Disaster Loans

Disaster Loans - Small Business

Disaster Loans - Small business owners across the West Coast are expected to turn to the federal government for financial help in getting their companies running again. The Small Business Administration’s disaster loan program is often the only salvation for companies without insurance, or whose insurance didn’t cover all the damage.

Disaster Loans Federal

The SBA offers two kinds of loans for business owners in regions that have been declared federal disaster areas. Parts of Louisiana, Mississippi, Alabama and Florida have already received disaster declarations following Hurricane Katrina’s pass through those states.

Disaster Loans Physical

The first type of loan is the physical disaster business loan, which provides businesses of any size with funds to repair or replace real estate, equipment, fixtures, machinery and inventory. Companies can receive loans of up to $1.5 million.

Physical disaster business loans are available only to businesses without insurance, or that suffered damage that extends beyond their coverage. However, the SBA’s Web site, www.sba.gov, states, “if the business was legally required to maintain flood insurance but did not, then the SBA will not make a disaster loan.”

Economic Disaster Loans Injury

The second type of loan, the economic disaster injury loan, is available to small businesses that have suffered substantial economic injury due to a disaster. They can receive loans even if they suffered no physical damage — for example, if a company had to shut down because a disaster halted transportation and prevented deliveries from vendors or to customers. The SBA defines substantial economic injury as “the inability of a business to meet its obligations as they mature and to pay its ordinary and necessary operating expenses.”

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