Getting an SBA Loan After a Natural Disaster

The SBA has special loan programs to help individuals and businesses after a natural disaster.

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If you have been affected by a natural disaster, such as Hurricane Sandy, one of the options available to help you rebuild your home or business is to obtain a loan from the U.S. Small Business Administration (SBA). SBA loans are available for homeowners, renters, and business owners. Read on to learn more about the types of loans the SBA provides, who is eligible, typical loan terms, and what you can do with the funds.

About SBA Disaster Loans

The SBA provides the following types of disaster loans:

  • Home and Personal Property Loans (for homeowners and renters)
  • Business Physical Disaster Loans (for businesses)
  • Economic Injury Disaster Loans (for businesses), and
  • Military Reservists Economic Injury Loan (for businesses).

Loans can be used for repairing or replacing real estate (home or business), personal property, machinery, equipment, inventory, and business assets that have been damaged or destroyed in a declared disaster.

Home and Personal Property Loans

Here are the eligibility rules, loan terms, and permissible uses for SBA Home and Personal Property Loans.


Homeowners and renters (even those who don’t own businesses) who are victims of a disaster and are within a declared disaster area are eligible to borrow up to $40,000 to repair or replace personal property that was damaged or destroyed. Homeowners may also apply for up to $200,000 to restore their primary residence to its pre-disaster condition. The total amount that the SBA will lend to homeowners/renters is dependent upon the cost to repair or replace the home or personal property, less any insurance settlements or grants.

Home and personal property disaster loans are only available to cover damage to a primary home and its contents, not second homes or vacation properties. However, qualified rental properties may be eligible for a loan under the SBA business loan programs.

Loan Terms

The interest rate on an SBA home or personal property disaster loan will not exceed:

  • 4% for applicants unable to obtain credit elsewhere, or
  • 8% for those who are able to obtain credit elsewhere, such as from a bank. (The SBA determines whether an applicant has credit available elsewhere).

The repayment period of the loan may be up to 30 years, which is determined on an individual basis and is based upon the borrower’s repayment ability.

A borrower must provide collateral for loans over $14,000, which usually consists of a first or second mortgage on the damaged real estate. The SBA will not deny a loan for insufficient collateral, but it will require the borrower to provide whatever collateral they can.

Acceptable Use of Loan Proceeds

You may use loan proceeds to repair or replace clothing, furniture, cars or appliances damaged or destroyed in the disaster, as well as to repair or replace a primary residence. You cannot use the loan to upgrade homes or make additions (unless such upgrades and additions are required by local building codes). Loans may be increased up to 20% of the total amount of disaster damage to make improvements to the real estate that would reduce the risk of property damage in the future from the same type of disaster.

Business Physical Disaster Loans

The SBA will also provide a loan if your business was physically damaged in a disaster.


Any business or private, nonprofit organization may apply for a loan to replace damaged property or restore it to the pre-disaster condition so long as it is:

  • located in a declared disaster area, and
  • has incurred damage during the disaster.

Loan Terms

The interest rate is determined by the business’ ability to obtain credit from non-federal sources, but will not exceed:

  • 4% for businesses and nonprofit organizations unable to obtain credit elsewhere, or
  • 8% for businesses and nonprofit organizations with credit available elsewhere. (Again, the SBA determines whether the applicant has credit available elsewhere.)

The repayment period can be up to 30 years, depending on the business’ ability to repay the loan.

Acceptable Use of Loan Proceeds

Loan proceeds may be used for the repair or replacement of:

  • business real property
  • machinery/equipment
  • fixtures
  • inventory, and
  • leasehold improvements.

In addition, the loan can be increased up to 20% over the total amount of disaster damage to make improvements designed to protect the real property against future disasters of the same sort.

Economic Injury Disaster Loans

You may also qualify for a disaster loan from the SBA to help pay ordinary and necessary operating expenses until normal operations resume if your business suffered economic injury as a result of a disaster (even if no physical damage was incurred).


Businesses that have suffered substantial “economic injury” resulting from a declared disaster or an agricultural production disaster (as designated by the Secretary of Agriculture) are eligible for Economic Injury Disaster Loans. Economic injury is “the inability of a business to meet its obligations as they mature and to pay its ordinary and necessary operating expenses.” Covered businesses include:

  • small businesses
  • small agricultural cooperatives
  • small businesses engaged in aquaculture, and
  • most private nonprofit organizations of all sizes.

Loans are only available only to small businesses that are unable to obtain credit elsewhere, as determined by the SBA.


The SBA can provide up to $2 million to help a business meet financial obligations and operating expenses. The interest rate on this type of loan cannot exceed 4% per year, and the repayment period cannot exceed 30 years. The actual repayment period will be determined by the business' ability to repay the loan.

Acceptable Use of Loan Proceeds

This type of loan helps businesses meet the normal financial obligations that could have met had the disaster not occurred.

Military Reservists Economic Injury Loans

The Military Reservist Economic Injury Disaster Loan program provides loans to eligible small businesses that cannot meet ordinary and necessary operating expenses because an essential employee was called to active military duty in his or her role as a reservist.


Only businesses without the financial capacity to fund their own recovery are eligible for this type of loan. This means that if the SBA determines that credit is available from non-government sources, the SBA will not approve the loan. (However, according to the SBA website, over 90% of loan applicants do not have sufficient non-government financial resources.)

The timeframe to apply for a Military Reservist Economic Injury Disaster Loan:

  • begins when the essential employee receives notice of an expected call-up to active duty, and
  • ends one year after the essential employee is discharged or released from active duty.

Loan Terms

The interest rate for this type of loan is 4% and the repayment period may be up to a maximum of 30 years, based on the business’ ability to repay the loan. The maximum loan amount is $2 million, however if a business is a major source of employment, the SBA has authority to waive the $2 million statutory limit.

Acceptable Use of Loan Proceeds

These loans are intended to provide funds so the business can pay its necessary obligations until operations return to normal once the essential employee is released from active military duty.

The loans are not to be used to:

  • cover lost income
  • cover lost profits
  • take the place of regular commercial debt
  • refinance long-term debt, or
  • expand the business.

How to Apply for a SBA Disaster Loan

First, go to and click on "Current Disaster Declarations" to find out if you are within a declared disaster area. You can also find the deadline to apply for a SBA disaster loan by reviewing your relevant section.

Next, click on “Applying for a Disaster Loan” for information on how to start your application. You can apply online, via mail, or in person at any Disaster Recovery Center where you can receive personal assistance from an SBA representative. For more information or to find a Disaster Recovery Center near you, contact the SBA Customer Service Center at 1-800-659-2955 (TTY: 1-800-877-8339) or send an e-mail to

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