sba disaster loan terms

SBA disaster loan terms

What are the SBA disaster loan terms?  It’s a low-cost loan offered by the Small Business Administration to businesses facing economic hardship due to a natural disaster. The COVID-19 one is, of course, specifically for businesses affected by the coronavirus.

While originally advertised as having a maximum borrowing limit of $2 million, borrowers haven’t been able to get more than $150,000 since April. But rates are still favorable – sitting at 3.75% for small businesses and 2.75% for nonprofits. Terms for the COVID-19 disaster loan are up to 30 years. What loan term you get depends on the SBA’s evaluation of your business’s ability to repay. And you can hold off on making any payments on your loan for up to 12 months. You could previously apply for a grant alongside your disaster loan — which worked as an advance of a portion of your loan that didn’t have to be repaid. But that part of the program has since run out of funding and there haven’t been any talks of putting more money toward it.

To qualify for a coronavirus disaster terms loan, your business needs to meet the SBA’s size standards. This involves a long laundry list of criteria.
The following criteria you have to meet to be approved for SBA disaster loan

  • Location
  • Credit score
  • Repayment
  • Collateral

Qualified industries

And good news for agricultural businesses. You might be able to qualify— even if you have more than 500 employees — thanks to an amendment to the SBA’s size standards. Your business also needs to have been up and running as of January 31, 2020, and operate in a qualifying industry — those involved with gambling, adult entertainment, or government lobbying aren’t eligible. But the good news for independent contractors and sole proprietorships — you ARE eligible —along with faith-based organizations and nonprofits — is just as long as you meet SBA size standards. The SBA also looks at whether you’re current on your financial responsibilities when determining eligibility.

If a co-owner with at least 50% ownership in your business is more than 60 days late on a child support payment, you’re automatically disqualified. But one requirement the SBA DOESN’T have is a credit score minimum. This can come in handy if your score has taken a hit due to lost revenue during the coronavirus outbreak.

What can I spend my SBA disaster loan on?

Let’s discuss what you can use the loan for. SBA disaster loan terms are a working capital loan. This means you can use it for expenses like your business’ rent or mortgage. Utilities and software costs you can also use to refinance your business’s existing debt and buy personal protective equipment for your employees. And this is just a SMALL list of expenses you can cover with a disaster loan. There’s MUCH more you can do with the funds — just as long as you’re using them to keep your business up and running.

Can an SBA disaster loan be used for anything?

The SBA can provide loans for the repair or replacement of the following property damaged or destroyed in a declared disaster: real estate, personal property, machinery and equipment, inventory, and business assets.

Can I use an SBA disaster loan to buy a car?

My reply to this question is “No”, you can not use it to buy a car. The SBA can provide loans for the repair or replacement of the following property damaged or destroyed in a declared disaster: real estate, personal property, machinery and equipment, inventory, and business assets.

Some other loans

  1. Working capital
  2. Line of credit
  3. Collateral based loan
  4. Equipment loan
  5. Merchant cash advance
  6. Term loan

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