SBA disaster loans can provide financial relief to home- and business owners located in a declared disaster area.
Updated Jul 31, 2023 · 4 min read Written by Randa Kriss Lead Writer Randa Kriss
Lead Writer | Small business
Randa Kriss is a lead writer and NerdWallet authority on small business. She has nearly a decade of experience in digital content. Prior to joining NerdWallet in 2020, Randa worked as a writer at Fundera, covering a wide variety of small-business topics and specializing in the lending and banking spaces. Her work has been featured in The Washington Post, The Associated Press, MarketWatch and Nasdaq, among other publications. She has also hosted a webinar as part of the SBA's 2024 National Small Business Week Virtual Summit. Randa is passionate about helping small-business owners make educated financial decisions, especially when it comes to affordable funding. She is based in Chicago.
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SBA disaster loans provide financing to help small businesses recover from physical and economic damage caused by a declared disaster. These loans offer low interest rates, long repayment terms and may fund faster than other types of SBA loans .
Here’s what you need to know about SBA disaster loan assistance and how to get a loan for your business.
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
SBA disaster loans are small-business loans issued by the U.S. Small Business Administration in order to assist victims of declared disasters, such as hurricanes, wildfires, earthquakes and flooding, among other emergencies.
These loans are available to businesses, nonprofit organizations, homeowners and renters to help repair or replace damaged or destroyed property. SBA disaster loans are also available to help small businesses recover from economic injury as the result of a disaster — or as the result of losing an essential employee who was called-up to active service as a military reservist.
There are four different types of SBA disaster loans:
Home and personal property loans. Homeowners can use these loans to replace or repair (but not upgrade) their primary residence. Renters and homeowners can also apply for financing to repair or replace personal property, such as clothing, furniture, cars and appliances.
Business physical disaster loans. Businesses and most private nonprofits can use this financing to repair or replace business property, machinery, equipment, fixtures and inventory. Rental property owners can also use these loans to make repairs or replace damaged items within their buildings.
Economic injury disaster loans (EIDL). EIDLs provide working capital to small businesses that can’t pay for their typical operating expenses as the result of a disaster.
Military reservists economic injury disaster loans (MREIDL). This type of loan offers financing to help businesses pay their everyday expenses that they can no longer afford because an essential employee has been called-up to active service as a military reservist.
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Although the rates and terms you receive will ultimately vary based on your individual needs and circumstances, here are the features you can expect to see based on each type of disaster loan:
Type of SBA disaster loan
Maximum loan amount
Home and personal property loan
$500,000 for homeowners to repair residence. $100,000 for renters or homeowners to repair or replace personal property. Up to 4% for applicants who can’t access other financing. Up to 8% for applicants who can access other options.Business physical disaster loan
Up to $2 million.
Up to 4% for applicants who can’t access other financing. Up to 8% for applicants who can access other options.Economic injury disaster loan
Up to $2 million.
Military reservists economic injury disaster loan
Up to $2 million.
*The SBA is offering a 0% interest rate for 12 months on all disaster loans approved through September 30, 2023.
To qualify for a disaster loan, you’ll need to meet a set of SBA loan requirements that will largely vary based on your situation and the type of financing you’re looking to get. Here are some general criteria you should keep in mind:
With the exception of the MREIDL, you’ll need to be located in a declared disaster loan to be eligible to apply for SBA financing.
Each of the different SBA disaster loans will have unique requirements that you’ll need to meet.
For example, if you want to apply for an EIDL, you’ll need to be a small business, small agricultural cooperative or an eligible private nonprofit. You’ll also need to show that you’ve suffered economic injury as a result of the relevant disaster and the SBA needs to be able to determine that you can’t access credit anywhere else.
You may need to provide collateral to secure your SBA disaster loan:
SBA disaster loan
Home and personal property loan
Loans of more than $25,000 in a Presidential disaster declaration. Loans of more than $14,000 in an SBA declaration.Business physical disaster loan
Loans of more than $25,000.
Economic injury disaster loan
Loans of more than $25,000.
Military reservists economic injury disaster loan
Loans of more than $25,000.
You need to be able to show your ability to repay your SBA disaster loan. The SBA will use factors such as your personal credit score, personal finances and/or business finances to make this determination.
Unlike other types of SBA loans, you apply for SBA loan disaster assistance with the U.S. Small Business Administration directly. Follow these steps to get financing:
Before you begin with the actual application process, you should verify that your business is located in a declared disaster area and that you’re eligible for one of the available funding options.
You should also look for your applicable filing deadline. When the SBA publishes a disaster declaration with relevant financing information, it will specify when the application period begins and ends. You’ll want to make sure you submit your application before the window closes.
For MREIDLs, you can apply for financing any time beginning on the date your employee receives notice of expected call-up and ending one year after the date that the employee is discharged or released from active service.
There are three ways you can apply for an SBA disaster loan: Online, by mail or in person at a Discovery Recovery Center. The SBA recommends applying online to receive the fastest processing times.
Regardless of your application method, you’ll need to provide:
Personal contact information. Social security number. Deed or lease information (if relevant). Insurance information.Financial statements and information, including personal and business income, monthly expenses and account balances.
Employer identification number. IRS Form 4506-C, which gives the IRS permission to provide the SBA with your tax return information.If you apply online, the disaster loan assistance portal will guide you through the application and additional information you’ll need to provide. For paper applications, you can find the documents you’ll need on the SBA website .
It’s important to note that anyone with 20% or more ownership in the business will be required to sign an SBA personal guarantee .
Once everything is complete, you can submit your application. The SBA will process your loan package — which may include sending a property inspector to determine the cost of your physical damage.
Next, you’ll work with a loan officer who may request additional information or review insurance documents and recommend a loan amount. According to the SBA, it strives to provide loan decisions within two to three weeks of receiving your application.
This funding timeline can vary, however, based on the number of applications the agency anticipates receiving each year. If the SBA receives more than 250,000 applications per year, for example, it anticipates that processing times will be four weeks or longer. The two-to-three week estimate is based on receiving less than 50,000 applications per year [0]
Congressional Research Service . SBA Disaster Loan Program: Frequently Asked Questions. Accessed Jul 6, 2023.
When you receive approval, the SBA will send loan closing documents for you to review. You should read through any business loan agreement information thoroughly and ask your assigned case manager any questions you may have.
Once you sign the documents, you’ll receive an initial disbursement within five business days.
Frequently asked questions Do you have to pay back an SBA disaster loan?Yes. SBA disaster loans are debt-based financing that must be repaid with interest. Repayments are typically made on a monthly basis.
What can you use SBA disaster loans for?SBA disaster loans can be used to repair or replace damaged physical property caused by a declared disaster. Small businesses can also use these loans to cover operating expenses related to the impact of a declared disaster or of a core employee being called up to active service as a military reservist.
Are SBA disaster loans forgivable?No, SBA disaster loans are not forgivable. The Paycheck Protection Program , however, was an exception to this rule — as it was specifically created to provide forgivable financing to small-business owners impacted by the COVID-19 pandemic.
How long does SBA disaster loan approval take?The SBA can approve disaster loans in as little as two to three weeks, but this timeline can vary based on the number of applications the agency receives.
Do you have to pay back an SBA disaster loan?Yes. SBA disaster loans are debt-based financing that must be repaid with interest. Repayments are typically made on a monthly basis.
What can you use SBA disaster loans for?SBA disaster loans can be used to repair or replace damaged physical property caused by a declared disaster. Small businesses can also use these loans to cover operating expenses related to the impact of a declared disaster or of a core employee being called up to active service as a military reservist.
Are SBA disaster loans forgivable?No, SBA disaster loans are not forgivable. The
Paycheck Protection Program
, however, was an exception to this rule — as it was specifically created to provide forgivable financing to small-business owners impacted by the COVID-19 pandemic.
How long does SBA disaster loan approval take?The SBA can approve disaster loans in as little as two to three weeks, but this timeline can vary based on the number of applications the agency receives.
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Randa Kriss is a small-business writer who joined NerdWallet in 2020. She previously worked as a writer at Fundera, covering a wide variety of small-business topics including banking and loan products. Her work has been featured by The Washington Post, The Associated Press and Nasdaq, among others. Randa earned a bachelor's degree in English and Spanish at Iona College. See full bio.
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