May 27, 2021

SBA Disaster Loans: How to Qualify and Apply

Six Questions You May Have About SBA Disaster Loans:

1. What are SBA Disaster Loans?

SBA Disaster Loans are provided to businesses 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 costs such as:
  • Repairs on real estate
  • Personal property
  • Economic injury
  • Machinery and equipment
  • Inventory not covered by insurance.
Loan programs 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 disaster assistance 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's 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 a disaster. These loans are designed to help cover operating expenses and wages which could’ve been paid if the disaster hadn’t occurred. Most recently, EIDL loans have been made available to business owners impacted by the COVID-19 pandemic. To learn more about Economic Injury Disaster Loans for business owners affected by COVID-19, check out our EIDL Loan guide. Or, if you're interested in pursuing other business financing options, click the link below for a free financing quote. New call-to-action 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.

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. The only exception is if you need to make updates to meet new building codes. However, with special approval, you may be eligible for up to 20 percent additional funds to make improvements. This reduces the risk of damage from future disasters.

5. How Can I Apply for SBA Disaster Loans?

To determine if you qualify for a disaster loan, start by confirming that you’re in a Declared Disaster Area. Then, you can apply in one of the three ways: 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 the following information:
  • Relevant tax data
  • IRS Form 4506-T Request for Transcript of Tax Return
  • Personal financial statements for all owners with more than a 20 percent stake.
  • A year to date P&L
  • Balance sheet
  • Liabilities listing.
The most common reason for processing delays are due to incomplete applications. Therefore, you must 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 the following:
  • Your creditworthiness
  • The damage to your property
  • Your insurance information
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!
Editor’s Note: This post was updated for accuracy and comprehensiveness in May 2021.