The Small Business Administration (SBA) has introduced an emergency loan program to assist California residents affected by wildfires. Homeowners can borrow up to $600,000, and business owners can access loans of up to $2 million at relatively low interest rates. Below are the details of the program, announced on January 13.
Home Disaster Loans
Homeowners living in disaster-designated areas, as determined by FEMA, can apply for emergency loans through the SBA. These loans cover:
- Up to $500,000 for rebuilding or repairing primary residences.
- Up to $100,000 for repairing or replacing personal belongings such as clothing and furniture.
Renters affected by the wildfires can also apply for loans of up to $100,000 to recover personal property damages. However, vacation homes or non-primary residences are not eligible.
The loans are designed to supplement insurance payouts or other assistance, which will be deducted from the total loan amount. Loan funds cannot be used for home expansions.
Interest rates are capped at 4%, with interest and repayment deferred for the first year. Loan terms extend up to 30 years, and collateral is required for loans exceeding $50,000.
Business Physical Disaster Loans
Business owners can borrow up to $2 million to repair damages caused by the wildfires. Eligible expenses include repairs to buildings, machinery, equipment, fixtures, and inventory. The funds cannot be used for business expansion.
Similar to home loans, insurance reimbursements will be deducted from the total loan amount. Interest and repayment are deferred for the first year, with a repayment term of up to 30 years. For borrowers unable to obtain credit elsewhere, interest rates are under 4%; for those with access to other credit, rates are under 8%. Collateral is required for loans exceeding $50,000.
Economic Injury Disaster Loans (EIDL)
Small businesses that have suffered economic losses due to wildfires may apply for Economic Injury Disaster Loans (EIDL). These loans are available to small businesses, agricultural cooperatives, and most private non-profits in disaster-designated areas. Applicants must demonstrate they are unable to secure credit from other financial institutions.
EIDL funds can be used for general operational expenses, including employee health insurance, rent, loan repayments, and utilities. However, they cannot be used for facility expansion, wildfire repairs, refinancing, bonuses, or dividends.
EIDL loans also have a one-year deferral for interest and repayment, with interest rates under 4% and a maximum term of 30 years. The combined limit for Business Physical Disaster Loans and EIDL is capped at $2 million.
The SBA is currently accepting applications through its website (sba.gov). Applicants can schedule in-person appointments online or call the hotline at 888-659-2955 for assistance with their application.
By WONHEE CHO [cho.wonhee@koreadaily.com]
