Businesses, Nonprofit Organizations Get Smart About Low-Interest Disaster Loans

WINDSOR, Conn. — Businesses and nonprofit organizations are discovering a low-interest disaster loan from the U.S. Small Business Administration is a smart business decision.

Disaster loans provide funding for private sector recovery and are being used to:

• Repair or replace buildings and business assets, such as equipment and inventory;
• Meet payroll and lease obligations during business downtime caused by the disaster;
• Refinance existing liens; and
• Make improvements to protect against future damage.

“Disaster loans from the SBA are the major source of federal disaster recovery assistance,” said Federal Coordinating Officer Albert Lewis of the Federal Emergency Management Agency. “The interest rates are low—as low as 4 percent for businesses and 3 percent for nonprofits.”

SBA offers businesses and nonprofits two types of disaster loans: a Physical Disaster Loan and an Economic Injury Disaster Loan.

Physical Disaster Loans are used to repair or replace damaged buildings and business assets. Economic Injury Disaster Loans help small businesses, small agricultural cooperatives, aquaculture businesses and most private nonprofits meet financial obligations that they cannot meet because of the disaster.

Business owners may also be eligible to refinance existing liens or mortgages.

Applications from the SBA are mailed to most survivors who register for assistance with FEMA. No one is obligated to accept a loan if offered.

SBA low-interest disaster loans for businesses have several advantages:

• SBA requires no collateral for physical loans less than $14,000 or economic injury loans less than $5,000. SBA requires the borrower to pledge as collateral only what is available, plus satisfactory credit and the ability to repay.

• Applicants don’t have to wait for insurance settlements to obtain loans.

• Loans are written for a length of time appropriate to the type of loan, but SBA may make adjustments in the length to lower the monthly payments.

• SBA offers mitigation loans to help pay for improvements to reduce potential for future damage. These mitigation funds are available for up to 20 percent of the total amount of disaster damage.

• SBA never charges an application fee or points for its disaster loans.

By law, SBA business loans cannot exceed $2 million.  If a business is a major employer, SBA may waive the limit.

The deadline to file for a Physical Damage Disaster Loan is Dec. 31. The deadline for an Economic Injury Disaster Loan is July 31, 2013.

No one is obligated to accept a loan if approved. SBA gives applicants six months to decide whether to accept a loan.

SBA has opened a Business Recovery Center in Fairfield County at the Fairfield County SCORE office, 111 East Ave., Norwalk, CT  06851. The center is staffed from 9 a.m. to 5:30 p.m., Monday through Friday. 

The SBA offers online an application through its Electronic Loan Application site at https://DisasterLoan.SBA.gov/ela. Survivors can call the SBA’s Disaster Assistance Customer Service Center at 800-659-2955, or visit the SBA’s website at www.sba.gov/sandy.