Did you know that natural disasters kill on average 45,000 people per year, globally?
Natural disasters can be incredibly destructive and costly. Many people are not sure what the best course of action is when a natural disaster strikes. Do you apply for an SBA Disaster Loan, or do you try to get help through the CARES Act?
Well, don’t worry. Keep reading because, in this Cares act vs SBA disaster loan article, we will answer all of those questions for you so you can choose which type of loan is better for you.
What Is the Cares Act and SBA Disaster Loan?
The CARES Act is a federal law that was passed in response to the COVID-19 pandemic. It provides small businesses with loans of up to $10 million to help them keep their businesses afloat during this difficult time. You can learn more here.
The SBA disaster loan, on the other hand, is a loan offered by the Small Business Administration (SBA) to businesses that have been impacted by a natural disaster. These loans can be for up to $2 million and you can use them for a variety of purposes, including business interruption expenses and property damage repairs.
Structure
The type of loan you receive will largely depend on the purpose of the loan and your ability to repay it. The CARES Act emergency relief loan does not have to be repaid if the business meets certain requirements, making it a good option for businesses that may not be able to repay a long-term loan.
The SBA disaster loan, on the other hand, is a long-term disaster loan that must be repaid over a period of time, usually 2-3 years. This type of loan may be a better option for businesses that have the ability to repay the loan over time and need long-term financial assistance.
Eligibility
Another big difference between the two loans is who is eligible for them. The CARES Act loan is available to any small business that has been impacted by the COVID-19 pandemic. The SBA disaster loan, on the other hand, is only available to businesses that have been impacted by a declared disaster.
Use of Funds
Another key difference between the two loans is how you can use the funds. The CARES Act loan can be used for a variety of purposes, including paying employee salaries, rent, utilities, and other business expenses.
You can only use the SBA disaster loan, on the other hand, for specific purposes related to the disaster, such as repairing damage to your business property or replacing lost inventory.
Cares Act vs SBA Disaster Loan: Which One Should You Choose?
The CARES Act was recently passed in an effort to provide more assistance to businesses and workers affected by the COVID-19 pandemic. However, there are some important differences between the CARES Act and the SBA Disaster Loan Program.
In this Cares act vs SBA disaster loan article, we’ve outlined the key distinctions between the two programs so that you can decide which is best for your business.
Want to learn more? Check out our blog for more articles like this.
