The Small Business Administration (SBA) isn’t just for owners of small companies. In the wake of a disaster, this federal agency has the power to grant loans quickly. SBA disaster loans are frequently used by renters and homeowners to help cover immediate costs.

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Low-interest rate SBA loans offer up to $500,000 for the repair or replacement of a primary residence for homeowners. For renters, homeowners, and personal property owners, the SBA offers personal property disaster loans up to $100,000.

What To Do

• Understand SBA loan eligibility

• Learn the purpose of SBA loans

• Apply for an SBA loan

• Learn how to use your SBA funds

Understanding Who Is Eligible

You do not need to own a business to apply for an SBA disaster loan. SBA loans can help homeowners and renters whose primary residence was damaged, as well as large and small businesses (including rental property owners) and nonprofit agencies located in a declared disaster area when they suffer damages in affected areas. 

The Purpose of SBA Loans

SBA disaster loans are the largest source of federal disaster recovery funds for survivors. 

In the wake of a disaster, SBA loans can help homeowners and renters repair or replace damaged homes, cars, appliances, furniture, and clothing. These disaster assistance loans cover losses not fully covered by existing insurance or other sources. Keep in mind, the amount you receive from insurance is deducted from the total damage to your property, which is how SBA decides how much you’re allowed to borrow.

SBA loan terms are favorable to homeowners and renters. Even though it is a loan, the first payment is not due for 12 months, and no interest accrues during that time. There’s also no prepayment penalty if you pay off any part of the loan early. Loan approval is based on your ability to repay but generally provided as 30 year fixed loans with rates well below the current prime rate.

How To Apply for an SBA Loan

You can apply online for an SBA disaster assistance loan. Survivors don’t have to wait for an insurance settlement before submitting an SBA loan application.

Your property must be within a declared disaster area, and applications begin by matching your location and dates of damage with approved disaster loan programs. SBA’s inspectors will estimate the cost of damage once your application is completed and submitted. 

If the SBA does not approve a loan for you—or approves a loan that doesn’t cover all of your needs—you may be referred to other grants to replace essential items among other serious disaster-related needs.

Learn How To Use Your SBA Funds

SBA disaster loans cover losses not fully compensated by insurance, FEMA grants, or other resources. You may discover you were underinsured for any deductibles or labor and  materials required to repair or replace your home, and that’s where an SBA loan can help bridge the gap.

If you already have a mortgage on damaged property, SBA specialists can also help with a low-interest loan that you can afford. In some cases, SBA can refinance all or part of an existing mortgage to a lower, 30 year fixed rate.