SBA Disaster Loans For Small Businesses
An SBA disaster loan is offered directly by the SBA when there is an unforeseen disaster occurs. The SBA finances low-interest, long term loans to corporations, homeowners, renters and nonprofits. The purpose of these loans is to assist these organizations in dealing with unexpected expenses that can result in financial difficulty.
In order to apply for these loans, an applicant should be well prepared, as they will be subjected to a number of strenuous screening processes. Although the SBA does not screen job applicants for eligibility, they will do credit checks.
As the eidl second round SBA loans are for unexpected and catastrophic expenses only, they come at a higher interest rate than conventional loans. Applicants applying for an SBA disaster loans should expect to pay a very high interest rate of between twelve and fifteen percent. They also have to be prepared to pay additional fees for these loans, which will include pre-approval and processing fees. Other fees that will be charged are document preparation fees, title search, application fee, title insurance, and private mortgage insurance. In addition, applicants may also be required to pay filing fees.
One of the benefits of SBA disaster loans is that they are not loans that are given for a specific amount of money. This means that business owners who do not foresee an overwhelming amount of debts cannot receive these loans. They are available for a period of one year. In order to make the loan process easier, the applicant can choose to pay off the entire loan in two years or repay a part over this time frame. This option is advisable for business owners who are planning to expand their business.
Although the process of receiving SBA disaster loans is fast and convenient, applicants should know that there are also some circumstances in which the lender may charge higher interest rates. First, it will be higher if the borrower declared bankruptcy two or three years before he or she received the SBA loans. Also, the interest rates are higher if the borrower availed the loans while the borrower was unemployed. Borrowers are also advised to take their time in choosing a lending company. If the company is new, the interest rates will be less expensive.
Another important consideration to make is the repayment structure of SBA disaster loans. The loan amount usually caps at $100, and borrowers can extend the terms up to three years. They can pay the loan amount along with any applicable penalties every month, but they cannot extend the terms. As long as the loan has not been repaid, borrowers are allowed to extend the terms for an additional two years. Borrowers who wish to pay off the loan in full are required to pay the interest rates and fees in full at the end of the term.
Business owners can apply for SBA loans even in cases when there have been no declared disasters. They just need to contact the SBA and they can give them a loan application. These loans are offered to business owners regardless of their financial status. Business owners can meet the criteria for small business loans, which includes owning only a single store or office, or owning a chain of stores. Business owners can get the SBA disaster loans by submitting a business plan to prove that they have a viable business plan.