Disasters halt business operations, leaving owners without working capital to cover payroll or rent. When options run out, the Small Business Administration steps in. Applying for an SBA disaster loan can help you meet financial obligations and stay in business.
Review the guidelines for the SBA Economic Injury Disaster Loan (EIDL) program, including a documentation checklist and application timelines. Follow these steps to learn how to apply for an SBA disaster loan.
Who is eligible for an SBA disaster loan?
SBA disaster loans are available for all for-profit businesses (regardless of size), nonprofit organizations, homeowners, and renters affected by declared disasters. To be eligible, you must be in the declared disaster area, be unable to access alternative financing, and meet specific loan criteria, which vary by the type of disaster loan.
Types of SBA disaster loans
Section 7(b) of the Small Business Act authorizes four types of low-interest, long-term disaster loans, including physical disaster home loans, physical disaster business loans, economic injury disaster loans, and Military Reservist EIDL loans.
The SBA also offers mitigation funds to eligible loan applicants. Businesses can qualify for an EIDL and a business physical disaster loan, as long as the loan amount doesn’t exceed $2 million. Compare SBA disaster assistance loans to decide which program fits your situation.
Here’s a quick look at the SBA disaster loan options:
- Home and personal property loans: Homeowners and renters in declared disaster areas can apply for loans to replace or repair personal property up to $100,000, and homeowners can request up to $500,000 for primary residence repairs or replacement.
- Business physical disaster loans: Most private nonprofit organizations and businesses of any size located in a declared disaster area may qualify for up to $2 million to repair or replace real property, equipment, or inventory.
- Economic Injury Disaster Loans: Small businesses, agricultural cooperatives, or private nonprofit organizations in a disaster area may qualify for SBA EIDL loans if they can’t cover necessary operating expenses and obtain credit elsewhere.
- Mitigation assistance: Businesses and homeowners eligible for SBA disaster loans can apply to increase their funding by up to 20% to upgrade their buildings or properties to reduce future damage.
- Military Reservist Economic Injury Disaster Loan (MREIDL): The SBA calculates actual economic injury to determine loan amounts for businesses financially impacted by an essential employee who is a military reservist called to active duty.
SBA disaster loan documentation checklist
Improve business continuity and streamline the SBA disaster loan process by organizing your personal and operational documents. Add your EIDL documentation checklist to your emergency preparedness plan and create a secure, digital backup of related records. This step can help you apply for a disaster loan quickly, even if you can’t access your physical business location. Here’s what you need for most SBA disaster loan applications.
Personal and business identification
- Government-issued photo ID.
- Social Security number of each business owner.
- Federal employer identification number (EIN).
- Six-digit NAICS code.
- Business legal name and DBA.
- Entity structure used on your last federal tax return (sole proprietorship, LLC, etc.).
Financial statements and tax documentation
- Most recent federal business tax return (all schedules).
- Current personal tax return for each owner.
- Year-to-date profit and loss statement and balance sheet.
- Schedule of liabilities (See SBA Form 2202 for an example).
- Personal financial statements (SBA Form 413) for each owner with 20% or more interest.
Supporting business operations documents
- Proof of location, such as utility bills, property tax records, or a lease.
- Business licenses or permits.
- Formation documents, such as articles of incorporation and an operating agreement.
- Most recent business insurance declaration page.
- Voided check or bank information for disbursement.
Revenue and economic injury documentation (EIDL)
- Monthly gross revenues for the past 12 to 24 months.
- Documentation showing revenue disruptions, such as invoices, contracts, and bank statements.
- Payroll summary if economic injury impacts payroll.
Physical damage and insurance documentation (physical disaster loans)
- Photos and videos of damaged property.
- Repair estimates or contractor quotes.
- Insurance policies, claim numbers, and settlement letters.
- Inventory lists for damaged or lost equipment, supplies, or products.
- Property deed or lease agreement.
Section 7(b) of the Small Business Act authorizes four types of low-interest, long-term disaster loans, including physical disaster home loans, physical disaster business loans, economic injury disaster loans, and Military Reservist EIDL loans.
How to apply for an SBA disaster loan
If your business is located in a declared disaster area and has experienced significant economic or physical impacts, you can apply for one or more SBA disaster loans. Follow these steps to see if you qualify, gather the required documents, and submit your application.
Step 1: Confirm your SBA disaster loan eligibility
Check if your property is in a declared disaster area using the SBA search tool or in person at a disaster recovery center. Take note of key information, including the disaster declaration date and filing deadlines for physical damage and economic injury applications. Also, write down the five-digit disaster number that comes after the state abbreviation. You will need this for your SBA loan application.
Other disaster-related documentation may provide contact details and hours for temporary field operations and loan outreach centers or lists of local SBA partner resources for small business owners.
Step 2: Gather and update the required documents for your SBA application
Use your documentation checklist to see what information you need. Update records and make sure your recent versions are error-free with no misspelled names or outdated addresses.
Take these steps if you have general partners, managing members, or anyone who owns at least 20% of your business:
- Confirm personal and contact information: Make sure you have the correct email address, primary and secondary phone numbers, Social Security or Individual Taxpayer Identification Number, and marital and citizenship status.
- Disclose criminal background and delinquencies: Seven application questions require dates and details for each occurrence, including bankruptcies within the past two years, child support payments more than 60 days late, and other reportable issues.
- Complete personal financial statements: List all relevant assets and total liabilities, including co-signed loans. Double-check your math and be ready to show your work with documentation. Make sure everyone signs and dates SBA Form 413.
Step 3: Apply online, in person, or by mail
You can submit your SBA disaster loan application online using the MySBA Loan Portal, in person at a disaster recovery center, or by mail. All methods require the same information, but the online process puts everything in one spot, which is convenient.
To apply online, you must register for MySBA, which verifies your identity and lets you use a single login across multiple SBA programs. Provide a state-issued ID, your Social Security number, and a phone number on a plan associated with your name to receive a verification code.
After securing your account, begin your application in the disaster loan assistance portal. Read the directions for each question and confirm your responses match your federal tax return and financial documents.
Along with the required documents and information from above, you will need to:
- Know how many employees you had at the time of the disaster.
- Complete and sign a Request for Transcript of Tax Return.
- Provide your schedule of liabilities.
- Submit a complete copy of your company’s most recent federal income tax returns.
SBA disaster loans may have additional requirements, or the SBA may request more information before processing your application. You can submit documents through the MySBA Loan Portal.
What to expect after you apply for an SBA disaster loan
The SBA reviews applications in several stages. You can check your SBA disaster loan status in the portal and respond to document requests. When application volumes are low, a complete application package can be processed and approved within two to three weeks.
When there are many disasters and applications, processing takes longer. Errors and missing documents also cause delays.
Here’s what typically happens after you submit your SBA disaster loan application.
- Identity and credit checks: The SBA requests tax transcripts and pulls credit reports. Bad credit doesn’t automatically disqualify you, but recent bankruptcies or severe delinquencies could trigger a denial or request for more information.
- Damage verification (for physical disaster loans only): The SBA’s loss verification team evaluates damage using photos, invoices, and insurance documents. If the area is accessible, they may perform an in-person inspection.
- Financial review and collateral requirements: To assess your ability to repay, a loan officer reviews your tax records, revenue history, and debt. They may ask for more documents before determining your loan amount. Most loans under $25,000 don’t require collateral.
- Loan documents and signatures: If you’re approved, the SBA posts your closing documents in your loan portal. You can review repayment terms and electronically sign documents, including personal guarantees by managers, partners, and anyone owning 20% of the business.
- SBA loan disbursement timeline: After the SBA receives your signed documents, the first loan disbursements usually arrive within five days. Your loan agreement outlines when or if you will receive additional disbursements.
If denied: reconsideration, appeals, and alternatives
When the SBA denies your disaster loan, you can request a reconsideration within six months of the date on the letter. To win your case, you must provide evidence that addresses the reasons for denial, such as corrected financial documents and a higher credit score. Submit your new information to SBA's Disaster Assistance Processing and Disbursement Center (DAPDC).
If this attempt fails, you can appeal in writing within 30 days to the director or the director’s designee at DAPDC. Your request must give specific reasons why the denial should be reversed. The ruling is typically final under SBA regulations.
At this point, you may want to consider community or state grants and alternative lending options. Check with your local Chamber of Commerce and SBA partner resources to learn about options in your area. To speed up funding, nonbank lenders offer working capital loans and lines of credit, and several offer products for those with fair credit.
Nicole Fallon and Ami Scherson contributed to this article.
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