was declared by the President, as long as their unemployment continues to be a result of the major disaster.

The maximum weekly benefit amount is determined under the provisions of the state law for unemployment insurance in the state where the disaster occurred.

Filing a Claim

Claims should be filed in accordance with the state's instructions published in announcements about the availability of Disaster Unemployment Assistance, or contact the State Unemployment Insurance agency.

• Midwest Flood Recovery Assistance
  Info about National Emergency Grants for temporarily employing dislocated workers.

Tax Relief Assistance

• Federal Tax Relief for Individuals and Businesses
  Tips and resources to help individuals and business located in federally declared disaster areas.
• Disaster Losses Kit for Businesses
  Tax info for claiming unreimbursed casualty losses on property that was destroyed by a natural disaster.

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