SBA stands for Small Business Assistance Program. It is a federal government-run program which assists small businesses in the United States of America. SBA is responsible to – connect the small businesses with investors – thereby helping them execute their business plans, and expand their reach in the market.
This initiative was launched in 1953 and works under the directives of the federal government. SBA grants loans to small entities. The SBA disaster loan disbursement program has lately been very active and effective – in the wake of COVID-19. As many small businesses are finding it difficult to establish their foothold, during the ongoing pandemic, therefore, the US government is providing assistance to the small businesses to sustain in these critical times.
What is a SBA Disaster Loan?
The SBA disaster loan program was launched to assist small business owners, and individuals who have been facing losses- in the wake of natural disasters – officially declared as a national calamity by the President. The disasters include hurricanes, floods, wildfires, tornadoes or droughts, and pandemics.
Any small business – a nonprofit organization or an agricultural business that employs less than 500 individuals – are eligible to acquire the SBA disaster loan. Currently, these organizations can claim up to $2million through the SBA disaster loan disbursement program.
To acquire the SBA disaster loan, organizations need to follow four simple steps:
- application submission,
- property analysis and verification
- loan processing decision
- loan approval and disbursement funds.
SBA disaster loan program came into limelight recently, because of the coronavirus. Once the verification process is completed, the agency provides the loan directly to the borrowers. The disaster loan program not only caters small businesses, but it also helps individuals and families who have faced damages due to natural disasters. The low-interest loan is provided for long term, to benefit the borrowers making the repayment easy.
SBA disaster loan program covers many categories, namely:
- Business- related physical SBA disaster loans
- Economic injury disaster loans
- Homeowner disaster loans
- Personal property disaster loans
It takes about two to four weeks for the SBA team to finalize the decision of granting or rejecting the disaster loan. After the approval, the SBA disaster loan disbursement starts within the first five days of acceptance of the application.
SBA Disaster Loan disbursement plan:
Once the SBA disaster loan is approved, the disbursement starts immediately. This is the only loan which doesn’t have a third-party lender involved; the agency itself verifies the case, and starts the disbursement as soon as the case is approved. As the conditions are long-term with low interest to assist the borrower, the initial disbursement consists of a hefty amount, to let the borrower stand on his feet and deal with the crisis he is facing. For business loans, the initial disbursement is equal to $25000. Along with the amount, a case manager is also provided, to assist you to recognize the loan conditions, and schedule the rest of the loan disbursements.
SBA disaster loans – Eidl (economic injury disaster loans):
This category was introduced to aid the businesses and individuals who have been badly affected by the novel coronavirus financially. The loans granted are for up to 30 years, and no pre-payment is required.