How to Get an SBA Disaster Loan for Your Business: Eligibility and Steps

If a declared disaster damaged your business property or cut off your cash flow, an SBA disaster loan may be one of the cheapest ways to recover. Businesses that can’t get credit elsewhere pay a fixed rate of no more than 4% and can take up to 30 years to repay.

Yet roughly 80% of loans made through the Small Business Administration’s Disaster Loan Program go to individuals and households, according to the Congressional Research Service. Businesses and nonprofits make up the rest. Part of that gap reflects the fact that disasters usually damage far more homes than businesses. But it may also mean some eligible owners never apply because they assume the program is only for homeowners.

Here’s who qualifies, how to apply and what to have ready before you do.

Businesses and most private nonprofits can apply for two types of SBA disaster loans. If you have both kinds of losses, you can get both:

• Business Physical Disaster Loan: Covers repair or replacement of real estate, equipment, inventory and other physical assets. You can borrow up to $2 million at a fixed rate of up to 4% if you can’t get credit elsewhere, or up to 8% if you can.

• Economic Injury Disaster Loan (EIDL): Covers working capital and normal operating expenses your business can’t meet because of the disaster. You can borrow up to $2 million at a fixed rate of up to 4%. EIDLs are only available to businesses that can’t get credit elsewhere.

You can borrow up to $2 million in total across the two loans, although SBA can raise that limit for businesses that are a major source of employment in the area.

You don’t make a payment for the first 12 months, and no interest accrues during that time. After that, terms run up to 30 years if you can’t get credit elsewhere. If you can, physical damage loans max out at seven years.

Eligibility depends on which loan you’re applying for.

Business Physical Disaster Loans

You may qualify if you’re:

• A business of any size or a private nonprofit (most qualify).

• Located in a declared disaster area.

• Dealing with damage to real estate, equipment, inventory or other physical assets that insurance doesn’t fully cover.

Economic Injury Disaster Loans (EIDLs)

You may qualify if you’re:

• A small business (as defined by SBA size standards), a small agricultural cooperative or a private nonprofit (most qualify).

• Able to show substantial economic injury, meaning you can’t meet your financial obligations or pay ordinary operating expenses as a direct result of the disaster.

• Unable to get credit elsewhere, as determined by SBA.

A drop in sales or lost expected profits alone doesn’t count. SBA looks for a documented cash flow gap tied to the disaster.

What SBA Looks at for Both Loan Types

For both loans, SBA reviews your credit history and your business’s ability to repay. Loans over $50,000 generally require collateral, with real estate preferred. However, SBA won’t decline a loan solely for lack of collateral if it’s otherwise reasonably sure you can repay and you pledge what you have.

Once your area has a disaster declaration, here’s the general process:

1. Confirm your area is in a declared disaster: Check current declarations and apply through SBA’s disaster loan portal.

2. Gather your documents early: Expect to provide tax records, revenue history, an estimate of your losses and proof that your business was in the disaster area at the time.

3. Choose how to apply: Apply online, by phone or in person at a Disaster Recovery Center, where SBA representatives can walk you through the application.

4. Expect a loss verification: For physical damage claims, SBA’s loss verification team typically reviews photos, invoices and insurance documents. It may inspect in person if the area is accessible.

5. Watch your deadlines: Physical damage applications are generally due within 60 days of the disaster declaration, and SBA accepts late applications only in limited circumstances. EIDL applications are due within nine months of the declaration.

A complete application the first time around can save weeks of back-and-forth with SBA. It helps to keep your tax records, revenue history and insurance documents in one place before a disaster hits.

Expert Tip: One mistake I see business owners make is waiting for their insurance payout before applying. You don’t have to. SBA factors in what your insurer pays when it underwrites your loan, so you can start the application while your claim is still open instead of burning through the 60-day window.

It’s harder. A Government Accountability Office review of 13 major hurricanes from fiscal years 2018 through 2022 found that SBA declined about 40% of disaster loan applications. The main reasons were insufficient credit scores and a lack of proof that applicants could repay.

The same review found wide gaps by community. Average approval rates were 23 percentage points lower in the lowest-income communities than in the highest-income ones, and 22 points lower in communities with the highest share of Black or African American residents than in those with the lowest.

Businesses that were already struggling before the disaster have the hardest time.

If your business credit profile is thin or inconsistent, it may be worth building your business credit before a disaster strikes, since weak credit is one of the most common reasons applications are declined.

Your rate and term depend on whether SBA decides you can get credit elsewhere:

For comparison, SBA’s 7(a) Working Capital Pilot, a line of credit and one of the more competitively priced standard SBA loan products, caps rates at the base rate (usually the prime rate) plus 3% to 6.5%, depending on loan size. Lines can run up to 60 months. Because those caps sit on top of a market rate, they typically land well above the 4% disaster loan ceiling, and conventional bank loans and business lines of credit usually cost more still.

Disaster loans are only available after a qualifying disaster declaration. If your area isn’t covered, you can compare SBA loans for standard financing instead.

Proceeds generally can’t be used to expand your business, refinance debt unrelated to the disaster or replace lost profits. They’re meant to restore your business to its pre-disaster condition, not to fund growth.

Personal Opinion: Even though a 4% interest rate is relatively low, an SBA disaster loan is still debt. It’s a good safety net, but it shouldn’t replace business interruption insurance [link pending — no confirmed BestMoney page], which is often included in a business owner’s policy (BOP). Paying a premium to be reimbursed may be preferable to paying interest for up to 30 years to recover from a disaster that’s entirely out of your control.

If your losses include both physical damage and a working capital shortfall, applying for both loans at once is generally the most efficient path. SBA allows businesses to hold both, up to the $2 million combined cap.

A personal loan or business credit card might get you money faster in a true emergency, and you can compare business loans if you need a bridge. But for anything beyond a short-term gap, the lower rates and longer terms of an SBA disaster loan may be worth the extra paperwork for many qualifying businesses.

Do SBA disaster loans have to be repaid?

Yes. Unlike some FEMA assistance, SBA disaster loans are loans, not grants. Payments are deferred for the first 12 months, and interest doesn’t accrue during that period, but you repay the full balance over the loan term.

Can I apply before my insurance claim is settled?

Yes. You don’t need to wait for your insurer. SBA accounts for insurance recoveries when it sets your loan amount, so starting early helps you avoid missing the 60-day physical damage deadline.

Does my business have to be small to get a disaster loan?

Not for physical damage. Businesses of any size can apply for a Business Physical Disaster Loan. EIDLs are limited to small businesses, small agricultural cooperatives and most private nonprofits.

Do I need collateral?

Loans over $50,000 generally require collateral, and SBA prefers real estate. But SBA won’t decline an otherwise creditworthy application just because you don’t have enough collateral.

An SBA disaster loan can be one of the most affordable ways to rebuild after a declared disaster, with rates capped at 4% and terms up to 30 years for businesses without other credit options. The biggest risks are missing the deadlines and showing up with incomplete paperwork, so check the declaration, gather your records and apply as soon as you can.

Outcomes will vary based on your business’s financial history and the scope of your losses. Nothing here should be taken as a guarantee of approval or a substitute for advice from a qualified accountant or financial advisor familiar with your situation.

• Congressional Research Service, “SBA Disaster Loan Program: Frequently Asked Questions” (R44412), updated May 23, 2025

• U.S. Government Accountability Office, “Disaster Loan Program: SBA Should Include Key Issues in Its Review of How the Program Affects Underserved Communities” (GAO-24-106682), published Nov. 30, 2023

• U.S. Small Business Administration, “Disaster assistance”, accessed October 2026

• U.S. Small Business Administration, “7(a) loans”, accessed October 2026

• Electronic Code of Federal Regulations, 13 CFR Part 123, “Disaster Loan Program”