SBA’s disaster assistance is in the form of low-interest loans with terms and conditions that make recovery less challenging. The goal of these loans is to help people recover from disasters and rebuild their lives by providing financial assistance to homeowners, renters, businesses and non-profit organizations of all sizes. Disaster loans are only for uninsured or uncompensated losses. These loans are direct from the federal government: they do not come from a bank.
Types of SBA Declarations: The SBA is unique in that they offer several different types of loan recovery programs following disasters.
- Administrative (Agency-only)
- Governor’s Certification
- Secretary of Agriculture
- Military Reservists
The purpose of this Fact Sheet is to summarize each of these programs and provide additional resources for future reference, which feature detailed information on how each SBA loan program functions.
Presidential IA/PA Declarations
If the President declares a major disaster declaration for IA, SBA’s disaster loan program is automatically activated for eligible homeowners, renters, businesses including private-nonprofits (PNPs) interested in applying for uncompensated physical losses as a direct result of a disaster. Eligible renters and homeowners may borrow up to $40,000 to repair or replace clothing, furniture, cars or appliances damaged or destroyed in the disaster. Homeowners may also apply for up to
$200,000 to repair or replace their primary residence to its pre-disaster condition. These loans may not be used to upgrade homes or make additions unless as required by local building authority/code. Loans may be increased up to 20 percent of the total amount of physical loss, as was verified by SBA, to make improvements that lessen the risk of property damage by future disasters of the same kind. In addition, small businesses, small cooperatives and most PNPs of any size, can apply for working capital loans to cover their economic-injury losses.
When the Preliminary Damage Assessment (PDA) indicates damages are insufficient for a Presidential declaration, the Governor of Virginia can request an Administrative (Agency-only) declaration through the SBA Administrator. The SBA disaster loan program can be activated following a formal request from the Governor of Virginia, and subsequent approval, for an SBA-only (Agency-requested) disaster declaration. One way to qualify is when: At least 25 homes and/or businesses in a county have uninsured losses of 40% or more of their estimated fair market value.
If a Governor certifies that at least five (5) small businesses in a disaster area have suffered substantial economic injury as a result of the disaster, and need financial assistance not available on reasonable terms, SBA activates its Economic Injury Disaster Loan (EIDL) program only. However, Physical Disaster Loans are not available under this type of declaration.
Secretary of Agriculture (Sec-Ag) Declaration: If the Secretary of Agriculture designates an area an agricultural disaster, SBA automatically activates its Economic Injury Disaster Loan (EIDL) program. Loans are made available to eligible small businesses, small agricultural cooperatives, or private nonprofits organizations that have suffered substantial economic injury as a result of the declared disaster. This declaration is for EIDL loans only.