The COVID – 19 pandemics have severely impacted numerous small businesses that require an S.B.A. disaster loan. The U.S.A declared a 50-state disaster in March 2020. Business owners doubt whether they can make a recovery anytime soon and survive the unprecedented disaster.
When the scenario is so gloomy and uncertain, the S.B.A disaster loan program has come to the rescue—the S.B.A loan disbursement helps your business afloat smoothly. These loans have the lowest interest rates of 2.75% to 3.75% A.P.R. and vary according to the situation. The loan types cover both natural and economic disasters and provide a generous repayment period of a maximum of 30 years.
One must have sound knowledge regarding the application procedure. Below are some of the tips to help you apply for an S.B.A. disaster loan.
Know various types of S.B.A. disaster loan
The loans in high demand now are the S.B.A. Paycheck Protection Program or P.P.P. and the S.B.A. Economic Injury Disaster Loan Program or E.I.D.L. These programs benefit businesses that suffered a massive economic injury. The borrowers are allowed for a deferment of payments. However, they must choose from these two types as per their requirement. Another option is the S.B.A. Business Physical Disaster Loan that supports businesses hit by natural disasters.
The reservists, veterans, active-duty military along with their families can apply for an S.B.A. loan through the Office of Veterans Business Development.
Check the qualification for an S.B.A. disaster loan disbursement.
One must ascertain whether his area has been designated as a disaster zone impacted by a natural disaster. The U.S.A. small business owners are eligible to apply for E.I.D.L., and P.P.P. Determination of all this qualification is a must for the S.B.A. loan disbursement.
Have an organized information
One must arrange the following for the business and owners while applying for an E.I.D.L. or P.P.P.
- I.R.S. form 4506-T
- The most recent tax return copies
- Personal financial statement
- A liability schedule
- Current sales figure
- Current account for profit and loss
- Information for deed or lease
- Applicants’ unique security numbers
- F.E.M. registration number
- Bank statement
- Employer identification number
- Business insurance information
- Proof of lost revenue
- Evidence of damage
- Document the levels of damage
Initiate the insurance claim in case of physical damage
The S.B.A loan disbursement for natural disasters demands an initiation for your insurance claim. S.B.A. grants your loan amount if only your insurance policy does not cover them. Herein lies the importance of initiating an insurance claim before applying for a disaster loan.
Fill the application form.
One must fill the S.B.A. application form fully for disaster loans. Any blank area may cause delays in the application process. You can always contact the S.B.A. authority whenever you come across any problem.
Locate the collateral you are allowed to pledge.
One must determine the assets he is prepared to use as collateral before applying to the S.B.A. loan disbursement. For example, an E.I.D.L loan over $25,000 must be backed by collateral. It would help if you pledged collateral when it is available. However, know that the S.B.A. does not decline a loan for a shortage of collateral.
So, decide on the collateral beforehand to secure your loan.
Check the credit report.
There are lenders to verify the credit report to confirm one’s credit repayment history. One can check the credit reports for errors or discrepancies before applying for the S.B.A. loan disbursement. Any mistake, if found, must be rectified at the right time. The personal credit report is equally important to ensure all the bases of a borrower are covered.
One must not forget to pull the business’s credit report before submitting a P.P.P. or E.I.R.L. application. Equifax, Experian, and TransUnion are the three major reporting agencies.
The early application helps.
There is a higher demand for a loan when widespread disasters take place. The first-come, first-serve model can be beneficial here. However, do not forget to gather all the necessary documents in a hurry.
Online applications could be advantageous.
Paper works take time—online application via mail for the S.B.A loan disbursement is a more streamlined process than an in-person application.
S.B.A loan disbursement is designed to seek out an ideal financial solution during hard times. These are low-interest-bearing loans with flexible repayment terms. However, one must know the loan eligibility criteria beforehand for added benefits.