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Isabel Casillas Guzmán, SBA Administrator, listening to LA Mayor Karen Bass.
Isabel Casillas Guzmán, administrator of the SBA. Photo: @SBAIsabel.

SBA announces disaster loans, with no interest or payments in the first year

The Small Business Administration will waive charging them.

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Isabel Casillas Guzmán, SBA Administrator, shared the good news recently noting that the agency will extend the down payment deferment period on new disaster loans automatically to 12 months.

Casillas Guzmán stated:

We must ensure that communities struck by disaster have the help they need to recover in the wake of natural disasters, and the Biden-Harris Administration is 100 percent focused on finding more ways to assist.

New conditions

Those who now seek access to disaster loans will have up to one year from the date of the promissory note to start making payments, instead of the standard five months that used to apply.

This means that interest on the loan will not begin to accrue until 12 months after the loan's initial disbursement date, which will benefit disaster survivors and help them lower the total cost of recovery by setting the interest rate at 0% for the first year and reduce the total amount of accrued interest they must pay.

“Our zero-interest disaster loan and payment deferral solutions add new tools to our toolbox to help small business owners gain flexibility as they work to invest, reopen, and get back to business. Disaster-impacted residents in Florida, Puerto Rico, and others facing disaster can count on the SBA to help in any way it can in the days and months ahead,” added Casillas Guzmán.

About disaster loans

Offering fixed interest rates for the remaining 30-year term, SBA disaster loans allow individuals and businesses direct access to affordable financial assistance to help repair or completely replace disaster-damaged property.

Although the SBA does not have the authority to forgive interest that has already accrued on disbursed loan funds, the change is effective for all disaster loans approved in response to a declared disaster on or after September 21, 2022 through September 30, 2023.

The effective date covers the SBA disaster loans currently available for Hurricane Fiona and Hurricane Ian declared earlier this year. The extended deferment to 12 months is automatic and loan borrowers do not need to take any further action. There is no prepayment penalty and borrowers can begin making loan payments during the deferment period if they choose.

Borrowers who already received a declared disaster loan after the September 21 effective date will also receive an automatic extension of their first payment due date to 12 months and 0% interest. Eligible borrowers will be notified by the SBA of their loan modification and will not need to apply to receive this automatic benefit.

As of December 5, 2022, the SBA has approved $1.2 billion for residents and businesses affected by Hurricanes Fiona and Ian.

Loan Amounts

  • Businesses and private nonprofit organizations of any size can borrow up to $2 million to repair or replace real property, machinery and equipment, inventory, and other business assets damaged or destroyed by the disaster.
  • Disaster loans of up to $200,000 are available to homeowners to repair or replace real property damaged or destroyed by the disaster.
  • Homeowners and renters are eligible to receive up to $40,000 to repair or replace personal property damaged or destroyed by the disaster.

The SBA reviews the eligibility, good credit and repayment capacity of disaster loan applicants to determine if they qualify for assistance. Applicants must have good credit, acceptable to the SBA, and must be able to afford the additional debt burden of a new disaster loan to be approved. The SBA's criteria for acceptable credit are more flexible than those of traditional lenders, banks, credit unions, and other financial institutions.

How to apply?

To be considered for all forms of disaster assistance, applicants must register online at DisasterAssistance.gov or download the FEMA mobile app. If online or mobile access is not available, applicants should call FEMA's toll-free helpline at 800-621-3362. Those using 711-Relay or Video Relay services should call 800-621-3362.

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