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Home > Disaster Planning > SBA Physical Disaster Loans

If your buisness -- large or small -- has suffered physical damage as a result of a disaster, you may be eligible for financial assistance from the U.S. Small Business Administration.

Any business that is located in a declared disaster area and has incurred damage during the disaster may apply for a loan to help repair or replace damaged property to its pre-disaster condition. The SBA makes physical disaster loans of up to $1.5 million to qualified businesses.

Use Of Proceeds

Repair or replacement of real property, machinery, equipment, fixtures, inventory and leasehold improvements may be included in the loan. In addition, disaster loans to repair or replace real property or leasehold improvements may be increased by as much as 20 percent to protect the damaged real property against possible future disasters of the same type.

SBA loans will cover uninsured physical damage. If you are required to apply insurance proceeds to an outstanding mortgage on the damaged property, you can include the amount applied in your disaster loan.

Interest Rates

The interest rate that the SBA charges on a disaster loan is determined by your ability to obtain credit elsewhere - that is, from nonfederal sources.

If You Cannot Obtain Credit Elsewhere

If the SBA determines that the business (or nonprofit organization) is unable to obtain credit elsewhere (considering the cash flow and assets of the business, its principals and affiliates), the law sets a maximum interest rate of 4 percent per year.

The maximum maturity for such business disaster loans is 30 years. However, the actual maturity is based on your ability to repay the loan.

If You Can Obtain Credit Elsewhere

For businesses that the SBA has determined are able to obtain credit elsewhere, the interest rate cannot exceed that being charged in the private market at the time of the physical disaster or 8 percent, whichever is less. The maturity of this loan cannot exceed three years.

Note: Charitable, religious, nonprofit and similar organizations with the ability to obtain credit elsewhere are eligible for physical disaster loans for up to 30 years at an interest rate based upon a different statutory formula. The nearest SBA disaster office can supply you with the interest rate.

Physical Disaster Loan FAQ