If your business has been affected by a natural disaster of any kind, there is help, an economic injury disaster loan might just be the ticket to help you get back on track.
The SBA Economic Injury Disaster Loan
An economic injury disaster loan is a loan specifically designed for any business owner who has been affected by any kind of natural disaster. This includes tornadoes, earthquakes, floods and even COVID-19. The loan is meant to help you get back on your feet again. There are many reasons why this loan can be helpful. There are also a few potential pitfalls you should know about before you choose to apply for a loan like this.
No Fees Required
Many kinds of loans have all sorts of fees. That includes many types of business loans. You can choose this kind of loan and be assured that what you see is what you’re going to get. There are no application fees or origination fees. That means that all of your funds are being directed where they are most needed rather than being used to fund your loan process.
Low Interest Rates
Another advantage of these kinds of loans is they have low interest rates. As the experts at Lantern by SoFi state, “these loans have some of the lowest SBA loan rates available and a 30-year repayment period.” That means you’re able to pay them back as you can and avoid the feeling of having a loan debt always overhead. That gives many small business owners some much-needed chance to get the cash they need without the rush to pay it back as soon as possible.
A Long Application Process
Bear in mind the EIDL loan disbursement process may take some time. You will also need to provide a lot of documentation. In fact, you’ll need to give them access to a full three years of your income tax returns. That means the process of getting access to these funds can take a lot of time. If you are in need of cash right now, it might be better to consider other options that can help you gain access to the cash you want more much quickly.
Highly Specific Requirements
Many types of loans can be used for all sorts of purposes. That can help you prioritize where they are most needed. These loans are designed for a single and specific purpose. You must agree to use this type of loan for working capital and working capital only. The business owner cannot use the funds for any existing debt they need to refinance. They also can’t use the funds for a new expansion into a different part of the country or the world. This kind of limitation can make it much harder for you to use this capital to benefit your small business as you see fit. Economic injury disaster loans have many important pros and cons that should be carefully considered before applying.