Q. I've heard that SBA loan applications are complicated and hard to complete. Is this true?
A. No. The application form asks you for the same information about the business and its substantial owners and managers that generally is required for a bank loan. If you need help, SBA personnel will explain the forms and give you assistance at no charge. You may use the services of accountants, attorneys or other representatives if you wish, but be sure they are reliable and that their fees are reasonable. You must report the use of a epresentative and the fees charged on your loan application.
Q. If I receive a disaster loan, may I spend the money any way I want?
A. No. The disaster loan is intended to help you return your property to its pre-disaster condition and, under certain circumstances, for mitigating devices. Normally, SBA funds cannot be used to expand or upgrade a business. If, however, city or county building codes require such upgrading, then you can use the SBA loan for that purpose. Your loan will be made for specific and designated purposes. Remember that the penalty for misusing disaster funds is immediate repayment of one-and-a-half times the original 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 that you keep these receipts and records for three years.
Q. I already have a mortgage on my business. Can the SBA refinance my mortgage?
A. In certain cases, yes. The SBA can refinance all or part of prior mortgages, 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. An SBA loan officer can provide you with more detailed information on your specific situation.
Q. Is collateral required for these loans?
A. Loans of $10,000 or less do not require collateral. Loans in excess of $10,000 require the pledging of collateral to the extent it is available. Normally the collateral would consist of a first or second mortgage on the damaged business property. In addition, personal guaranties by the principals of a business are required. The SBA will not decline a loan for lack of collateral, but you must pledge available collateral.
Q. When will I know if I get the loan?
A. That depends on when you file a complete SBA loan application. To make a loan, we must estimate the cost of repairing the damage, be satisfied that the business can repay the loan from its operations and take reasonable safeguards to help ensure that the loan is repaid. Since we process
applications in the order received, the faster you can return it with all the needed information, the faster we can work on it. We try to make a decision on each application within seven to 21 days. Be sure the information in your application is complete; missing information is the biggest cause of delay.
Q. How soon can I expect the money?
A. After we approve the loan, we will tell you what documents are needed to close the loan. Once we receive these documents, we can disburse the funds. Because our disaster loans are subsidized, the SBA provides the money in installments, as you need it to repair or replace the damage.
Q. Will the SBA check the losses I claim?
A. Yes. Once you have returned your loan application, an SBA loss verifier will visit you to determine the extent of the damage and the cost to repair or replace it.
Q. What information do I need to help me complete the loan application form?
A. Necessary information is specified in the loan application and includes: a) an itemized list of losses with your estimate of the repair or replacement cost of each item; b) a copy of certain federal income tax information (as specified on the application); c) a brief history of the business; and d)
personal and business financial statements. A contractor's estimate for repairing structural damage may be desirable, but you may make your own cost estimate if you wish. Remember to sign and date each part of the application; we cannot process it if you omit any form that requires your signature.
Q. I had to remove debris from my property after the disaster. Can this expense be included in my loan application?
A. Yes, but your own labor and that of family members cannot be included. Amounts paid to others and any equipment rental can be listed as part of repairs to real estate. Remember that the maximum loan limit on physical damage is $1.5 million, and debris removal is included in that limit.
Q. I am a farmer. Am I eligible to apply for SBA assistance for damage to my farm?
A. No, not for damage to farms. However, you may apply to the SBA only for a loan to cover the damage to your home and its contents. It may be in your interest to seek assistance first from the U.S. Department of Agriculture.
Q. I would like to get a contractor's estimate for the cost of repairing damage to my business, but I'm having difficulty in finding a contractor. Should I hold up my application until I get the estimate?
A. No. You might miss the deadline for filing your application by waiting for a contractor's estimate. If you have a contractor's estimate, include it; otherwise include your own. The SBA will verify the damage estimate in your application. The sooner you file a complete application, the faster the SBA can process it.
Q. Should I wait for my insurance settlement before I file my loan application?
A. No. Don't miss the filing deadline by waiting for an insurance settlement. The application should be returned to the SBA right away; final insurance information can be added when a settlement is made. We can approve a loan for the total replacement cost; however, you must assign the insurance proceeds to the SBA settlement.
Q. Must I use my own money or try to borrow from a bank before I come to the SBA?
A. No. The resources of the business and its principals will be considered in determining the ability of the business to obtain credit elsewhere.
Q. If my business is completely destroyed, can the SBA lend me money to relocate my business?
A. Yes. In certain circumstances, limited relocation costs can be included in the loan amount. Whenever relocation is involved, you should contact the SBA disaster office before making any commitments.
Q. Besides the damage to my property, my business suffered economically from the disaster. Do SBA loans cover these economic losses?
A. Yes they do, but only if you and your business do not have credit available elsewhere, and your business qualifies as small as defined by the SBA. The same application is used together with a supplementary form for the economic injury. The maximum amount the business and any
affiliates may borrow for any one disaster is limited to $1.5 million for both physical damage and economic injury combined. (See SBA Publication DA-3, Economic Injury Disaster Loans for Small Business.)
Q. Is flood insurance needed to get a loan?
A. If the business is in a special flood hazard area, or if the disaster damage was caused by flooding, it must have flood insurance before we can disburse a loan. If the business was legally required to maintain flood insurance but did not, then the SBA will not make a disaster loan.
A. The amount of money that the SBA will lend you will be based upon the actual cost of repairing or replacing your home and/or personal property, minus any insurance settlements or other reimbursements or grants. The total loan amount is subject to the limits set out above.
Q. Must I use my own money or try to borrow from a bank before coming to the SBA?
A. No.
Q. I already have a mortgage on my home. I can't afford a disaster loan plus my current mortgage payment. Can the SBA refinance my mortgage?
A. In certain cases, yes. The SBA can refinance all or part of prior mortgages, 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. An SBA disaster loan officer can provide more detailed information on your specific situation.
Q. What information do I need to submit for a home and/or personal property loan?
A. The necessary information is specified in the loan application. In all cases, it includes an itemized list of personal property losses with the repair or replacement cost of each item. It also includes permission for the IRS to give the SBA information from your last two federal income tax returns. If you have pictures of the damaged property, you can include them as well.
Q. Will the SBA check the losses I claim?
A. Yes. Once you have returned your loan application, an SBA loss verifier will visit you to determine the extent of the damage and the reasonableness of the loan request.
Q. How soon will I know if I qualify for a loan?
A. That depends on how soon you file a complete SBA loan application. The SBA disaster relief program is not an immediate emergency relief program such as Red Cross assistance, temporary housing assistance, etc. It is a loan program to help you in your long-term rebuilding and repairing. To make a loan, we have to know the cost of repairing the damage, be satisfied that you can repay the loan, and take reasonable safeguards to help make sure the loan is repaid. The SBA loan application asks for the information we need. The faster you return it with all the needed information, the faster we can work on it. We try to make a decision on each complete application within seven to 21 days. Applications filed early can be completed in a much shorter
time. We process applications in the order received, so file early. Be sure your application is complete; missing information is the biggest cause of delay.
Q. How soon can I expect the money?
A. Loans over $10,000 have to be secured. We won't decline a loan just because you do not have enough collateral, but we do ask for whatever collateral is available. This means that after a loan is approved there are other steps you must take. Usually, the security consists of a first or second
mortgage on the damaged real estate. After we approve the loan, we will tell you what documents are needed to close the loan. You return the loan-closing documents to us, we can order the checks. You will receive the money in installments as you need it to repair or replace the damage.
Q. Should I wait for my insurance settlement before I apply to the SBA?
A. No. If you do not know how much of your loss will be covered by insurance or other sources, the SBA will consider making a loan for the full amount of the loss, up to our loan limits, provided that you assign the insurance check to the SBA to reduce the amount of the loan.
Q. I would like to get a contractor's estimate for the cost of repairing damage to my home, but I'm having trouble finding one. Should I hold up my application until I get the estimate?
A. No. You might miss the deadline for filing your application while waiting for a contractor's estimate. If you have an estimate, include it. The SBA will verify any damage estimates listed on your loan application. Also, the sooner you file a completed application, the sooner the SBA can process it.
Q. If I receive a disaster loan, may I spend the money any way I want?
A. No. The disaster loan is intended to help you return your property to the same condition it was in before the disaster. Your loan will be made for specific and designated purposes. Remember that the penalty for misusing disaster funds is immediate repayment of one-and-a-half times the original 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 that you keep these receipts and records for three years.
Q. If my home is completely destroyed, can the SBA lend me money to relocate my home somewhere else?
A. If you are unable to obtain a building permit to rebuild or replace your home at its original site, the cost of relocating your home might be included in the loan amount. If, however, you decide to relocate your home without being required to, an SBA loan can be obtained only for the exact amount of the damage. SBA can not make loans involving some relocations. An SBA disaster loan officer can provide more detailed information on your specific situation.
Q. I am a farmer. My home was damaged, and so were my barns, fences, and some of my crops. Am I eligible to apply for SBA assistance?
A. You may apply to the SBA for a loan to cover the damage to your home and its contents only. But it may be in your interest to seek assistance first
from the U.S. Department of Agriculture for all your damage.
Q. Are secondary homes or vacation homes eligible for loans?
A. No, not as homes. They may be eligible for business disaster loans under certain conditions. SBA will also consider situations where a family member may occupy a property owned by someone else in the family, i.e. , extended family.
Q. Are there any other limitations?
A. Yes. Generally, loans will not be made for damage to personal pleasure boats, planes, recreational vehicles, antiques, collections, etc. Also, amounts for landscaping, family swimming pools, etc., are limited.
Q. Is there a minimum monthly payment, and when would the first payment be due?
A. The SBA does not have a minimum monthly payment. Payments vary depending upon income and expenses, size of family and other circumstances that may affect your repayment ability. Generally, the first payment is not due until five months after the date of the loan.
Q. I had to remove debris from my property after the disaster. Can this expense be included in my loan application?
A. Yes, but your own labor and that of family members cannot be included. Amounts paid to others and any equipment rental can be listed as part of repairs to real estate. Remember that the maximum loan limit on real estate damage is $200,000, and debris removal is
included in the limit.
Q. May people over the age of 65 apply for help from the SBA?
A. Yes. Loans are made without regard to age.
Q. I've heard that SBA loan applications are complicated and hard to complete. Is this true?
A. No. The application form asks you the same information that any bank would request before lending you money. If you need help, SBA disaster personnel are available to explain the forms and give you assistance at no charge. You may use the services of accountants or attorneys if you
wish, but be sure they are reliable and that their fees are reasonable. If you choose to use an attorney or an accountant, you must report those fees on your SBA loan application form.
Q. Are damages to cars and mobile homes eligible?
A. Generally, yes. The loan would be only for uninsured losses.
Q. Do I need flood insurance to get a loan?
A. If you are in a special flood hazard area, you must have flood insurance before we can disburse a loan. The amount of insurance required is the insurable value of the property in the special flood hazard area but not to exceed the maximum flood insurance available under the National Flood Insurance Act.
This is for informational purposes only. For complete information about a particular program, use the link provided under eligibility or contact the sponsoring agency.
203(h) Mortgage Insurance for Disaster Victims
Helps victims in presidentially-designated disaster areas recover by making it easier to obtain mortgages to purchase a new home or rebuild their home that was damaged by a disaster.
Loans to homeowners or renters to repair or replace disaster-damaged real estate or personal property owned by victim. Renters are eligible for personal property losses, including automobiles. Homeowners may apply for up to $200,000 to repair or replace their primary residence to its pre-disaster condition.
To receive money or help for Housing Needs that are the result of a disaster, all of the following must be true:
You have filed for insurance benefits and the damage to your property is not covered by your insurance
You or someone who lives with you is a citizen of the United States, a non-citizen national, or a qualified alien
Your home is in an area that has been declared a disaster area by the President
The home in the disaster area is where you usually live the majority of the year
You are not able to live in your home now, you cannot get to your home due to the disaster, or your home requires repairs because of damage from the disaster
Funds for rehabilitation to resolve health and safety issues such as weatherization, structural problems (leaking roof, etc.) or systems failures (heating, septic, etc.); rehabilitation needed to meet Housing Quality Standards or correct municipal or state code violations; and, access modification for elderly or disabled homeowners.
Funds for home repair for energy efficiency improvements, heating systems, including alternative fuel heating sources such as pellet stoves; accessibility modifications, including ramps roof and foundation repairs, wells and septic systems, and plumbing and wiring.
This is for informational purposes only. For complete infomation about a particular program, use the link provided under eligibility or contact the sponsoring agency.
Business Physical Disaster Loans
Provides physical disaster loans of up to $2 million to qualified businesses or private, nonprofit organizations.
Any business or private, nonprofit organization that is located in a declared disaster area and has incurred damage during the disaster may apply for a loan to help replace damaged property or restore it to the condition it was in before the disaster.
Provides working capital loans to help small businesses meet the normal financial obligations that business or private nonprofit organization could have met had the disaster not occurred. These loans are intended to assist during the period affected by the disaster.
Small businesses, small agricultural cooperatives and certain private nonprofit organizations of all sizes that have suffered substantial economic injury resulting from a physical disaster or an agricultural production disaster (as designated by the Secretary of Agriculture) Available only to small businesses determined unable to obtain credit elsewhere.
Emergency loan program to help family farmers recover from losses resulting from natural disasters to: repair or replace buildings or other structures, purchase livestock and equipment, pay essential farm operating and family living expenses, refinance debt, and repair or replace essential household contents damaged in the disaster.
Must be a U.S. citizen or permanent resident who owns or controls farm/ranch land, who has suffered production or property losses from a natural disaster (including severe drought) and who has been denied a loan by a commercial lender
Must have an acceptable credit history; not have received debt forgiveness from the Agency
Must not have had any controlled substance convictions
For production loss loans, the applicant must have suffered at least a 30 percent loss in yield
Low interest loans of up to $100,000 to assist businesses, farms & non-profits in recovery from direct physical damages due to Hurricane Irene storm damages.
All types of businesses and farms that sustained flood related damage, including but not limited to damage to or loss of inventory, equipment, business premises, working capital, crops, animals, feed or other supplies.
Many individuals and businesses have been significantly impacted by Tropical Storm Irene.
Contact your lender directly, if you have a mortgage or loan payment due and are uncertain what to do. Lenders have been encouraged to the extent possible to assist borrowers and other customers affected by Irene. Some lenders have special programs to assist borrowers affected by natural disasters. If you have difficulty contacting your lender, the Banking Division will assist you.
