SBA Disaster Loans: Interest Rates, Qualifications & How to Apply

Small Business Administration (SBA) disaster loans provide quick and affordable financing for disaster recovery as declared by the President of the United States, SBA or U.S. Department of Agriculture. Businesses of all sizes, most private nonprofit organizations, homeowners and renters are eligible. The SBA disaster loan program features an initial 5- to 15-month payment deferral, terms up to 30 years and interest rates of 4 to 8 percent.

The SBA is the direct lender for disaster loans. This is different from SBA 7a loans, where approved lenders issue loans directly to small business borrowers with guarantees provided by the SBA. An initial loan disbursement of up to $25,000 will be issued within 5 days of the SBA receiving your loan closing documents.

How SBA Disaster Loans Work

SBA disaster loans are a safety net for businesses without sufficient insurance or other assistance. Businesses in declared disaster regions can receive loans up to $2 million with affordable interest rates and terms. The SBA processes loan applications within 4 weeks. Within 5 days of receiving your closing paperwork, the SBA will disburse an initial $25,000.

Some disasters are so severe that the President, SBA or Department of Agriculture determine government assistance is needed to help businesses recover, and so they are added to the SBA’s current disaster list. Businesses are encouraged to first seek relief from their insurance companies, Federal Emergency Management Agency (FEMA) and other agencies and organizations offering grants or other assistance. SBA disaster loans can potentially fill any remaining funding gaps.

The SBA provides relief to businesses of all sizes and most private nonprofit organizations up to $2 million through the following three programs:

1. Business physical disaster loans (BPDL) are available to qualified businesses of all sizes and most private nonprofit organizations to provide funds to repair or rebuild real estate, machinery and equipment, inventory and other business assets.
2. Economic injury disaster loans (EIDL) are available to qualified small businesses, small agricultural cooperatives, small businesses involved in aquaculture and private nonprofit organizations — excluding religious organizations — for working capital needs.
3. Military economic injury disaster loans (MEIDL) are available to qualified small businesses to meet normal and ordinary expenses they are not able to cover because an essential employee was called to active duty as a military reservist during a military conflict.

SBA Disaster Loan Eligibility

SBA disaster loans provide borrowers with a quick and affordable source of gap funding once other resources like insurance have been exhausted. Businesses of all sizes and most private nonprofit organizations meeting basic qualifications, such as good credit and an ability to repay their obligations, are eligible to apply for funding of up to $2 million.

The basic borrower types eligible for SBA disaster loans include:

• Businesses of all sizes that experienced physical damage from a qualified declared disaster may apply for BPDL from the SBA of up to $2 million.
• Private nonprofit organizations, small businesses, small agricultural cooperatives and small businesses involved in aquaculture may apply for disaster relief from the SBA. You can determine if the SBA considers your business to be small by using its Size Standards Tool. Businesses in this category may qualify for a maximum combined loan amount of up to $2 million for:
  • Physical damage via the BPDL program.
  • Substantial economic injury resulting from a qualified disaster via the EIDL program.
  • Substantial economic injury resulting from an essential employee being called to active duty as a military reservist under the MEIDL program; the MEIDL program applies to small businesses only.
• Homeowners may apply for a loan of up to $200,000 from the SBA to repair or rebuild a primary residence damaged by a qualified declared disaster after registering with FEMA and other forms of assistance have been exhausted.
• Renters may apply for a loan of up to $40,000 from the SBA to repair or replace personal property damaged by a qualified declared disaster after registering with FEMA and other forms of assistance have been exhausted.

If a disaster strikes, the SBA disaster loan program provides a good source of supplemental recovery funding for businesses of all sizes, including most private nonprofit organizations as well as homeowners and renters. Through this program, those affected by the disaster may be able to obtain the funds needed to recover at an affordable rate and under reasonable terms.

Businesses Ineligible for SBA Disaster Loans

While the SBA offers disaster loans to most businesses and private nonprofit organizations, businesses of certain types and characteristics are ineligible for assistance. If you’re not sure of your eligibility, SBA staff members can provide assistance. You can contact the SBA in person at a Disaster Recovery Center, by email or by phone with any questions.

Some of the most common businesses ineligible for the SBA disaster loan program include the following:

Public Entities & Publicly Owned Nonprofit Organizations

Nonprofit organizations that are publicly owned and other public entities like cities, towns and counties are ineligible for any type of funding under the SBA disaster loan program. The SBA can provide relief to most private nonprofit organizations of any size; however, religious organizations are excluded from participation in the EIDL program.

Agricultural Enterprises

The SBA is not authorized to provide BPDLs to agricultural enterprises (AE), which includes farmers, ranchers and aquaculturists. It can provide relief to a non-agricultural venture of an AE so long as the income and operations of the non-agricultural venture are separate and distinct from the AE. Additionally, the SBA can provide relief to small agricultural cooperatives and small businesses involved in aquaculture through the EIDL program.

Hobby Businesses

If the SBA determines a business is a hobby, it becomes ineligible for any type of funding under the SBA disaster loan program. When making this determination, the SBA considers such factors as the legal status of the business, licensing and efforts on the part of the owner to operate as a business rather than a hobby.

SBA Disaster Loans Interest Rates, Features & Options

The SBA provides affordable assistance through the BPDL, EIDL and MEIDL programs. BPDLs repair or replace disaster-damaged property. EIDLs address substantial economic injury (SEI) from a disaster. MEIDLs address SEI from an essential employee serving as an active-duty reservist during a military conflict.

Comparison of SBA Disaster Loan Features

1. The $2 million maximum loan amount is based on the sum of all loans provided to your business and any related affiliates by the SBA for each disaster. This includes BPDL and EIDL as well as loans for mitigation and refinancing.
2. The Credit Elsewhere test is an analysis performed by the SBA to determine if you have the ability to obtain some or all of the financing you have requested from other sources without causing you undue hardship. Unless you are a private nonprofit organization, if your business is able to obtain credit elsewhere, the maximum term the SBA will provide to you is 7 years.
3. The SBA may approve extending the deferral period beyond 5 months if it will take longer than 5 months to repair or replace the property or for the economic injury to be resolved. It may also extend the deferral period on a case-by-case basis for seasonal businesses.
4. While the first payment is generally due at 15 months, the payment may actually be deferred to the later of either 12 months from the date of the initial disbursement or the period of time the essential employee is on active duty.

SBA Disaster Loan Qualifications

As with other SBA loan types, in order to be approved for an SBA disaster loan, you need to meet certain qualifications. In general, your credit history needs to be considered acceptable by the SBA, you need to be able to repay all your loans with a cushion, and you need to provide any available collateral.

The basic credit qualifications for an SBA disaster loan are as follows:

• Credit score: 660+ (check your score for free here) The SBA must deem your credit history as acceptable. While there are no specific requirements, credit scores typically need to be 660 or better. The SBA will review your credit reports, and you will need to have no recent bankruptcies, foreclosures, tax liens or problems with prior SBA and other federal obligations.
• Repayment ability: Calculated from your company’s earnings, your ability to repay the loan must be sufficient to cover all of your loans and other obligations with a cushion. A debt service coverage ratio (DSCR) on your business of 1.25 times or better is generally considered sufficient. The SBA will review your financial information and credit reports using an approach similar to other SBA loan programs and also has an expedited RAPID program for smaller loan amounts.
• Time in business: Your amount of time in business is typically not a factor when it comes to qualifying for a disaster loan from the SBA.
• Equity or down payment: Requirements apply insomuch as the SBA will consider it when determining how much collateral to require. Typically, the SBA will be looking for you to pledge enough business or personal collateral to cover the full loan amount. Its preference is for you to have a loan-to-value (LTV) ratio of 100 percent or less.
• BPDL collateral: Collateral is always required for loans above $25,000. In the event you do not have sufficient collateral, the SBA will not decline the loan for this reason alone, but it will ask you to pledge any available collateral.
• EIDL collateral: Real estate collateral is required for loans above $25,000, if and when available.
• MEIDL collateral: Real estate collateral is required for loans above $50,000, if and when available.

Business Physical Disaster Loan Features

The purpose of BPDLs is to provide qualified businesses of any size and most private nonprofit organizations with funds up to $2 million to help replace damaged business property or restore it to its predisaster condition.

Eligible business property includes:

• Real estate
• Leasehold improvements
• Inventory
• Machinery and equipment
• Supplies
• Other business assets

BPDL funds are to address disaster losses that are uninsured or not covered by other types of assistance and/or to help you relocate. The SBA will consider whether your relocation is voluntary or involuntary when deciding how much to lend to you. You can’t use loan proceeds for expansions or to make upgrades unless required by current building codes or the SBA grants an exception to mitigate future damage — up to 20 percent above the repair cost.

The SBA may be able to refinance your existing real estate loans if you are unable to obtain credit elsewhere, intend to repair the damage and have suffered from substantial uncompensated disaster damage. Substantial uncompensated disaster damage is defined as at least 40 percent of the property value or 50 percent of the structure value.

Economic Injury Disaster Loan Features

The purpose of EIDLs is to provide small businesses, small agricultural cooperatives and most private nonprofit organizations — excluding religious organizations — with funds up to $2 million to alleviate substantial economic injury from qualified disasters, even if there was no physical damage. Your business experienced substantial economic injury if you can’t afford your normal operating expenses or meet your typical obligations because of the disaster.

Examples of funding gaps caused by substantial economic injury to your business include:

• Reduced working capital: Reductions in working capital could happen for a number of reasons, including your customers not paying their accounts receivable (A/R) within agreed-upon terms or if you are unable to sell your inventory as quickly as normal. Both of these scenarios would result in increased days on hand — slower A/R and inventory turnover — resulting in reduced working capital.
• Increased expenses: A disaster could easily result in your company needing to pay extraordinary expenses, meaning expenses outside what you normally spend. Besides damage, increased expenses could also be caused by increases in labor if it is in short supply like contractors may be spending their time repairing damage and thereby unavailable to provide normal services to you or supply costs, amongst other items.

The EIDL program is available if the SBA determines you can’t obtain credit elsewhere without undue hardship. Your loan amount is based on your company’s financial needs and your actual economic injury, either already incurred or projected, regardless of whether you experienced physical damage. Businesses can receive funding under both the BPDL and EIDL disaster loan programs under the same application, with the maximum combined loan amount capped at $2 million.

Military Economic Injury Disaster Loan Features

Under the MEIDL program, small businesses can receive up to $2 million. The purpose is to alleviate substantial economic injury caused by an essential employee’s absence during a military conflict while serving as an active duty reservist. The funds cannot be covered by insurance like key man and business interruption or other means.

Per the SBA, an essential employee (EE) is someone whose skills — managerial or technical — are critical to the company’s day-to-day business success. The EE does not need to be an owner of the business but may simply be an employee of the company. Substantial economic injury is defined the same as in the EIDL loan program.

The loan amount is based on your financial needs and actual economic injury already sustained or projected, and you must be unable to obtain credit elsewhere. It’s a source of gap funding for your existing obligations like replacement employee salary, not lost income. Businesses can apply for relief the day the EE is called to active duty as a reservist for military conflict and up to one year after the EE’s active duty release or discharge.

How to Apply for the SBA Disaster Loan Program

If disaster strikes and you need funds to cover gaps in insurance coverage or other assistance, consider applying for assistance under the SBA disaster loan program. You can apply as soon as it is safe and feasible to do so, without waiting to receive insurance proceeds. Applying quickly enables you to begin recovering sooner.

The four steps to apply for an SBA disaster loan are:

1. Gather Required Documentation

The SBA will be able to make its decision more quickly if you provide it with a loan application that includes all the required information at the time of submission. That said, you should gather and prepare the following information before you submit your application to the SBA:

• Business loan application: The business applicant will need to complete and sign SBA Form 5.
• IRS request for transcript of tax return: Each of the following need to complete and sign IRS Form 4506-7:
  • Business applicant
  • All individuals or entities owning 20 percent or more of the business
  • Each general partner or managing member of the business
  • Any owner who owns more than 50 percent of an affiliate business; this includes businesses with common management or ownership, the business parent, and/or business subsidiaries
• Federal tax returns: The most recent federal tax returns, including all schedules, need to be provided to the SBA by all of the following (an explanation must be provided to the SBA if the most recent federal tax returns are not available and an extension with the IRS must have been filed if the filing date has passed):
  • Business applicant
  • All individuals or entities owning 20 percent or more of the business
  • Each general partner or managing member of the business
  • Each affiliate business that is owned more than 50 percent by any of the business owners
• Debt schedule: The business applicant needs to provide a schedule listing all debts. A relatively simple way to do this is by preparing SBA Form 2202.
• Business financial statements: The business applicant needs to provide the following to the SBA:
  • Year-end balance sheet and profit and loss statement, if the most recent federal tax return has not yet been filed
  • Current year-to-date profit and loss statement
• Personal financial statements: Each of the following need to complete, sign, and date SBA Form 413:
  • Business applicant if a sole proprietorship
  • All individuals or entities owning 20 percent or more of the business
  • Each general partner or managing member of the business
• Additional documentation requirements:
  • For EIDLs and MEIDLs, the business applicant needs to prepare SBA Form 1368, which provides the SBA with monthly sales figures.
  • For MEIDLs:
    • A copy of notice(s) to the essential employee of expected call-up to active duty, official call-up orders or active duty release/discharge.
    • A financial estimate and written explanation of the economic injury to your business that has been experienced or will result from the essential employee’s absence, along with a description of the steps your business is taking to lessen the economic injury.

Additionally, before you apply make sure you have the following information readily available:

• For all applicants:
  • Contact information
  • Employer identification number (EIN) or Social Security number
• Information on the following:
  • Deed of trust or lease agreements
  • Insurance
  • Financial like income and expenses, liabilities or account balances

2. Apply for the SBA Disaster Loan

Once you have gathered the necessary documentation, the next step is to apply for the SBA Disaster Loan. The loan application can be submitted in three different ways:

• Online: To submit your application online, visit the SBA’s website. This is the quickest way to apply for a disaster loan.
• In-person: If you would prefer to submit your application in person, you can do so at a Local Disaster Recovery Center. You can find a location by emailing the SBA or by searching for a Disaster Center Office on the SBA’s website.
• By mail: You can mail your completed application, including all required documentation to the following address:

SBA Processing & Disbursement
14925 Kingsport Road
Fort Worth, TX 76155

3. Work with a Loan Officer on Property Verification & the Loan Decision

Once the SBA has received your loan application, it will assign a loan officer to your case and make its loan decision within four weeks. Your loan officer will work with you throughout the loan decision-making process, which includes the following:

1. Perform a credit review: The first step the SBA will take is to review your credit history to determine if the way you have handled your loans in the past and present meets its standards.
2. Order an inspection & estimate total losses: If the credit review is satisfactory, the SBA will ask an inspector to estimate the total amount of physical loss your disaster-damaged property has sustained.
3. Determine eligibility: Your loan officer will determine your eligibility, which will include reviewing any insurance or other possible recoveries like grants. The good news is you do not have to wait to receive the insurance proceeds before the SBA will make the disaster loan. You will simply need to apply the insurance proceeds to your SBA loan when received.
4. Request additional information & complete loan processing: If you have not provided all the required information needed in order for the SBA to make its loan decision, your loan officer will work with you to obtain the missing information. Once all requested information has been provided to the SBA, the loan officer will complete the processing of your loan so the SBA can make a decision about your loan.
5. Discuss loan decision & next steps: Once the SBA has made its loan decision, your loan officer will contact you to discuss the SBA’s decision and next steps. The SBA will also provide its loan decision to you in writing.

4. Close the Loan & Receive Loan Proceeds

Once your loan has been approved by the SBA, your loan officer will send you a package of loan closing documents for signature. The quicker you sign and return these documents, the sooner you will receive the initial disbursement on your loan. The SBA will provide you with an initial disbursement of $25,000 within 5 days of receiving your loan closing documents for both BPDLs and EIDLs.

You will be assigned a case manager who will work with you to help you meet all loan conditions and to schedule future loan disbursements up to the approved loan amount as follows:

• BPDLs: Disbursements are made over a 6-month period as repairs are completed — extended up to 12 months on a case-by-case basis. You will provide your loan officer with the documents specified in your loan agreement at each draw like budgets, building permits and lien waivers. Your loan officer will review and confirm the work was completed per its approval before disbursing funds. You can request draws as frequently as needed to ensure the timely completion of the project.
• EIDLs: After you receive the initial $25,000, the remaining funds are typically disbursed in a single lump sum as soon as you have satisfied all loan closing conditions.
• MEIDLs: Funds are generally disbursed quarterly unless there is a sound business reason to provide a single disbursement. An exception to the quarterly disbursement schedule needs to be requested by your loan officer at loan approval. Your loan officer will review your financial condition each quarter to ensure you still need the funds prior to authorizing any additional disbursements.

You’ll make monthly principal and interest payments once your loan is fully disbursed. This is generally at 5 months for BPDLs and EIDLs, and 15 months for MEIDLs. The deferral period for MEIDLs is the later of 12 months from initial disbursement or the essential employee’s release from active duty. For BPDLs and EIDLs, a deferral period extension may be granted as an exception for seasonal businesses, extended economic injury or substantial repairs.

Lastly, your loan officer will help you work through any loan modifications needed to address changes in your situation. This could include increasing the loan to address unexpected repairs. It could also include reducing the loan if you receive more insurance proceeds than initially expected. You need to submit material modification requests to your loan officer in writing, which could include changes to the:

• Use of proceeds like you decide to relocate instead of rebuild
• Collateral like the location in the event of a relocation
• Flood insurance proceeds like higher or lower than expected
• Loan amount like an increase because of a problem with the contractor or lack of available contractors, increase to allow for mitigation of future disasters

Your loan officer will work with you to obtain the information needed to evaluate any modification requests. You’ll be notified in writing of the SBA’s decision and will be asked to sign revised documents. As with the initial request, you can help the SBA process your request quickly by making sure your responses to requests for information are thorough and timely.

SBA Loans Disaster List: Current Qualifying SBA Disasters

When a disaster strikes, first responders coordinate state and local recovery efforts. The state governor may determine the disaster cannot be handled locally and will petition the U.S. President or the SBA for federal assistance. Additionally, the U.S. Secretary of Agriculture and U.S. Secretary of Commerce may make economic injury disaster declarations.

The disaster declarations described above fall into two broad categories:

• Presidential & SBA agency-declared disasters: BPDLs and EIDLs are both available when disasters are declared under this category.
• Secretary of Agriculture-declared disasters: Only EIDLs are available for disasters declared under this category.

Lastly, the SBA’s MEIDL program goes into effect during a period military conflict. This type of disaster declaration is not published on the SBA’s website or in the federal register. However, the SBA publishes the current SBA disaster loans interest rates to the Federal Register on quarterly basis via a notification (the most recent notification as of the article publication date can be accessed here). The SBA defines a period of military conflict as:

• Congressional declarations of periods of war or national emergency; or
• Secretary of defense declarations of periods of contingency operation, which means the U.S. military is or may be involved in peacekeeping operations or other hostilities, military actions or other operations.

Note: A period of military conflict is not a situation where a state’s governor activates reservist action in response to a disaster event.

Presidential & SBA Agency Declared Disasters: SBA Loans Disaster List

The following map and table show current disasters declared by the President and SBA. The list of declared disasters can also be viewed at the SBA’s website, where you can filter the disasters by state and county. On this same website, the SBA provides details for each disaster such as the specific SBA disaster loans interest rate and filing dates.

Note: Current disasters declared in U.S. territories are not included on the map; instead check out the table below.

Presidential & SBA Current Declared Disaster List

The following table provides the current Presidential and SBA declared disasters (updated as of October 15, 2018). Click the table to expand and view more information. Visit the Disaster Declaration links provided to view more details, such as specific SBA disaster loans interest rates for the event and local SBA contact information.

Secretary of Agriculture Declared Disasters: SBA Loans Disaster List

The following map and table show current disasters declared by the Secretary of Agriculture. The list of declared disasters can also be viewed at the SBA’s website, where you can filter the disasters by state and county.

Note: Current disasters declared in U.S. territories are not included on the map; instead check out the table below.

Secretary of Agriculture SBA Current Declared Disaster List

The following table provides the current Secretary of Agriculture declared disasters (updated as of January 15, 2019). Click the table to expand and view more information.

Pros & Cons of the SBA Disaster Loan Program

SBA disaster loans provide qualified businesses with affordable financial assistance during crisis periods. As a safety net for businesses not sufficiently covered by insurance or other assistance, SBA disaster loans allow for quick access to funds prior to receipt of insurance proceeds or other assistance. The pros and cons that should be considered are outlined below.

Pros of the SBA Disaster Loan Program

The pros of the SBA disaster loan program include:

• Affordable financing: Interest rates for BPDLs may not exceed 4 percent if you cannot obtain credit elsewhere and 8 percent if you can obtain credit elsewhere. For EIDLs, interest rates may not exceed 4% when you cannot obtain credit elsewhere.
• Expanded borrower scope: Unlike traditional SBA loans, the scope of the SBA disaster loan program includes businesses of all sizes and most private nonprofit organizations.
• Lack of collateral not prohibitive: Your loan will not be declined by the SBA simply because you lack sufficient collateral. Rather, you will be asked to pledge any available collateral to the SBA. This is an especially beneficial feature if you have existing debt, given that the repairs may not increase the value of your property.
• No waiting period: There is no need to wait for receipt of insurance proceeds before applying for a disaster loan. This means you can get access to the funds needed to recover sooner than would otherwise be the case.

Cons of the SBA Disaster Loan Program

The cons of the SBA disaster loan program include:

• Limited scope for EIDLs: While businesses of all sizes can apply for BPDLs, the scope of the EIDL program is more limited. The latter program is only available to private nonprofit organizations, small businesses, small agricultural cooperatives and small businesses involved in aquaculture. Further, the program is only available to companies that do not have the ability to obtain credit elsewhere.
• Only available for declared disasters: The disaster loan program is only available for disasters recognized by the SBA, which are generally those declared directly by the SBA, U.S. President, U.S. Secretary of Commerce, or U.S. Secretary of Agriculture. If your area is affected by a disaster not recognized by these sources, you are not eligible for financing under this program.
• Potentially extended loan approval period: While you do not have to wait to receive insurance proceeds before applying for relief, the SBA states that the application period is approximately four weeks. You can help the SBA process your loan application more quickly by providing a complete package up front and responding quickly to requests for additional information.
• Requires good credit history: If you do not have a satisfactory credit history, the SBA will most likely not be able to provide assistance under its disaster loan program. According to the SBA, most of its loan declines are due to poor credit history.

Alternatives to the SBA Disaster Loan Program

While the SBA disaster loan program provides quick and affordable disaster financing, it may not work for your business. If the SBA determines you can get credit elsewhere, you’re not eligible for an EIDL. Further, when you can get credit elsewhere, you’ll pay up to 8 percent on a BPDL with a maximum term of 7 years, unless you’re a private nonprofit organization.

The SBA disaster loan program is a great option, but there are other potential alternatives. These include traditional bank loans, other SBA loans and alternative business loans. When making a financing decision, you should take time to consider the available options.

Some potential alternatives to an SBA disaster loan include:

Traditional Bank Loans

If you have good credit and plenty of cash flow, a traditional bank loan could be a viable alternative to the SBA disaster loan program. A traditional bank may offer you a construction loan if you have sufficient collateral or it chooses to take advantage of other disaster relief programs. It may also be willing to provide you with a working capital loan if you have ample liquidity or other available collateral like accounts receivable and inventory.

Other SBA Loans

If you do not qualify for a traditional bank loan, you may consider applying for a different type of SBA loan. In addition to its disaster loan program, there are five other types of SBA loans that could potentially meet your needs, including 7a loans, 504 loans, CAPlines, export loans and microloans. If you did not suffer from a formal declared disaster but still need help in recovering, you might consider applying for one of these SBA loan types.

Alternative Business Loans

If you need to receive funds quickly, you may be able to receive a quick decision from an alternative lender. Furthermore, alternative lenders often have more flexible credit terms, so you may be able to receive financing not otherwise available from either the SBA or a traditional bank. Read our article for nine possible alternative business loan options.

SBA Disaster Loan Frequently Asked Questions (FAQs)

While this article has provided substantial information about the SBA’s disaster loan program as with any lending program, some questions are asked more frequently than others. The following are some of the most frequently asked questions about the SBA’s disaster loan program.

Can I get assistance for physical damage to a residential rental property that I own through an SBA Disaster Loan?

Yes, if the residential property is a rental and not a residence you can apply for a BPDL. This determination is made by using the IRS definition. In general, if you lease the residential property for more than 14 days each year, the IRS considers it a rental property and not a residence.

How does approval of an SBA Disaster Loan affect my eligibility for grants or other forms of assistance?

Other government agencies like FEMA and organizations offer alternative types of disaster assistance. As an example, one type of assistance is a grant, which doesn’t need to be repaid. The SBA recommends you check with the administering agencies and organizations before applying for an SBA disaster loan to determine if it will affect your eligibility.

How can I determine if the SBA considers my business small for the purpose of an EIDL?

The SBA uses its traditional approach when determining if a business is small. A business is typically considered small by the SBA when it generates $750,000 to $38.5 million in annual revenue and has 100 to 1,500 employees, which varies by industry. You can determine if the SBA considers your business small by using its Size Standards Tool.

What are common reasons that SBA Disaster Loans applications are declined?

A common reason for the SBA declining an application is poor credit history. This includes a low credit score and unsatisfactory performance on prior SBA loans or other federal obligations like student loans. Another common reason is being unable to repay your debt with a cushion, generally 1.25 times or better DSCR is acceptable.

What if I waited too long to apply for an SBA Disaster Loan?

If you missed the application deadline, the SBA may grant an extension if the issue was unavoidable and outside your control. Examples include serious illness or death of the owners and temporary relocation outside the disaster area. To request an extension, you need to provide the SBA with a letter of explanation in your loan application.

What if my event is not on the SBA’s current disaster list?

Disasters are initially managed at the local and state level. Once disasters move to the federal level, the SBA engages in outreach programs, publishes fact sheets, and issues press releases. You can check the SBA’s website to see if a disaster has been declared. Alternatively, you can email the SBA or contact a Disaster Center Office.

The Bottom Line

SBA disaster loans provide quick and affordable disaster recovery funding to qualified businesses of all sizes and most private nonprofit organizations. Companies with good credit history and the ability to repay their obligations can benefit from low-interest rates and terms up to 30 years. Viable alternatives include loans from traditional banks, SBA lenders and alternative lenders.