Qualifying For Small Business Disaster Loans in the Event of an Emergency
Once you have decided to pursue your passion for beading and have opened up a business, you may quickly find success as an entrepreneur. However, your achievements may be short-lived due to factors you cannot control: the economy, natural disasters, industry complications. Regardless of how much insurance you have, your small business may still suffer due to variables over time.
There are a number of disaster loans developed by the government to help entrepreneurs rebuild after the unthinkable happens, according to the U.S. Small Business Association (SBA). The first of these loans is for damage to home and personal property. If your company is located in an area that the government has deemed a disaster area, you may qualify for this type of loan.
Renters and homeowners who receive this loan will be able to use up to $40,000 to replace and repair clothing, furniture and appliances that were affected by the disaster. Individuals can also apply for $200,000 to restore their property to the state it was in prior to the event, with the exception of making upgrades.
The amount of money that renters and homeowners receive through this type of loan is determined by the amount of insurance coverage they had before the natural disaster. The SBA is also unauthorized to duplicate benefits at any time.
Entrepreneurs who are eligible for the Home and Personal Property Disaster Loan but are unable to obtain credit will have an interest rate of no more than four percent. Homeowners and renters who can apply for credit will have a rate of no higher than eight percent. The SBA is responsible for determining which individuals are eligible for credit.
Repayment on a Business Physical Disaster Loan can be up to 30 years. Entrepreneurs who do not qualify for credit will receive an interest rate of no more than four percent, while all others will have a rate of up to eight percent, depending on an evaluation by the SBA.
||Business Physical Disaster Loans are another type of lending that may be available to entrepreneurs in the event of a natural disaster. If your company exists in a declared disaster zone, the SBA may offer you up to $2 million to repair items, such as machinery, business equipment, fixtures and inventory. These physical items are considered necessities to nonprofit and for-profit companies alike.
If a company is located in an area that is prone to natural disasters, the SBA may increase the loan by approximately 20 percent to prevent future damage to the property. The SBA also allows entrepreneurs to include insurance proceeds to an outstanding mortgage to their application when filing for a loan.
Economic Injury Disaster Loans are a type of assistance given to entrepreneurs after the local area has suffered as a result of the economy. Small businesses are the most common type of business that qualifies for this loan. Agricultural cooperatives also often meet the eligibility requirements of the SBA to receive economic injury disaster loans.
The goal of the SBA is to help organizations make up for the business that they otherwise would have conducted if not for the disaster. Up to $2 million may be given to a small business, depending on the extent of the damage. The SBA sends an inspector to the disaster area to determine how much assistance is needed. Loan recipients may have up to 30 years to repay them.
The last type of disaster loan that is available to small business owners is the Military Reservists Economic Injury Loan. This money may be lended to individuals who have companies that are suffering due to an employee being called to serve in the military. Small businesses that have the means to stay afloat without financial support are not eligible for this type of loan. A company must also be unable to obtain credit elsewhere in order to borrow this money.
Prior to the SBA giving the loan to a small business, it must be confident that the borrower can repay this money in a timely manner. The standard interest rate is set at four percent and entrepreneurs can have up to 30 years to repay the loan, depending on the terms of the contract.
One of the positives of the Military Reservists Economic Injury Loan is it can provide a maximum of $2 million to recipients. This can help cover operation costs and other expenses to run the business while the individual is away on military leave.
Natural disasters are an unfortunate part of life, and in some cases, there is little that small business owners can do to protect themselves from Mother Nature. You can prepare yourself to handle an emergency by researching more information on these types of loans on the SBA website before your company is forced to deal with the unthinkable.
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