If your home is damaged in a declared disaster area, you may be eligible for a loan from the U.S. Small Business Administration. Businesses, homeowners and renters may apply for these loans to pay recovery costs not covered by insurance.

Renters and homeowners alike may borrow up to $40,000 in personal property loans to repair or replace clothing, furniture, cars or appliances damaged or destroyed in the disaster. Homeowners may apply for Real Property Loans of up to $200,000 to repair or restore a main residence to its pre-disaster condition. The loans may not be used to upgrade homes or make additions. Loans may be increased up to 20 percent for structural improvements to lessen property damage by future disasters. Second homes or vacation properties are not eligible for these loans but may qualify for disaster business loans under certain conditions.

Any proceeds from insurance coverage on your property or home will be deducted from the total damage to the property to determine the loan amount you are eligible for. For applicants unable to obtain credit elsewhere the interest rate won’t exceed 4 percent. For those who can obtain credit elsewhere, the interest rate is no more than 8 percent. The SBA offers terms of up to 30 years for repayment. Terms are determined case-by-case.

Frequently asked questions about SBA disaster loans include:
How much can I borrow?
The amount the SBA will lend depends on the cost of repairing or replacing your home and/or personal property, minus any insurance settlements or grants.

I already have a mortgage on my home. I can’t afford a disaster loan and my mortgage payment. Can the SBA refinance my mortgage?
The SBA can refinance all or part of a previous mortgage in some cases when the applicant does not have credit available elsewhere, has suffered substantial disaster damage not covered by insurance, and intends to repair the damage.

What information must I submit for a home and/or personal property loan?
You submit the loan form and permission for the IRS to provide the SBA information from your last two tax returns.

How soon before I know I have been approved for a loan?
The SBA disaster assistance program helps with long-term rebuilding and repair of damaged property, unlike immediate emergency relief provided by American Red Cross. To make a loan, we must know the repair cost, be assured that you can repay the loan, and take reasonable safeguards to make sure the loan is repaid. The sooner you return the completed loan application, the sooner the SBA can process the application. The SBA tries to make a decision on each application within seven to 21 days. Make sure the application is complete; missing information causes delays.

Is collateral required for these loans?
Loans over $10,000 must be secured. The SBA won't decline a loan if you don't have enough collateral, but will ask for whatever collateral is available. That usually consists of a first or second mortgage on the damaged real estate.

Should I wait for my insurance settlement before I file my loan application?
No. Don't miss the filing deadline by waiting for an insurance settlement. Final insurance information can be added after a settlement is made. The SBA can approve a loan for the total replacement cost, but the insurance proceeds must be applied to the SBA loan balance.

Residents and business owners can begin the disaster application process by registering online with FEMA at http://www.fema.gov/ or by calling FEMA at 800/621-3362. For more information, visit SBA's Web site at www.sba.gov/disaster, or call the Disaster Customer Service Center at 800/659-2955 or 800/877-8339 for those who are hearing impaired.

SBA hurricane recovery centers
Louisiana - http://www.sba.gov/disasterarea3/SBA_LA_OFC.pdf

Texas - http://www.sba.gov/disasterarea3/SBA_TX_OFC.pdf

Mississippi - http://www.sba.gov/disasterarea2/mississippi-hurricane-katrina-office-locations.pdf

Alabama - http://www.sba.gov/disasterarea2/alabama-hurricane-katrina-office-location.pdf

Filing Deadlines
Hurricane Katrina (physical damage)–Oct. 28, 2005
Hurricane Katrina (economic injury) –May 29, 2006
Hurricane Rita (physical damage) – Nov. 23, 2005
Hurricane Rita (economic injury) – June 26, 2006

What types of disaster loans are available?

• Home Disaster Loans – Loans to homeowners or renters to repair or replace disaster-damaged real estate or personal property owned by the victim. Renters are eligible for their personal property losses, including automobiles.

• Business Physical Disaster Loans – Loans to businesses to repair or replace disaster-damaged property owned by the business, including real estate, inventories, supplies, machinery and equipment. Businesses of any size are eligible. Nonprofit organizations such as charities, churches, private universities, etc., are also eligible.

• Economic Injury Disaster Loans (EIDL) – Loans for working capital to small businesses and small agricultural cooperatives to assist them through the disaster recovery period. EIDL assistance is only available to applicants and their owners who cannot provide for their own recovery from nongovernment sources. Farmers, ranchers, nurseries, religious and nonprofit organizations are not eligible for an EIDL.

What are the credit requirements?

• Credit history – Applicants must have a credit history acceptable to SBA.

• Repayment – Applicants must show the ability to repay all loans.

• Collateral – Collateral is required for physical loss loans over $10,000 and all EIDL loans over $5,000. SBA takes real estate as collateral when it is available. SBA will not decline a loan for lack of collateral, but requires you to pledge what is available.

What are the interest rates?
By law, the interest rates depend on whether each applicant has "Credit Available Elsewhere." An applicant does not have Credit Available Elsewhere when SBA determines the applicant does not have sufficient funds or other resources, or the ability to borrow from non-government sources, to provide for its own disaster recovery. An applicant that SBA determines to have the ability to provide for his or her own recovery is deemed to have Credit Available Elsewhere. Interest rates are fixed for the term of the loan, are determined by formulas set by law, and may vary from disaster to disaster with market conditions. Currently (for disasters that occurred on or after Aug. 1, 2005) the applicable interest rates are:

What are loan terms?
The maximum term is 30 years. However, the law restricts businesses with credit available elsewhere to a maximum three-years term. SBA sets the installment payment amount and corresponding maturity based upon each borrower's ability to repay.

What are the loan amount limits?

• Home loans – SBA regulations limit home loans to $200,000 for the repair or replacement of real estate and $40,000 to repair or replace personal property. Subject to these maximums, loan amounts cannot exceed the verified uninsured disaster loss.

• Business loans – The law limits business loans to $1.5 million for the repair or replacement of real estate, inventories, machinery, equipment and all other physical losses. Subject to this maximum, loan amounts cannot exceed the verified uninsured disaster loss.

• Economic injury disaster loans (EIDL) – The law limits an EIDL to $1.5 million for alleviating economic injury caused by the disaster. The actual amount of each loan is limited to the economic injury determined by program standards, less business interruption insurance and other recoveries up to the administrative lending limit. SBA also considers potential contributions that are available from the business and/or its owner(s) or affiliates.

• Business loan ceiling – The $1.5 million statutory limit for business loans applies to the combination of physical and economic injury, and applies to all disaster loans to a business and its affiliates for each disaster. If a business is a major source of employment, SBA has the authority to waive the $1.5 million statutory limit.

What restrictions are there on loan eligibility?

• Uninsured losses – Only uninsured or otherwise uncompensated disaster losses are eligible. Any insurance proceeds which are required to be 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 only to the extent of their functional value. Amounts for landscaping, swimming pools, etc., are 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 or federally insured loans.

Is there help available for refinancing?

• SBA can refinance all or part of prior mortgages that are evidenced by a recorded lien, when the applicant (1) does not have credit available elsewhere, (2) has suffered substantial uncompensated disaster damage (40 percent or more of the value of the property), and (3) intends to repair the damage.

• Homes – Homeowners may be eligible for the refinancing of existing liens or mortgages on homes, in some cases up to the amount of the loan for real estate repair or replacement.

• Businesses – Business owners may be eligible for the refinancing of existing mortgages or liens on real estate, machinery and equipment, in some cases up to the amount of the loan for the repair or replacement of real estate, machinery, and equipment.

What if I decide to relocate?
You may use your SBA disaster loan to relocate. The amount of the relocation loan depends on whether you relocate voluntarily or involuntarily. If you are interested in relocation, an SBA representative can provide you with more details on your specific situation.

Are there insurance requirements for loans?
To protect each borrower and the agency, SBA may require you to obtain and maintain appropriate insurance. By law, borrowers whose damaged or collateral property is located in a special flood hazard area must purchase and maintain flood insurance for the full insurable value of the property for the life of the loan. (10/13)