Homeowners and Renters: How SBA Loans Impact FEMA Aid
If you want the Federal Emergency Management Agency (FEMA) to help you with the cost of repairing or replacing your personal property — including cars and other vehicles — you must also apply for an SBA loan. FEMA aid with this requirement is often called “SBA-dependent FEMA aid.” That means FEMA can give you this type of repair and replacement aid only if SBA turns down your request for a loan, or if the SBA loan amount is too small to cover all your costs.
Apply for FEMA aid as soon as possible, even if you also have to apply for an SBA loan to qualify for some of the FEMA aid. You have a limited number of days after the disaster to apply for FEMA aid, so it’s important not to wait. You can apply for FEMA aid and an SBA loan at the same time.
Learn more about the types of SBA-dependent FEMA aid, which are part of FEMA’s Other Needs Assistance (ONA) program.
SBA Disaster Loan Assistance
Homeowners, renters, nonprofits, and businesses can apply for SBA loans specifically created for disaster survivors. These loans help them recover from the disaster. Homeowners and renters must use the money to repair or replace a home or personal property. The things you own that can be moved to different locations are your personal property. (A home, which cannot be moved, is called “real property.”)
Here are more key points about SBA assistance:
- These are loans. You must pay back the money to SBA over time.
- You do not just pay back the amount you borrow. You also pay “interest,” an additional amount of money that builds up over time.
- The interest rate for the loan determines how much additional money you must pay back. SBA’s interest rate is no higher than 4% for anyone who cannot get a loan somewhere else.
- You pay back a portion of the loan each month. You must pay back the full amount within a certain number of years. SBA might give you as long as 30 years to pay back the full amount.
- SBA may decide you cannot afford a loan. In that case, SBA will automatically refer you to FEMA’s Other Needs Assistance (ONA) program. Money from the ONA program is not a loan. If you receive ONA money, you do not have to pay it back.
- An SBA loan might not cover all your costs. If it does not, you may be able to get FEMA aid to cover the rest of your costs.
Types of SBA Loans
SBA offers three types of disaster relief loans. The type depends on whether the loan is for a homeowner, renter, nonprofit, or business. For businesses, the loan type also depends on how the money will be used.
Home and Personal Property Loans
- Homeowners can borrow as much as $200,000 to replace or repair the home they live in.
- Renters and homeowners can borrow as much as $40,000 to replace or repair personal property.
- Personal property loans can be used for specific types of property, including furniture, clothing, and appliances. Appliances include refrigerators, washing machines, furnaces, and hot water heaters.
- Personal property loans can be used to repair damage to your car or other vehicle.
- Both home and personal property loans help pay for damage that is not fully covered by insurance or other sources. For example, say you experience $50,000 in damage. Your insurance pays $25,000. You can get a loan to cover the difference, which is $25,000.
- Learn more about home and personal property loans.
Business Physical Disaster Loans
- These loans are for businesses and private nonprofits. A business or nonprofit can borrow up to $2 million. The amount applies to disaster losses that are not fully covered by insurance.
- The loans can be used to repair or replace real estate property, machinery, equipment, fixtures, and inventory. They can also be used to make building improvements.
- Learn more about business physical disaster loans.
Economic Injury Disaster Loans
- These loans are for small businesses, small farmers’ cooperatives, and most private nonprofits. They can borrow up to $2 million.
- These loans can be used for recovery from “substantial economic injury.”
- “Substantial economic injury” means that the business or organization cannot meet its obligations. It cannot pay its ordinary and necessary operating expenses.
- Learn more about economic injury disaster loans.
Applying for an SBA Loan
Who Can Apply
You must live in a federally declared disaster area or operate a business in that area. If you do not, you cannot apply for an SBA loan.
How To Apply
Follow these steps to apply for a loan:
- Register with FEMA. Call FEMA at 800-621-3362. Or visit DisasterAssistance.gov to get a registration number.
- Apply for your loan. Apply online to receive the fastest response. You can also apply by mail.
- To get in-person help from an SBA representative, apply at a Disaster Recovery Center.
- Find a Disaster Recovery Center near you by using FEMA’s online locator or by texting “DRC” and your ZIP code to 43362.
Homeowners and renters need to provide:
- Contact information for all applicants.
- Social Security numbers for all applicants.
- FEMA registration number.
- Deed or lease information.
- Insurance information.
- Financial information. This includes income, bank account balances, and monthly expenses.
After You Apply
Here is what to expect after you apply:
- SBA may ask you for additional information. These requests would come from your SBA loan officer.
- SBA will decide if you can afford a loan. If SBA decides you cannot, it may refer you to FEMA to get aid from its Other Needs Assistance (ONA) program.
- SBA may send someone to inspect the damage to your home or personal property.
- If your loan is approved, SBA will send you loan closing documents. These are documents you must sign to get the loan. They are prepared by SBA.
SBA aims to reach a decision quickly for each application. It usually takes two to three weeks. This time period starts when the application is considered complete. Incomplete information causes delays.
Loan Increase Requests
You may be able to increase the amount of your loan even after it has been approved. You might be able to borrow more money if:
- You discover hidden damage.
- Your costs go up because the building code requirements changed.
- Your health or safety is at risk. This could be because the contractor did not complete the repair work, did not complete the work correctly, or used below-standard materials.
SBA regulations provide more examples and details.