SBA disaster loan

What it means

The U.S. Small Business Administration lends to households, not just businesses, after a declared disaster. Its physical damage loans cover losses not fully covered by insurance or other sources.

SBA lists the limits. Homeowners may apply for up to $500,000 to repair or replace a primary residence. Homeowners and renters may borrow up to $100,000 to repair or replace personal property, such as clothing, furniture, cars and appliances. Insurance proceeds may be deducted from the eligible amount. Loans cannot be used to upgrade a home or add on, unless the local building code requires it.

Why it matters to your bill

An SBA loan can fill the gap between an insurance payment and the real cost of repairs, but it is debt you must repay. SBA lists favorable terms: the first payment deferred for 12 months, no interest during the first 12 months, and a fixed rate of no more than 4% for applicants unable to obtain credit elsewhere. Apply even if you are unsure, since SBA decisions can affect other aid. Keep your insurance settlement letters, because SBA will reduce the loan by what insurance paid. Our page on FEMA assistance explains how FEMA, insurance and SBA fit together.