What’s New in Disaster Loans
February 14, 2019 | Last Updated on: August 16, 2023
February 14, 2019 | Last Updated on: August 16, 2023
Disaster loans can be a useful tool when your business is impacted by the unexpected. In December 2018, it was announced that companies in Maryland could make applications for a low-interest disaster loan after a series of tornadoes. While many businesses have been quick to take advantage of this option, many others are still confused about what a small business administration (SBA) disaster loan is, and whether or not they are entitled to one. A disaster loan is not available for every business, but knowing that you are entitled to this form of credit can help you return to normality and provide the necessary cash advance to resume trading.
At their core, disaster loans are intended to help businesses recover after being affected by a natural event that negatively impacts normal commercial activity. If your insurance does not cover wildfires, tornadoes, or floods, then a disaster loan can help make up for the losses that you incur. It can take a while for a disaster loan payment to come through, but they usually arrive in your account four weeks after your application. This is a very different experience for those who have gone through the SBA loan scheme for other reasons. However, if your business qualifies for a disaster loan, you may be entitled to up to $2million. There are three disaster loan programs available. They are:
Not every business is suitable for an SBA disaster loan. They are loans rather than grants, and so a strict set of criteria are in place to ensure that only those that need the loan agreement are eligible. A business of any size that has experienced some form of physical damage due to being in a qualified and declared disaster may be eligible. This is the most crucial factor for those in Maryland. Loans in these cases can be made up to a value of $2million. Recently, Bay County businesses made applications worth $363 million after Hurricane Michael, but many Maryland businesses have yet to make their applications. In a disaster, these loans can be essential for getting back to trading quickly.
Not every business is eligible for a disaster loan. Before you start your application, make sure that your business does not fall into the following categories:
As well as your business type, other factors will affect your eligibility for a disaster loan from the SBA. This is to make sure that you are going to be able to make your repayments. Those repayments are usually less demanding than traditional commercial loans. Make sure that you are aware of the following essentials:
You will not be able to use your disaster loan on anything that you want. These loans have been specifically designed to help businesses recover from disaster, and as such have restrictions in place regarding what the money can be spent on. You can spend your loan on:
Because disaster loans are intended as a way to return to normal, they are not expected to be used as a way of expanding or upgrading your business model.
A disaster loan from the SBA can make all the difference to your future if you and your business has been hit by an unexpected disaster. Make sure that you know exactly what you’re entitled to, but get advice from the SBA. They can help guide you through the application process and ensure that you can start on the road to business recovery much more quickly.