Leah Androski
ECB Publishing, Inc.
Small business owners might be eligible for financial assistance from the U.S. Small Business Administration (SBA). The SBA is helping small businesses and households that suffered damage from Hurricane Idalia.
Here are some loan options that may apply to you and their amount limits:
• Business Physical Disaster Loans — repair or replace disaster-damaged property owned by a business. This includes real estate, inventories, supplies, machinery and equipment. Businesses of any size are eligible. Private, non-profit organizations such as charities, churches, private universities, etc., are also eligible. The law limits $2,000,000 for repairing or replacing real estate, inventories, machinery, equipment and other physical losses. Loan amounts cannot exceed the set limit.
• Economic Injury Disaster Loans (EIDL) — Working capital loans to help small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, non-profit organizations of all sizes. This is intended to assist through the disaster recovery period. The law limits EIDL to $2,000,000 for helping economic injury caused by the disaster. The amount of each loan is limited based on the economic injury determined by SBA. EIDL assistance is available only to businesses and their owners who cannot provide for their own recovery from non-government sources, which is also determined by SBA.
• Home Disaster Loans — offered to homeowners or renters to help repair or replace disaster-damaged real estate and personal property, which also includes automobiles. SBA limits home loans to $500,000 for repairing or replacing real estate. The SBA limits $100,000 to repairing or replacing personal property. The amount of these loans cannot exceed the set limit.
The Business Loan Ceiling of $2,000,000 is a statutory limit for business loans and applies to the combination of physical, economic injury, mitigation and refinancing. If a business is a major source of employment, SBA can waive this limit.
Restrictions on loan eligibility are as follows:
• Uninsured Losses — Only uninsured or otherwise uncompensated disaster losses are valid. Any insurance proceeds which are applied against outstanding mortgages are not available to fund disaster repairs and do not reduce loan eligibility. However, any insurance proceeds voluntarily applied to any outstanding mortgages do reduce loan eligibility.
• Ineligible Property — Secondary homes, personal pleasure boats, airplanes, recreational vehicles and similar property are not eligible, unless used for business purposes. Property such as antiques and collections are eligible based on their functional value. Amounts for landscaping, swimming pools, etc., are also limited.
• Noncompliance — Applicants who have not complied with the terms of previous SBA loans are not eligible. This includes borrowers who did not maintain flood and/or hazard insurance on previous SBA loans.
Applicants must have a credit history that is accepted by the SBA and applicants must show the ability to repay all loans. Loan terms are set depending on the borrower’s ability to repay. The law sets a maximum of 30 years for the borrower to repay. However, the law also restricts any businesses with credit elsewhere a maximum seven year term. Borrowers may be required to provide collateral. Loan applicants should check with agencies or organizations with any grants or other assistance programs to determine how a SBA disaster loan may affect their eligibility.
If a loan is approved, a business owner may be eligible for additional money to cover costs of improvements that will protect property. Examples of improvements are as follows: retaining walls, seawalls, sump pumps, etc. Mitigation loan money would be in addition with the amount of the approved loan but will not exceed 20 percent of total amount of physical damage to real property, including leasehold improvements and personal property accepted by the SBA with a maximum of $500,000 for home loans. There is no need to describe the improvements and cost estimates to be submitted with the loan application. SBA approval of the mitigating measured will be required before any loan increases.
SBA can refinance all or part of mortgages when the applicant does not have credit available anywhere else, has suffered substantial uncompensated disaster damage (40 percent or more from the value of the property or 50 percent or more of the value of the structure) and intends to repair the damage. Business owners may be eligible for the refinancing of existing mortgages on real estate, machinery and equipment, up to the amount of the loan for repairing or replacing real estate, machinery and equipment. Homeowners may be eligible for refinancing existing liens or mortgages on homes, up to the amount of the loan for repairing or replacing real estate.
The SBA disaster loan may be used to relocate. The amount of relocation loan depends on whether the relocation is voluntarily or involuntarily. For those interested in relocating, an SBA representative can share more details on the situation. To protect each borrower and the Agency, SBA may require applicants to obtain and maintain the correct insurance.
The application deadlines are October 30, 2023, for any physical damage and any economic injury is due on May 31, 2024. To apply online visit, https://disasterloanassistance.sba.gov/ela. For more information, email disastercustomerservice@sba.gov or call the SBA’s Customer Service Center at (800)- 659-2955.