After a hurricane, the damage to homes, businesses, and personal property can be devastating, leaving individuals and businesses with costly repairs and losses. While FEMA offers crucial short-term assistance to cover immediate needs, it is often not enough to fully rebuild and restore what was lost. This is where the U.S. Small Business Administration (SBA) disaster loan program comes in.

The SBA offers low-interest disaster loans that provide much-needed financial assistance to help homeowners, renters, and businesses recover. In this blog, we will dive into the details of SBA disaster loans, what they cover, who qualifies, and how you can apply to get the help you need to rebuild after a hurricane.

SBA disaster loans are low-interest loans available to individuals, families, and businesses in federally declared disaster areas, such as those affected by hurricanes in Florida. These loans provide financial assistance to cover repair and replacement costs for damaged homes, personal property, and business assets. Contrary to what many people believe, SBA disaster loans are not just for businesses — they also provide substantial assistance to homeowners and renters who need help recovering from disaster-related damage.

SBA disaster loans offer several advantages, including:

• Low interest rates — As low as 1.813% for homeowners and renters, and starting around 4% for businesses.
• Flexible repayment terms — Loans can be repaid over as long as 30 years, depending on your ability to repay.
• Large loan amounts — Homeowners can borrow up to $500,000, and businesses can borrow up to $2 million.

The SBA’s disaster loans can cover the gap between what your insurance pays and the total cost of repairs or rebuilding. They are designed to help restore your property to its pre-disaster condition and, in some cases, can even be used to make improvements to protect your property from future disasters.

There are several different types of SBA disaster loans, depending on your needs and situation.

Homeowners can apply for disaster loans to repair or replace their primary residence. The loan can cover the cost of repairs to damaged structures (like the roof, walls, or foundation), as well as the cost of replacing essential household systems (like plumbing and electrical systems). Homeowners can borrow up to $500,000 through the SBA to cover these costs.

For renters, the SBA offers disaster loans to help replace personal property lost or damaged in the disaster. Renters can apply for up to $40,000 to replace items like furniture, appliances, clothing, and other personal belongings.

Example: If your home’s roof is severely damaged in a hurricane and your insurance only covers a portion of the repair costs, you could use an SBA home disaster loan to pay for the remaining repairs. Similarly, if you are renting and lost essential items like furniture or a refrigerator, you could apply for a loan to replace those items.

Businesses of all sizes, as well as private nonprofit organizations, can apply for Business Physical Disaster Loans to cover the cost of repairing or replacing property that was damaged or destroyed in the disaster. This includes everything from real estate to machinery, equipment, inventory, and other business assets.

Businesses can borrow up to $2 million, depending on the extent of the damage and their financial need. The goal of these loans is to help businesses recover their physical assets so they can resume operations as quickly as possible.

Example: If your small business’s storefront is damaged in a hurricane, you could apply for a Business Physical Disaster Loan to cover the cost of rebuilding the structure, replacing lost inventory, and repairing equipment.

Even if your business wasn’t physically damaged by the hurricane, it may still suffer financially due to the disaster’s impact on the local economy. For example, if your business experiences a drop in sales because customers are affected by the disaster, you may struggle to meet ongoing financial obligations, such as payroll or rent. In this case, you could apply for an Economic Injury Disaster Loan (EIDL).

EIDLs provide working capital to help small businesses meet their financial obligations during a disaster recovery period. These loans can be used to cover operating expenses, including payroll, rent, and utility bills.

Example: If your business was forced to close temporarily due to the hurricane, leading to a loss of income, an EIDL could help cover ongoing expenses like employee wages or rent until your business is able to fully reopen.

If one of your key employees is a military reservist called to active duty during a disaster, you may experience economic hardship due to their absence. In this case, you can apply for a Military Reservists Economic Injury Loan, which provides financial assistance to small businesses to cover the costs associated with the temporary loss of a key employee.

Example: If your business relies on an employee who is a military reservist and they are called away to active duty during a disaster, this loan can help offset the economic impact of their absence.

Applying for an SBA disaster loan is a relatively simple process, but it’s important to have the right documentation and information ready. Here’s a step-by-step guide to help you through the application process:

Step 1: Gather Your Documents

Before you start the application process, gather all the necessary documents to support your loan request. This may include:

• Proof of Identity — Social Security numbers for all applicants.
• Property Ownership Documents — If applying for a home or business loan, you’ll need proof of ownership for the damaged property.
• Insurance Information — Details about any insurance claims you’ve filed and what settlements you’ve received or expect to receive.
• Damage Estimates — An estimate of the cost of repairs for your damaged home, business, or property.
• Financial Records — For businesses, you’ll need recent tax returns, current profit and loss statements, and other financial documents to demonstrate your economic need.

Step 2: Submit Your Application

You can apply for an SBA disaster loan in three ways:

• Online — The fastest way to apply is through the SBA’s Disaster Loan Assistance Portal at SBA.gov.
• In Person — Visit a local SBA Disaster Assistance Center, where SBA representatives can assist with your application and answer questions.
• By Mail — You can also download a paper application from the SBA website and mail it in.

Step 3: Wait for Loan Processing

After you submit your application, the SBA will review it to determine if you qualify for the loan. This process can take a few weeks, depending on how many applications are being processed. Be sure to check your application for accuracy and completeness to avoid delays.

Step 4: Loan Approval and Disbursement

If your loan is approved, the SBA will send you a loan agreement with the terms and conditions. Once you sign the agreement and return it, the SBA will disburse the funds to your bank account.

Step 5: Use the Funds and Keep Records

Once you receive the funds, you can begin using them to repair your home, replace personal property, or restore your business. It’s important to keep detailed records of how you use the loan, as the SBA may require proof that the funds were used for approved disaster-related expenses.

There are several reasons why SBA disaster loans are one of the best resources for individuals and businesses recovering from hurricanes:

1. Low Interest Rates
   SBA disaster loans come with some of the lowest interest rates available. Homeowners and renters can qualify for rates as low as 1.813%, while businesses can benefit from rates starting around 4%.
2. Flexible Repayment Terms
   With repayment terms of up to 30 years, SBA disaster loans make it easier to manage your monthly payments without putting a strain on your finances.
3. Large Loan Amounts
   The SBA offers substantial loan amounts, with up to $500,000 for homeowners and up to $2 million for businesses, giving you the funds needed to cover large-scale repairs and rebuilding efforts.
4. Opportunity for Improvements
   SBA loans don’t just help you repair what was lost; they can also be used to make improvements that protect your property from future disasters. For example, you could use part of your loan to install impact-resistant windows or elevate your home to protect against future flooding.

If your SBA disaster loan application is denied, you still have options. You can appeal the decision by providing additional documentation or correcting any errors in your application. The SBA encourages applicants to reach out if they have questions or need guidance on what additional steps they can take to qualify.

If you’re unable to secure an SBA loan, FEMA may be able to offer additional grants or connect you with local resources for further assistance.

Recovering from a hurricane is a difficult and often lengthy process, but SBA disaster loans can provide the financial assistance needed to rebuild and restore your home, personal property, or business. Whether you’re a homeowner needing to repair your residence, a renter replacing personal items, or a business trying to recover from lost revenue, SBA loans offer the support necessary to help you get back on your feet.

At Comegys Insurance Agency, we’re committed to helping our clients through every step of the recovery process. If you have questions about SBA loans, need assistance with your insurance claims, or want to review your coverage to ensure you’re prepared for the next storm, don’t hesitate to reach out. We’re here to help you navigate this challenging time and rebuild stronger than ever.