Once your business faces a disaster, the first thing that comes to your mind is how you are going to pay for the recovery. Insurance will help for some expenses, but you might need additional financing. To fully afford to rebuild your business, you will need additional capital.
If this is your case, a disaster loan from the Small Business Administration (SBA) may be a viable funding option. However, you should weigh the pros and cons of SBA disaster loans before you apply.
In this post, we will review those pros and cons of SBA disaster assistance so you can make a decision about how to afford your business’s disaster recovery.
You could qualify for a SBA Disaster Loan if your business is damaged or destroyed due to a hurricane, fire, drought, or flooding. You will need to prove that your business is in a declared disaster area to qualify. The SBA will want to know how your business was affected by the natural disaster.
In some cases, small business owners can seek FEMA small business loans as well. Typically, you’ll only qualify for this program if you don’t qualify for other SBA loans.
Many business owners have sought disaster assistance due to the challenges caused by the COVID-19 pandemic. If you own a small business or non-profit based in the U.S. with 500 or fewer employees, you may qualify for the COVID-19 Economic Injury Disaster Loan (EIDL).
Take the time to thoroughly review the SBA disaster loan program and see if it’s the right funding option for you. It’s important to remember the application process is uncertain and complicated. After you weigh the pros and cons, evaluate other financing options so you can select the best solution for your business.