SBA disaster loans are available to residents, homeowners and small business owners needing emergency financial aid to recover quickly from various local disasters, including fires, tornados and earthquakes. The U.S. Small Business Administration offers small business loans to qualified borrowers in federal disaster areas. It is important to understand that although the Small Business Administration loans may be called “disaster loans,” they are not necessarily based on disaster-related events. SBA loans are offered for a wide variety of reasons and are available to all types of borrowers, including new businesses, home owners, renters and mortgage lenders.
Most lenders who provide eidl round 2 SBA disaster loans provide both personal and business loans. When applying for these loans, potential borrowers should carefully consider the type of financing they need. They should research whether they need a traditional personal loan or a nontraditional commercial loan. Homeowners may be able to qualify for a personal loan, while business owners may qualify for a business loan. There are specific qualifications for each type of loan and prospective borrowers should fully understand these requirements before submitting an application.
Because the Small Business Administration disaster loans programs are not based on ethnic heritage or on the financial status of the business, most borrowers can be successful in applying for them. As long as the business owner can show that he/she is in dire need of short-term cash and that he/she will be unable to obtain normal credit until after satisfying the loan requirements, SBA disaster loans can be approved. The two SBA approved programs include:
Typically, the SBA disaster loan is designed to provide small businesses with the cash they need to avoid a shut down. To qualify for an SBA approved loan, the business must demonstrate to the lender that it is in an immediate and foreseeable financial need of funding. The business must have a written plan that clearly identifies how the funds will be used, as well as a detailed description of anticipated usage.
If the lender determines that the business can meet all of its prerequisites for approval, the business will be approved for an SBA approved disaster loan. Once the business has obtained SBA approved disaster loan funds, it is required to repay the loan within a specific period of time (typically 30 days) after receiving its final approval.
While these loans are specifically targeted at businesses facing financial difficulties due to a temporary catastrophe, they can also be beneficial to homeowners facing financial difficulties due to an extended crisis. In order to obtain approval for SBA approved flood and hurricane disaster loans made possible by the Small Business Administration, a borrower must fulfill the eligibility requirements.
To do so, the borrower must first confirm that he/she does not have a defaulted mortgage, possess a negative income, have no unpaid delinquent payments, possess a valid direct deposit account, and a bank account in good standing. Borrowers also must be able to verify employment and financial details through a variety of sources, such as payroll, tax records, bank statements, and a variety of financial documents. After all requirements are met, borrowers are usually issued for a maximum loan amount, as well as a repayment plan. In order to repay their SBA approved disaster loan, borrowers are typically required to pay all interest and principal on their loan during the specified time period.