In today’s global economy, changes on the other side of the world can have a surprisingly significant impact on your business. Changes in demand, supply, materials, fuel, work personnel, and many other factors can impact your bottom line in large ways.
Why Small Businesses Need SBA Disaster Loans
Small businesses often feel the effects of these market shifts more acutely than other companies. Your business may have tight profit margins or a lower threshold of available working capital, which means you don’t have as much natural flexibility in cases of financial emergencies.
The good news is that government agencies, such as the Small Business Administration, have a real interest in supporting your small business. It’s not charity on their part. The reality is that the entire U.S. economy depends on keeping small businesses healthy, despite what it seems like sometimes.
That’s the reason for the SBA disaster loan program. In addition to other types of small business loans, such as financing for real estate and equipment, SBA loans for disasters can help with immediate needs in case of unexpected downturns.
What a Disaster Loan Covers
This type of SBA loan is extraordinarily flexible. For example, if a flash flood destroyed your business property, equipment, or electronics, you can use the funds to help rebuild.
SBA disaster loans can also help your business purchase replacement inventory for items that were destroyed or lost. In some cases, the money can replace personal property used for business purposes and other types of business assets, such as vehicles used for your business.
When Disaster Loans Apply
There are a few strings attached to the SBA loan program for disasters. The biggest one is the need for disasters to be officially announced, or declared. Generally, either the U.S. president or the SBA itself must declare an emergency for your business to take advantage of this special financing.
For this reason, fires because of accidents generally don’t qualify. On the other hand, widespread forest fires, tornadoes, hurricanes, flooding, and similar problems often do.
It’s important to check the terms of any loan you apply for. In some disasters, the SBA offers loan forgiveness, potentially allowing you to restore your business without having to pay back the funds. In other cases, you must repay the loan in full, but you have long terms and low (or no) interest rates that give you plenty of time to get back on your feet.