Loans from SBA Offered to Victims of Disasters

[Jul 1, 2009.]

 

West Virginians still time to apply for a disaster loan from the U.S. Small Business Administration (SBA). Homeowners, renters, businesses and nonprofits can apply for loans if they suffered property damage from severe storms, flooding, mudslides, and landslides from May 3 through June 8, 2009.  

The SBA offers loans throughout the U.S. to victims who live in a declared disaster area. Some previous recipients of disaster loans have suffered property damage due to hurricanes, floods, wildfires, and tornados. Other states where disaster victims may currently be eligible for an SBA loan include Alabama, Florida, and Kentucky.

Loans Can Be used for Repairs

The SBA disaster loans of up to $200,000 can be used to repair primary residences. Loans up to $40,000 are also available for homeowners and renters to replace personal property, such as furniture and clothing. Loans for businesses and nonprofits-up to $2 million-can be used to repair damage to real estate, machinery, inventory, and equipment. Economic injury disaster loans provide working capital to businesses and nonprofits.

A Low-Interest Rate Loan

The loans are offered at rates that can be as low as 2.437% for homeowners and renters, and 4% for businesses. Terms can be for as long as 30 years. The SBA sets the terms of any loan received and bases it on the individual applicant's financial situation. To receive a disaster loan, recipients must:

• Have an acceptable credit history


• Be able to repay it


• Have collateral for physical loss loans over $14,000 and economic injury disaster loans over $5,000.

Loans to Prevent Future Damage

Mitigation loans are also available to pay for improvements to protect a property from future damage. Those improvements might include sump pumps, retaining walls, or sea walls. Mitigation loans are made only if a disaster loan has been approved.

Disaster victims who have insurance should go ahead and apply for a SBA loan instead of waiting for an insurance settlement. Even if victims don't know how much their insurance will pay out, the SBA might loan them money. Recipients of a loan would have to agree to use any future insurance payouts to reduce or repay an SBA loan.

People seeking help in West Virginia can visit an SBA center to fill out an application. They can also call 1-800-659-2955 to get more information or download a loan application online. The deadline to apply for a physical disaster loan in the state is July 14, 2009. The deadline for an economic injury loan is Feb. 15, 2010.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.