Hazard Insurance for SBA EIDL Loan | Why SBA EIDL Requires Hazard Insurance?
If you got or are applying for an SBA EIDL Loan the SBA may require your business to get specific hazard insurance in order to get the SBA EIDL Loan approved.
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One of the most common questions we get at Freedom Tax Accounting is, “Why is the SBA making my business take out a hazard insurance policy in order to get the EIDL loan approved?” Another common question is, “Where do I get this type of policy to fulfill the SBA requirement in order to use the EIDL loan funds?” That’s what we’re going to talk about in this video. Hello from Freedom Tax Accounting or an accounting firm where we have been providing quality tax and accounting services now for over 20 years. We are recording this video on June 29th, 2021 and we always emphasize the date on any recording related to the SBA programs because these loan programs have been constantly changing. So, there may be things we discussed in this video that can change as soon as tomorrow. So, that’s the importance of subscribing to our channel that way you’re always up to date with the most current and correct information relating to these SBA programs.
So, if you have applied or already received an EIDL loan from the SBA you know that the SBA may have already emailed you that you need to send them proof that you have hazard insurance for your business. Now, why is the SBA making businesses take out this hazard insurance policy because remember any amount of SBA loan if you get an SBA loan an EIDL loan over $25,000 it does require collateral okay. And that’s important to know because if you’re getting an EID loan that’s 25 or less you are not required to have this hazard insurance. So, if you’re getting an EIDL loan an SBA agent is telling you that you need to send them proof of hazard insurance and remind the SBA agent that your SBA loan is less than $25, 000 and that you don’t require the insurance.
But if you have received or are applying for an SBA EIDL loan that’s over $25 000 you are required to have this insurance policy. Why if you read the SBA EIDL loan contract any amount over 25 000 does require collateral. Meaning, that if your business or you as self-employed do not pay the loan the SBA has the right to go after your business or personal assets so the insurance policy is to protect your business or self-employed assets in case your loan goes into default. So, that’s the reason the SBA is making anyone who is applying or got an EIDL loan over $25, 000 to get this hazard insurance because they want the business asset to be covered by an insurance policy just in case you don’t pay your EIDL loan or if your loan goes into default. So, that’s the reason that the SBA is making you take out this hazard insurance policy.
Now one of the other questions that people ask me is where to get it. So, basically, you have to contact your local uh commercial insurance agent okay they tell them look I want an SBA EIDL loan hazard insurance policy and they know what it is. Now if you are in Florida, we recommend that you call Maximus Insurance, we have been working with them for many years and I feel they have the lowest rates so if your business is in Florida or if you’re self-employed and you live in Florida and you’re applying for an EID alone and you need the SBA insurance. These are the people you need to contact because they will give you the best rates okay.
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