Section 8.1: Dissa And Data

8.1.1: Basic Information

In the wake of hurricanes, floods, earthquakes, wildfires, tornados, and other physical disasters, the U.S. Small Business Administration plays a major role. SBA disaster loans are the primary form of Federal assistance for nonfarm, private sector disaster losses. Do not let the "Small Business" in "Small Business Administration" confuse you. If you are the victim of a physical disaster you do not have to own a business or be self-employed to receive help from the SBA. As a person who owns a home or other property, including personal property, you may apply to SBA for a loan to help you recover from a disaster. For this reason, the disaster loan program is the only form of SBA assistance not limited to small businesses. Disaster loans from SBA can help homeowners, renters, BUSINESS OF ANY SIZE, and even non-profit organizations. SBA disaster loans are a critical source of economic stimulation in disaster ravaged communities, helping to spur employment and stabilize tax bases.

By providing disaster assistance in the form of loans which are repaid to the Treasury, the SBA disaster loan program helps reduce federal disaster costs compared to other forms of assistance, such as grants. When disaster victims need to borrow to repair uninsured damages, the low interest rates and long terms available from SBA make recovery affordable. Because SBA tailors the repayment of each disaster loan to each borrower's financial capability, unnecessary interest subsidies paid by the taxpayers are avoided. Moreover, providing disaster assistance in the form of loans rather than grants avoids creating an incentive for property owners to underinsure against risk. Disaster loans require borrowers to maintain appropriate hazard and flood insurance coverage, thereby reducing the need for future disaster assistance.

The SBA is authorized by the Small Business Act of 1953 to make two types of disaster loans:

1. Physical disaster loans are a primary source of funding for permanent rebuilding and replacement of uninsured disaster damages to privately-owned real and personal property. To restate a most important point: SBA's physical disaster loans are available to homeowners, renters (for personal property losses, silly, not real estate!), nonfarm businesses of any size, and non-profit organizations.
   
   
2. Economic injury disaster loans provide necessary working capital until normal operations resume after a physical disaster. The law restricts economic injury disaster loans to "small" businesses only.
   

The penalty for misusing disaster funds is immediate repayment of one and one half the orginal amount of the loan. The SBA requires that you obtain receipts and maintain good records of all loan expenditures as you restore your damaged property and keep these receipts and records for three years.

End Section 8.1.1 ###

Section 8.2: Forms and Documents

8.2.8: Help With Your Paperwork

This book can be an aid in your investigating and successfully acquiring federal disaster assistance, including a possible SBA disaster loan. The cost of this book may be included in your loan amount (ask your loan officer) (and would you please tell us what he says) (yeah, and how he says it! Thanks!).

For more SBA information contact:
The SBA