SBA Disaster Relief Loans
By RON CONSOLINO
Small Business Q&A
Sept. 28, 2008
My small business suffered severe damage during Hurricane Ike. Can I get some help from the government to get back on my feet?
Yes. Low-interest disaster loans are available to victims of Hurricane Ike from the U. S. Small Business Administration (SBA). In fact businesses of all sizes, non-profit organizations, homeowners and renters may be eligible for SBA financial assistance.
Businesses of any size and private, non-profit organizations may borrow up to $2 million to repair or replace damaged or destroyed real estate, machinery and equipment, inventory, and other business assets. The SBA can lend additional funds to help with the cost of making improvements that protect, prevent or minimize the same type of disaster damage from reoccurring.
For small businesses and most private, non-profit organizations, the SBA offers Economic Injury Disaster Loans (EIDLs) to help meet working capital needs caused by the disaster. EIDLs cover ordinary and necessary financial obligations that cannot be met as a result of the disaster and, so, are not intended for lost or reduced profit. EIDLs are available regardless of whether any property damage was suffered.
Disaster loans up to $200,000 are available to homeowners to repair or replace damaged or destroyed real estate. Homeowners and renters are eligible for up to $40,000 to repair or replace damaged or destroyed personal property.
Interest rates can be as low as 2.875 % for homeowners and renters and 4 % for businesses with terms up to 30 years. Loan amounts and terms are set by the SBA and are based upon each applicant’s financial condition. There are no set criteria on credit. Decisions are made according to the circumstances of each person or business.
You may use your SBA disaster loan to relocate. The amount of the relocation loan depends on whether you relocate voluntarily or involuntarily. If you are interested in relocation, an SBA representative can provide you with more details on your specific situation.
Loans in excess of $14,000 require the pledging of collateral to the extent it is available. In addition, personal guaranties by the principals of a business are required. The SBA will not decline a loan for lack of collateral, but you must pledge available collateral.
Visit the SBA website, www.sba.gov, to learn more about these loan programs. Click on “Services/ Disaster Assistance” to get detailed requirements, apply online, or download forms and mailing instructions. (Or click here: http://sba.gov/services/disasterassistance/index.html)
Homeowners and renters must first register with the Federal Emergency Management Agency to obtain a FEMA Registration ID Number by calling 1-800-621-3362. All businesses should register with FEMA to receive current information on all disaster programs. For other questions, contact the SBA at 1-800-659-2955 or send an email to firstname.lastname@example.org.
Victims can get assistance from SBA representatives to apply for loans at disaster relief centers.
A current list of disaster relief centers in Texas can be found by going to the “Disaster Assistance” web page referenced above and clicking on “Click here for information on SBA’s Disaster Recovery Centers”.
For Hurricane Ike, the filing deadline for property damage is November 12, 2008 and for EIDL is June 15, 2009.
Ron Consolino is a management counselor for SCORE, Counselors to America's Small Business, a volunteer, nonprofit association and a partner of the U.S. Small Business Association. For information, go to www.scorehouston.org.
His column is intended to provide general information. Send your small-business questions to Small Business, Houston Chronicle, P.O. Box 4260, Houston, TX 77210.