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Businesses, Nonprofit Organizations Get Smart about Low-Interest Disaster Loans

Release date: 
March 8, 2016
Release Number: 
DR-4254-AR NR 024

NORTH LITTLE ROCK — Businesses and nonprofit organizations in the Arkansas disaster area are discovering a low-interest disaster loan from the U.S. Small Business Administration is a smart business decision.

Disaster loans provide funding for private sector recovery and are being used to:

  • Repair or replace buildings and business assets, such as equipment and inventory;
  • Meet payroll and lease obligations during business downtime caused by the disaster;
  • Make improvements to protect against future damage; and, in some cases,
  • Refinance existing liens.

 “Disaster loans from the SBA are the major source of federal disaster recovery assistance,” said Federal Coordinating Officer John Long of the Federal Emergency Management Agency. “The interest rates are low—as low as 4 percent for businesses and 2.625 percent for private nonprofits.”

SBA offers businesses and nonprofits two types of disaster loans: a Physical Disaster Loan and an Economic Injury Disaster Loan.

Physical Disaster Loans are used to repair or replace damaged buildings and business assets. Economic Injury Disaster Loans help small businesses, small agricultural cooperatives, aquaculture businesses and most private nonprofits meet financial obligations that they cannot meet because of the disaster.

Business owners may also be eligible to refinance existing liens or mortgages.

Applications from the SBA are available to most survivors who register for assistance with FEMA. No one is obligated to accept a loan if offered.

SBA low-interest disaster loans for businesses have several advantages:

  • SBA requires no collateral on loans up to $25,000. SBA requires the borrower to pledge only what collateral is available, as well as satisfactory credit and the ability to repay.
  • Applicants don’t have to wait for insurance settlements to obtain loans.
  • Loans are written for a length of time appropriate to the type of loan, but SBA may make adjustments in the length to lower the monthly payments. Terms can be up to 30 years.
  • SBA offers mitigation loans to help pay for improvements to reduce potential for future damage. These mitigation funds are available for up to 20 percent of the total amount of physical disaster damage.
  • SBA never charges an application fee or points for its disaster loans.

By law, SBA business loans cannot exceed $2 million.  If a business is a major employer, SBA may waive the limit.

The deadline to file for a Physical Damage Disaster Loan is April 5, 2016. The deadline for an Economic Injury Disaster Loan is Nov. 7, 2016.

The SBA offers online an application through its Electronic Loan Application site at Survivors can contact the SBA’s Disaster Assistance Customer Service Center at 800-659-2955, email, or visit the SBA’s website at Individuals who are deaf and hard-of-hearing may call TTY (800) 877-8339.

Individuals and families who suffered loss as a result of the late December – January, 2016 storms are encouraged to register for assistance with FEMA. To do so:

  • Call 1-800-621-3362 (FEMA) or if you are deaf, hard-of-hearing, or have a speech disability and use TTY, 1-800-462-7585. If you use 711-Relay or Video Relay Services (VRS), call 1-800-621-3362.
  • Go to

The toll free lines operate from 7 a.m. to 10 p.m. local time, seven days a week. Multilingual operators are available.

Certain private nonprofit (PNP) organizations in Arkansas that provide essential services of a governmental nature may be eligible for federal Public Assistance grants or low-interest loans from the SBA.

If the PNP provides an “essential governmental service” and is a “critical facility” as defined by law, FEMA may provide a grant for their eligible costs. If not, FEMA may refer the organization to SBA for disaster loan assistance.

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FEMA's mission is to support our citizens and first responders to ensure that as a nation we work together to build, sustain, and improve our capability to prepare for, protect against, respond to, recover from, and mitigate all hazards.

Last Updated: 
March 8, 2016 - 12:50
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