SBA disaster relief loans are available to property owners, home owners and renters requiring financial assistance to repair from local catastrophes, including floods, tornadoes and fires. They can be used for a variety of purposes, including repairing physical damage caused by water or fire damage. Personal use of funds may be restricted to repairs only. It is therefore, important to clearly outline the requirements needed before applying for a loan. Be clear on what repairs or renovations will be completed and how much the loan will cost in advance of approaching lenders.
In carrying out an application for eidl round 2 SBA disaster loans, business owners must be ready to explain to lenders the type of collateral required, its total value and legal status. They should be ready to provide income statements and business documents that can prove their repaying capacity. For most borrowers, lenders require a credit report from a bank or credit union reporting past and present payments history. Business owners can improve their chances of approval of emergency loans by approaching SBA consultants who are experienced in handling SBA disaster loans. They can give good advice on managing finances in case of a declared disaster.
For borrowers, preparing for an SBA disaster loan involves documenting every expense and transaction that may affect loan repayment. This would include bank statements detailing cash flow, credit card statements detailing purchases, payment records, profit and loss accounts, inventory lists, and detailed business plans showing projected expenses and earnings.
The borrower must also obtain copies of tax returns, signed W-2 statements from each pay period covering the period for which disaster loan funds are requested, proof of down payment and collateral. Other documentation that may be needed is business insurance policies (listed as acceptable credit history on the application), business bankruptcy records if a business has filed in the past three years, and copies of zoning and building permits. Borrowers should prepare a list of their personal belongings that are required to meet loan requirements.
In order to qualify for these loans, borrowers must have the ability to repay the maximum loan amount at any one time. They must maintain an acceptable credit history and financial resources, and they must be able to prove that they will use the funds in good faith.
Because borrowers may not always be able to demonstrate these requirements in a timely manner, many lenders ask for additional documentation. For example, if borrowers own a business that creates a substantial amount of income and requires an expensive vehicle or other large item that cannot be financed, they may need to provide the lender with a security interest for the loan.
The maximum loan amount typically ranges between ten to fifteen thousand dollars. A borrower received assistance for a total of seventy-five thousand dollars, inclusive of fees. If the business was unprofitable for five years prior to receiving the loan, borrowers will not be eligible for funding under the program.
The SBA has established criteria for qualifying borrowers, including: whether the borrower owns operates, or intends to operate a small business, and whether the business generates profit. Borrowers must also agree to pay reasonable upfront fees. The upfront fees typically include application and processing fees, a fee for a marketing prospectus, and a fee for submitting the application. If borrowers fail to pay these fees, they face suspension of their license.
