The Small Business Administration (SBA), a government agency that supports small businesses, offers various types of loan programs to assist entrepreneurs in starting, expanding and maintaining their businesses.

An SBA disaster loan can provide financial assistance to businesses facing economic hardships due to a disaster. This specific loan type can help cover expenses such as repair costs, working capital and temporary relocation, enabling businesses to recover and resume operations during challenging times.

Here’s more on SBA disaster loans, requirements and how to apply.

Key takeaways

  • The SBA disaster loan offerings include physical damage, mitigation assistance, economic injury disaster loans (EIDL) and military reservist loans.
  • These loans provide up to $2 million in financial assistance to recover from and prepare for declared disasters.
  • Collateral may be required for loans over a certain amount.

What is an SBA disaster loan?

An SBA disaster loan is a financial assistance program designed to help businesses, homeowners and renters recover from declared disasters, such as hurricanes, floods or wildfires.

Unlike other SBA loans or conventional bank loans, these low-interest loans can be used for expenses not fully covered by insurance or other sources. Covered expenses include repair or replacement of damaged property, inventory and equipment and covering working capital needs. Ultimately, they help entrepreneurs rebuild operations and recover from the disaster.

Who can use an SBA disaster loan?

Businesses operating in officially declared disaster zones can apply for an SBA disaster loan. Private nonprofit organizations, homeowners and renters impacted by declared disasters can also apply.

Bankrate insight
According to the 2023 Report on Employer Firms, 23 percent of employer businesses received financial assistance through economic injury disaster loans in 2022.

Types of SBA disaster loans

The SBA disaster loan offerings include physical damage, mitigation assistance, economic injury disaster loans (EIDL) and military reservist loans. Each loan assists individuals and businesses affected by various disasters, including hurricanes, floods, wildfires, civil unrest, droughts, tornados and other declared emergencies.

Loan type Loan amount Term length Interest rate Collateral
Physical damage $40,000 to $ 2 million 30 years 4% to 8% Business loans: only amounts over $25,000; Homeowners and renters: loans above $14,000 with an agency declaration
Mitigation assistance $2 million 30 years 4% No
Economic injury disaster loans (EIDL) $2 million 30 years 4% Only for loans over $25,000
Military reservist loan $2 million 30 years 4% Only for loans over $50,000

Physical damage

Physical damage loans are designed to provide financial assistance for businesses, homeowners and renters who have suffered physical damage due to a declared disaster. These loans can be used for repairing or replacing damaged property not fully covered by insurance, including buildings, equipment and inventory.

Maximum loan amounts vary depending on the applicant. Renters can receive up to $40,000, homeowners up to $200,000 and businesses up to $2 million.

Mitigation assistance

Mitigation assistance provides financial support of up to $2 million to businesses and homeowners to prepare and protect against future disasters. This assistance helps fund projects focusing on wind, flood, wildfire, earthquake and hail mitigation. Projects can include infrastructure improvements, retrofitting and upgrading building materials. Ultimately, these measures can help reduce the cost of damage caused by declared natural and other disasters.

Economic injury disaster loans (EIDL)

EIDLs provide up to $2 million in working capital to cover necessary operating expenses and financial obligations that businesses couldn’t meet due to the disaster’s impact. This allows businesses to bridge the gap during difficult times, helping them recover from the economic setbacks.


Bankrate insight
The SBA stopped accepting new applications for COVID-19 EIDLs as of September 8, 2021. These were a vital financial resource for businesses impacted by the COVID-19 pandemic, used to cover operating expenses, payroll and other essential business costs.

Military reservist loan

The military reservist loan is designed to assist small businesses experiencing financial difficulties when an essential employee is called to active duty in the military reserves. These loans provide up to $2 million in working capital to cover operating expenses.

Requirements for an SBA disaster loan

All business loans have requirements, including those offered by the SBA. To qualify for an SBA disaster loan, businesses, private nonprofit organizations, homeowners and renters must:

  • Be in officially declared disaster areas
  • Have suffered financial impact or substantial economic injury from the declared disaster
  • Provide proof of creditworthiness and ability to repay the loan
  • Comply with SBA size standards for businesses
  • Provide collateral if borrowing a larger amount that requires it

How to get a disaster loan

Obtaining a disaster loan involves three steps. Business owners must complete an application, have their property inspected and review and sign the loan documents.

1. Application

Before applying for an SBA disaster loan, you’ll need to confirm that the SBA or the President has declared a disaster in your area. Once you confirm the declaration status and determine which loan type you qualify for, your application for a disaster loan can be completed online, in person or by mail within the filing period, based on the loan type.

When applying for a disaster loan, the following information must be provided:

  • Applicant contact information and Social Security number
  • FEMA registration number
  • Insurance information
  • Employer Identification Number (EIN), if applicable
  • Financial information to show income, monthly expenses and account balances
  • Real estate deed or lease information

2. Inspection

Your application is reviewed, and an inspection is scheduled to evaluate the total property loss. A loan officer will then review other details like insurance and suggest a loan amount. This process typically takes no more than three weeks following receipt of the application.

The SBA will provide updates on the status of your loan application. To review your status, log in to your SBA account or keep an eye out for updates via email.

3. Closing and funding

Applicants review and sign the loan documents and disburse funds within five business days. If additional funds are needed, up to 20 percent of the original amount, the assigned case manager will schedule the disbursement.

The bottom line

It is not uncommon for small businesses to require financing to cover expenses. The SBA’s goal is to help small businesses succeed, so disaster loans are invaluable resources for individuals and businesses alike in times of crisis. With their low interest rates and flexible repayment terms, these loans can provide much-needed financial support for recovery and rebuilding efforts.

Frequently asked questions

  • An SBA disaster loan is a type of low-interest loan created to assist individuals and businesses impacted by declared disasters. The purpose of the loan is to provide financial aid for recovery and rebuilding efforts.
  • Yes, SBA disaster loans must be repaid. You should make sure that the loan payments fit in your budget before signing the loan agreement.
  • Securing an SBA disaster loan depends on several factors. Before applying, it is important to thoroughly review requirements and provide accurate information and documentation when completing the application to increase the chances of approval.