As the flood waters recede and the process of piecing together what has been damaged begins, it’s important now more than ever to understand that there is hope for financial recovery during these devastating times. The Small Business Association (SBA) has announced they are offering low-interest Federal Disaster Assistance Loans to Businesses, Private Non Profits, Homeowners, and Renters affected by the 2019 Nebraska floods. I wanted to break down each qualifying group, as well as the details of each loan in an effort to eliminate any confusion. Here at Cruise & Associates, we strive to not only serve our clients, but also lend a helping hand in times of need.
Loan Rules & Restrictions
- Loan terms are authorized for up to 30 years, however, the loan term for businesses who can obtain credit elsewhere cannot exceed 7 years.
- All interest rates are fixed for their respective loan terms.
- Restrictions on loan eligibility include: uninsured losses, ineligible property, and noncompliance.
- For any loan, you must meet these requirements as identified by the SBA: acceptable credit history, ability to repay, and collateral for loans exceeding $25,000.
- These loans are only available to certain counties in Nebraska, and some restrictions apply in contiguous counties of Nebraska, Iowa, Kansas, Missouri, and South Dakota. To see if your county applies, visit the SBA Disaster Declaration Details website.
- The deadlines for these applications are May 20, 2019 for Physical Damage, and December 23, 2019 for Economic Injury.
Home Disaster Loans:
$40,000- Renters and homeowners are both eligible for a loan up to $40,000 to replace clothing, appliances, furniture, and cars that have been damaged in the flood.
$200,000- Only homeowners are eligible for a loan up to $200,000 to restore or replace their primary residence.
- Secondary properties, personal pleasure boats, airplanes, recreational vehicles, etc. are not eligible unless they are used for business purposes.
- This loan can NOT be used to make additions (unless specified by the building authority/code).
- Insurance coverage will be taken into account when determining how much you are eligible for.
- For those unable to obtain credit elsewhere, the interest rate will not exceed 2.063%, for those who are able to obtain credit elsewhere, the interest rate will not exceed 4.125%. The ability to obtain credit elsewhere is determined by the SBA.
Businesses and Private Non Profits:
$2 million- Up to $2 million to replace or repair real estate, inventories, machinery, equipment, and all other physical losses.
- Businesses of any size are eligible, as well as private, non-profit organizations such as charities, churches, private universities, etc.
- The interest rates for businesses will not exceed 4% for those unable to obtain credit elsewhere, for those able to obtain credit elsewhere, the interest rate will not exceed 8%. Ability to obtain credit is determined by the SBA.
- The interest rates for non-profit organizations will not exceed 2.75% for those who are unable to obtain credit elsewhere. For organizations that are able to obtain credit elsewhere, the interest rate will not exceed 2.75%. Ability to obtain credit is determined by the SBA.
Economic Injury Disaster Loans:
$2 million- Up to $2 million to alleviate economic injury to those who cannot provide their own recovery from non-government sources, as determined by the SBA.
- This loan is designed to help small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private non-profit organizations that cannot meet their financial obligations because of the flood.
- The economic injury will be determined by the SBA, which will then determine the loan amount. Business interruption insurance and other recoveries will also be taken into account when determining the loan amount.
- For businesses that cannot obtain credit elsewhere, the interest rate will not exceed 4%.
- For non-profit organizations that cannot obtain credit elsewhere, the interest rate will not exceed 2.74%
This is just a general overview of each loan available, so I encourage you to further explore these options by visiting SBA’s Disaster Declaration Details for a more in-depth description of each loan, as well as instructions for those interested in applying. Although we have been through a great natural disaster, there’s hope for great recovery.
NOTE: This information should not be considered as tax/legal advice. You should consult your tax/legal advisor regarding your own tax/legal situation. (#2539715)