Veterans who own small businesses aren’t immune from the economic realities of a disaster. It doesn’t matter if it’s a global pandemic such as the COVID-19/coronavirus emergency or a localized flood that affects a comparatively small number of people. Economic fallout from a disaster affects veterans, their families, even the customers of those who came to rely on veteran-owned businesses prior to the emergency.
The Small Business Administration (SBA) offers disaster loan assistance to business owners and home owners; this help is especially useful for veterans who may be one or both. How can SBA programs assist you as a veteran home owner or an owner-operator?
In Times Of Disaster, SBA Is Not Just For Businesses
The official site at SBA.gov has a wealth of resources for those in need of financial help after a disaster, but not just for businesses (veteran owner and operated or otherwise).
Homeowners and renters can find important disaster recovery assistance via the SBA, thanks to their homeowner and renter disaster relief options. Don’t let the word “business” in the name of the agency fool you into thinking there are no programs for homeowners and renters who do not run a commercial enterprise. There definitely are.
Small Business Administration Programs: Not Just For Business As Usual
There are two basic “lanes” (our term, not theirs) that SBA programs fall into for the purposes of this discussion.
One is for working entrepreneurs and those who aspire to start a business of their own. The second lane is for business people and homeowners affected by disasters. Both lanes are great for veterans who need SBA services and programs, but the disaster relief portion of the SBA mission is a critical service for vets and non-vets alike.
What SBA Offers Veterans And Non-Veteran-Owned Businesses
The SBA offers disaster assistance via low-interest loans. The SBA does not issue these loans; that is up to the participating lenders. These loans can be used by both veteran and non-veteran:
- Businesses
- Renters
- Homeowners
For those who need these programs there are two options; economic injury and physical damage caused by a disaster.
SBA literature about these programs includes the following line, as found on the SBA official site. “If your insurance, and funding from the Federal Emergency Management Agency (FEMA), doesn’t fully cover the disaster assistance you need, you can use disaster loans for a number of purposes.”
Register with Both SBA and FEMA
Many SBA options may require the borrower to apply for assistance via FEMA either as a condition of the program or to facilitate the assistance. It is also crucial to re-examine your options under FEMA as many exceptions have been passed in the advent of the global coronavirus pandemic that suspend, override, provide exceptions for, or otherwise amend existing rules on federal financial assistance.
In other words, don’t assume that the same rules are at work today that applied to the last disaster you may have had experience with in terms of seeking aid and assistance. The rules have been changed in many cases, suspended or re-worked in others.
Disaster Loan Assistance Options
There are a wide variety of options from the SBA for recovering from a disaster. Veterans who own homes and/or businesses affected by a disaster of any kind should first check to see if their area has been designated as a Presidentially-Declared Major Disaster Area or federally-declared disaster area.
SBA loans are available for those in federal disaster areas. If you live in a place that has not yet received such a declaration, you can get updates on the latest declarations at the FEMA official site Disaster page and at the SBA Current Declared Disasters page.
Once you have verified that your area is included in such a declaration, as a veteran business owner, veteran homeowner, (as well as non-vets) you can apply for both FEMA and SBA help.
SBA Programs
Small Business Administration economic relief comes in the form of:
- Economic Injury Disaster Loans
- Loan Advances
- Home Loans
- Sole Proprietor Loans
Disaster Loans For Veteran-Owned and Non-Veteran Owned Businesses
Those who wish to apply for a COVID-19 Economic Injury Disaster Loan and Loan Advance may be eligible for an Economic Injury Disaster Loan advance of up to $10,000. The Disaster Loan program itself offers small businesses loans intended to provide working capital. These loans can be as high as $2 million to help offset revenue losses during the COVID-19 crisis.
You could receive such funds “within three days of a successful application” and the loan advance does not have to be paid back.
Disaster Loans For Homeowners
Economic Injury Disaster Loans are also available to residents in declared disaster areas. If you have a VA mortgage, your first act should be to contact your loan servicer to discuss loan modification, loan forbearance, or other options.
But you should also contact the SBA to learn what your options are (based on your individual circumstances) for a disaster loan for homeowners and renters. Veterans and civilians who do not own homes but rent instead may also qualify for this relief.
Register With FEMA First
For home loans, and those who need relief associated with rental properties, registration with the Federal Emergency Management Agency is required because you must submit a FEMA Registration ID Number with your SBA loan application information.
Call 1-800-621-3362 prior to applying for an SBA loan, as per the SBA official site.
To apply, you will need to register with FEMA as mentioned above, submit a completed loan application, plus a signed and dated IRS form 4506-T “giving permission for the IRS to provide SBA your tax return information” according to the SBA.
Call The SBA For Assistance
Contact the SBA at 800-659-2955 to get information on where to obtain the loan application form–at press time the link on the SBA official site was not working.
SBA Disaster Loan amounts for homes and rentals will vary depending on circumstances. The SBA official site advises that the loan total depends on the costs of repairing or replacing property, “minus any insurance settlements or grants.”
At press time, “Renters and homeowners alike may borrow up to $40,000 to repair or replace personal property. Homeowners may apply for up to $200,000 to repair or replace their disaster damaged residence” according to the SBA.
Remember, these loan amounts may be affected by other disaster-related economic relief you have applied for or are currently receiving including any help from other government agencies such as the VA, FHA, or other avenues.
Common Questions About SBA Disaster Relief
Am I risking anything by applying for SBA assistance before my insurance settlement is final?
SBA literature advises that you apply immediately for disaster loans and other assistance for two important reasons–one is that there are filing deadlines you could miss by waiting, and also SBA loans are adjusted based on such settlements and those adjustments can be made at a later date according to the SBA.
What are the maximum loan amounts?
Disaster loan amounts will vary but in general the maximums include:
- $40,000 maximum for renters to repair or replace personal property
- $40,000 maximum for home owners to repair or replace personal property
- $200,000 to repair or replace a disaster-damaged residence
- $2,000,000 for businesses to repair or replace damaged property or economic injury
What is the interest rate on these loans?
SBA.gov states that disaster loan interest rates are set by law. “SBA assigns an interest rate to a loan based on the resources available to an applicant.” The “lower interest rate” will not exceed 4%; those offered interest rates “associated with current market rate” will not pay more than 8%. These are fixed-rate loans.
Is any collateral or guarantee required from the borrower?
SBA disaster loans higher than $25,000 “must be secured to the extent possible” but borrowers will not be turned down simply because they don’t have enough collateral. SBA will require “whatever collateral is available which may include real estate owned by a business’ principals,” according to the official site.
Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News
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