Disaster Loans

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When faced with financial recovery from a natural disaster, many homeowners turn to the Federal Emergency Management Agency (FEMA). Col. Kevin Shwedo, South Carolina's state disaster recovery coordinator, says “there’s the perception that FEMA has bottomless pockets, a perception that FEMA is going to solve all of your problems." FEMA spokesman Carl Henderson said that is a “big misconception.” FEMA can award a maximum of $33,000 to each household or individual [1]. This $33,000 cap often fails to fully reimburse households for damage to their property, so some people turn to the SBA and apply for Disaster Recovery Loans. SBA disaster loans are the primary source of federal long-term disaster recovery funds for disaster damage not fully covered by insurance or other compensation. $200,000 The maximum loan the SBA can provide to homeowners to repair or replace their homes is $200,000, and the maximum loan the SBA can provide for homeowners or renters to replace personal property is $40,000. Businesses and private nonprofits can receive loans of up to $2 million. [2]. SBA spokesman Michael Peacock said, “The SBA is basically the nation’s disaster loan bank. We’re here to provide the long-term relief. We [attempt] to get [residents and businesses] back to the position that they were in prior to the disaster.”

If a business suffers economically from a natural disaster and needs funding to return to operations, the SBA offers two types of disaster loans [3]:

  1. Business Physical Disaster Loans can help restore building or property damage, make improvements, or replace equipment and inventory. Interest rates for this type of funding are capped at four percent if a business cannot obtain credit elsewhere and at eight percent for a company has obtained credit from another lender.
  2. Economic Injury Disaster Loans can serve to fund businesses' economic shortfalls in the aftermath of a natural disaster, even if a business survives a natural disaster physically unscathed.

Disaster Loan Data Sets

Why does SBA deal with disaster loans for individuals?