Business Disaster Loans up to $300,000
When disaster strikes, how will you make repairs? Business disaster loans can help rebuild your business. Apply now with no fees, obligations, and no negative impact on your credit. See if you can get approved for up to $300,000 in less than 48 hours!
Many things can happen that turn your business and its operations upside down. While a lot of planning can go into avoiding catastrophes, they aren’t foolproof. At times, additional assistance is necessary to get through difficult times.
After the Federal Emergency Management Agency (FEMA) and other private nonprofit organizations have finished providing basic survivor needs and assistance, what is your next step to recovery? How will you recover your personal property, business assets, and meet other financial obligations? While there are several routes to secure assistance, one of the most utilized options is business disaster loans.
What Are Business Disaster Loans?
When a business finds itself within the confines of a declared disaster, whether economically or physically, it can apply for financial relief in the form of business disaster loans. If you find that your business is struggling due to disastrous conditions, there are avenues you can take, which include:
- Business Physical Disaster Loans
- Economic Injury Disaster Loans
Business Physical Disaster vs. Economic Injury Disaster
Different types of disasters can impact your business, and there are specific loans correlated with each issue. To determine which loan type is best for your situation, you’ll need to understand its terms.
When you find yourself victim to a situation such as flooding, tornadoes, earthquakes, or other environmental conditions, you are more likely to be approved for a Business Physical Disaster Loan. The amounts for this type of assistance will vary and are not a standard amount per applicant.
In the case of the Economic Injury Disaster Loan program, approval is also based on your location being the subject of an event or series of events that impact a broad area in a way that reduces financial gain or threatens the existence of commercial institutions. A prime example of this type of circumstance is the Covid-19 pandemic.
The Economic Injury Disaster Loan can also be used in conjunction with a Physical Disaster Loan, as it covers expenses related to employee needs and working capital. You can also use this funding to make ongoing debt payments and building rent.
Types of Business Disaster Loans
There are different routes that you can take to secure assistance for your business, with various programs available to fit a variety of needs. Below are some of those offered to business owners and the application requirements.
SBA Disaster Loan Options
To qualify for one of the many business disaster loans that exist, you must reside in a location that has fallen victim to a disaster of some type. For most of the options listed, the government must determine your site as being in a state of emergency to acquire funding.
Physical Damage Loans
If your place of business has experienced physical damage due to a declared disaster, you may be eligible for a Physical Damage Loan. While this program permits loans of up to $2,000,000, you will need to provide collateral for funding over $25,000. Typical collateral consists of real estate, whether the business or your home.
For those who qualify for these forms of business disaster loans, the interest rate will be within 4-8%. In addition, you can extend repayment for up to 30 years. When applying, the Small Business Administration (SBA) will assess the amount needed. SBA loans usually require a credit score of 670, but they prefer a higher score of 740+.
Loan funds can be utilized for the following purposes:
- Property Damage
- Replacement of Machinery
- Repair or Replacement of Equipment
- Necessary Adjustments to Fixtures
- Re-Stocking of Lost Inventory
- Improvements for Avoidance of Future Disaster Damage
As we briefly mentioned above, a physical damage loan can often cover expenses related to preparing for future disaster damage avoidance. This option is referred to as Mitigation Assistance, and if you choose to use loan funding for this purpose, you can be eligible for an increase of up to 20% on your loan to accommodate the alterations.
There are four different types of mitigation assistance available, including:
The terms and conditions of the additional mitigation funding will depend on your current stipulations made within your Physical Damage Loan. However, you can utilize these funds in the following ways once securing permission through the SBA:
- Deck Sealing
- Structure Elevation
- Inclusion of Landscaping to Ease Flooding
- Sump Pump Installation
- Relocation Fees
- Building Conversions
- Installations for Fire-Rated Roofing
- Addition of Mesh Screening, Gutters, and Fences
- Window Replacement
- Increasing the Strength of Current Structures
- Addition of Safe Rooms or Storm Shelters
- Installation of Hurricane Straps
Economic Injury Disaster Loans
The Economic Injury Disaster Loan (EIDL) is in place for those unable to acquire financial assistance through the other methods listed. The EIDL can be used in conjunction with other loans but is present for a different purpose than the Physical Damage Loans and the Mitigation Assistance.
When you are approved for the EIDL, you can utilize the funding for the following purposes:
- Business Working Capital
- Employee Health Care Benefits
- Building Rent
- Company Utilities
- Fixed Debt Payments
For this loan, in particular, the interest rate will not exceed 4%. Additionally, the repayment period can be up to 30 years if needed. Collateral is required if your requested amount is higher than $25,000.
Alternative Funding Options
If securing a large sum loan is not possible, or you want to look into alternative methods for getting your business back on its feet, options are available. Some of the most common avenues include smaller loans, and Merchant cash advances, among others. MCAs are available to those with a credit score of at least 500.
For some companies, acquiring a small equipment loan to replace what was lost or damaged during a disaster is sufficient. However, there are additional small business loan options through other banks and lenders that provide varied terms and interest rates to those who need them.
There are a variety of lenders who will extend a business line of credit for use during times of disaster. When you sign on for any type of loan, line of credit, or cash advance, you will be subject to different terms and interest rates.
Business Disaster Loan Qualifying Tips
When you are taking steps to apply for a loan to help your business get back on the right path, it is best to have everything lined up for the process to go smoothly and efficiently.
Most lenders will assist after the insurance company comes in. Therefore, it is vital to have everything squared away with insurance and know what they will cover before entering into talks to obtain additional resources.
It is essential to have a firm idea of what to offer as collateral if some form of it is required. Most lenders won’t require you to use your home for this purpose if your request is for less than $200,000 and you have another form of collateral to use in its place.
When applying for business disaster loans, it is pertinent to have all of your documentation completed and returned promptly. Without having the appropriate materials, the lender cannot approve your loan.
What Are the Pros and Cons of a Business Disaster Loan?
If you find yourself in a place where you need to secure financial resources to continue operating, you will want to be informed about the pros and cons of such loans.
Business Disaster Loan Advantages
When you consider the benefits of disaster relief funds, it is crucial to focus on the big picture and what the assistance will mean for your business in the long run. Some of the biggest reasons to turn to disaster loan assistance include:
- Loan Options To Fit Your Business Disaster Needs
- Access to Large Amounts of Capital
- Lower Interest Rates
Having the ability to borrow more considerable sums of money allows you to make significant headway in getting your company back to the status it once was. Additionally, assessing the different options available to find what best works for your company allows you to have more control over the circumstances and responsibilities associated with them.
Business Disaster Loan Disadvantages
As with all types of financing, taking out small business disaster loans comes with obligations that you will have to repay. While the funding will help to alleviate stress on the company, some variables can be problematic for some, including:
- Long List of Prerequisites To Qualify
- Rates Are Dependent on Credit History
- Lenders Prefer Established Businesses Over New Businesses
- Putting Up Collateral
For many individuals, finding appropriate collateral to acquire the necessary funding can be challenging. This struggle is especially so when you have not been in operation for very long. Many banks and institutions prefer those who have had a successful run of many years, and not all companies have that longevity before disaster strikes.
Frequently Asked Questions and Answers About Business Disaster Loans
Disaster assistance can take on many different forms. While you can obtain small business loans to help you navigate the situation and get your business back to where it was, you can also acquire lines of credit, grants, and cash advances.
The Disaster Relief Fund is money set aside for lending to those who have been victims of various disasters. Some loan types cover physical damage due to fires, hurricanes, and earthquakes, while some help in a pandemic or similar occurrence.
While it is not common that an SBA loan will become forgivable, there are times when the government will allow periods of forbearance. For example, during the Covid-19 pandemic, loan repayment was extended to enable businesses to get into a better place financially before tackling payments.
The specifics of what you can use your SBA disaster loan for will depend on what type of loan you obtain approval for and what the level of need is determined to be. Additionally, some SBA loans will have the ability to include mitigation elements. In this instance, you can utilize funds for securing future needs.
While you can get approved for a business disaster loan with bad credit, it will affect your interest rate. The exact amount will depend on what type of loan you acquire and which lender you utilize.
Funding Your Business Is Our Business
Business Disaster Loans Can Help Rebuild Your Business
In the end, utilizing business disaster loans during a time of need can be highly beneficial to your company’s ongoing operations. Although financing will require years of repayment, the ability to retain staff and continue serving your community far outweighs the additional obligations that you take on with loans.
Don’t Allow a Lack of Funding
to Hold your Business Back
It’s Time To Move Your Business Forward!