What You Need to Know About SBA Disaster Loans | Fora Financial Blog
Everything You Need to Know About SBA Disaster Loans
April 11, 2018

Everything You Need to Know About SBA Disaster Loans

Has your business been affected by a disaster, such as a hurricane, fire, or flooding? If so, you could be able to receive financing to recover. The Small Business Administration (SBA) provides disaster loans to individuals who are in declared disaster areas. These loans have favorable terms with repayment schedules up to 30 years, and interest rates at four or eight percent, depending on eligibility.

The SBA approved $1 Billion in Business Disaster Loans in 2017, processed nearly 3,500 applications, and awarded 51 percent of the applicants with a median loan size of $127,600. Although the SBA provides disaster loans to homeowners and renters too, we’ll focus primarily on the business loans.

Find out the Answers to Six Questions You May Have About SBA Disaster Loans:

1. What are SBA Disaster Loans?

SBA Disaster Loans are a special fund for businesses and homeowners in declared disaster areas that have been affected by a flood, storm, fire, drought or other disasters. They are designed to help businesses who can’t remain operational without financial assistance, and can be used for repairs on real estate, personal property, economic injury, machinery and equipment, and inventory not covered by insurance. Loans are designed to be quick, with a two to four-week approval process, and initial disbursement within five days of approval.

2. Who Qualifies for SBA Disaster Loans?

Businesses who have incurred physical damage or economic injury can qualify for disaster loans up to $2 Million. Even if you have insurance and are awaiting an insurance disbursement, the SBA recommends that you apply for a loan in the meantime. When your insurance disbursement is made, you may be required to apply the disbursement towards the disaster loan. If your business has available credit elsewhere, you can still apply for a loan, but the SBA may decide that your other credit is sufficient.  In that case, they may still offer you a loan, but at a slightly higher interest rate.

3. What Are Economic Injury Disaster Loans?

There is a specific portion of the disaster loans that are designed to help businesses that haven’t sustained physical damage, but whose business continuity is disrupted by the disaster. These loans are designed to help cover operating expenses and wages which could’ve been paid if the disaster hadn’t occurred.

In addition, there’s a specific chapter of the Economic Injury Disaster Loans for businesses who are impacted by Military Reservists who’ve been called to active duty because of a declared disaster. If you employ a military reservist who is recalled to active duty in the case of a disaster, you may be eligible for help covering any costs because of business disruption due to key personnel going on active duty.

4. What Can I Use a Disaster Loan For?

SBA Disaster Loans are specifically designated to promote business continuity. If you plan to stay in business, you may use the loans for the following costs:

  • Real estate
  • Machinery
  • Equipment
  • Fixtures
  • Inventory
  • Leasehold improvements
  • Payroll
  • Fixed debts
  • Accounts payable coverage
  • Restructuring debt
  • Economic injury recovery
  • Military reservist economic injury recovery

Loans can only be used for recovery activities, and can’t be used to expand or improve facilities beyond updates to meet new building codes. However, with special approval, you may be eligible for up to 20 percent additional funds to make improvements which reduce the risk of damage from a similar disaster in the future.

5. How Can I Apply for SBA Disaster Loans?

Do you qualify for a disaster loan? Start by ensuring that you’re in a Declared Disaster Area, then apply onlinein person, or by mail.

For additional information, you can call the Customer Service Center (1-800-659-2955) or email [email protected]. The SBA recommends that you start your application right away so that funds can be made available for recovery.

You’ll be required to provide relevant tax data, IRS Form 4506-T Request for Transcript of Tax Return, and personal financial statements for all owners with more than a 20 percent stake. In addition, you’ll be required to provide business financial documentation such as a year to date P&L, balance sheet, and liabilities listing. The most common reason for delays in processing are due to incomplete applications, so complete everything on the application or ask for assistance.

6. What is the Process?

The SBA’s goal is to decide within 2-4 weeks if a business will receive financing, and disburse initial funds within 5 days of approval. Once you apply, the SBA will review your creditworthiness, inspect and estimate the damage to your property, and review any insurance or other recoverables. They’ll also assign a loan officer to help you through the review process. To check the status of your SBA Disaster Loan application, log in to your online account.


SBA Disaster Loans may be a lifeline for your small business after adversity. If your business has sustained damage and is in a declared disaster area, then a SBA loan could be a beneficial option!

Fora Financial

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

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Fora Financial is a working capital provider to small business owners nationwide. In addition, the Fora Financial team provides educational information to the small business community through their blog, which covers topics such as business financing, marketing, technology, and much more. If you’d like to see a topic covered on the Fora Financial blog, or want to submit a guest post, please email us at [email protected].