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Disaster Preparedness

4 Steps to Getting Financial Help After a Disaster

In the face of a disaster, you may need financial assistance to keep your business afloat. The Small Business Administration (SBA) offers many resources, including disaster loan assistance, to help in these situations.  These are the steps you’ll need to take to qualify for a loan.

#1 | Make sure you have experienced a qualifying disaster.

The very first step is making sure you’re operating in a declared disaster area. The SBA keeps an updated list of declared disaster areas on their website, which you can access here.

#2 | Understand what’s offered.

Business Physical Disaster Loans cover losses up to $2 million in damage. You can use the money to repair or replace:

  • Inventory
  • Real property
  • Equipment
  • Leasehold improvements
  • Fixtures
  • Machinery

Note that this loan covers losses that aren’t fully covered by insurance, and you can’t use it to upgrade or expand your business, except as required by building codes. That being said, you may qualify for a 20 percent loan increase if you make improvements that will reduce the risk of future property damage caused by this type of disaster. The SBA will have to verify that the improvements are eligible.

Learn more about loan amounts and use from the SBA.

#3 | Know eligibility and terms.

Companies of any size can apply for a Business Physical Disaster Loan. At a glance, here’s what the interest rate and payoff terms look like:

  • The SBA determines whether you have credit available elsewhere.
  • If you can’t get credit anywhere else, the interest rate won’t exceed 4 percent.
  • If you have credit available elsewhere, the interest rate won’t exceed 8 percent.
  • Depending on your ability to pay the loan, repayment terms can be up to 30 years.

#4 | Apply online.

If you’re ready to apply for the loan, you can apply here online. You’ll need to submit the completed loan application, as well as a signed and dated IRS Form 456-T. This allows the IRS to give the SBA your tax return information. An inspector from the SBA will come to estimate the cost of damage to your business. Then, the SBA will let you know if you’re eligible for a loan, and for how much. 


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