How SBA Disaster Loans Work

Small businesses in a Presidential disaster declaration zone have the option of applying for SBA disaster loans. Understand that it’s not immediate assistance like Red Cross or temporary housing, but a loan to help you rebuild and repair your business. Find out more about this program so that if you ever are hit by a tornado, hurricane, or massive winter storm, you are prepared to get your organization back to normal to assist the local economy.


What Information You Will Need

When applying for a SBA disaster loan, you will need to register with FEMA. Once you have that number, the SBA will require the same type of documentation that a bank or other lender would need.

  • Financial information
  • Employer ID number (EIN)
  • Deed or lease
  • Contact information for all applicants
  • SSNs for all applicants
  • Tax information

Fortunately, after a disaster, the SBA offers personal assistance at the Disaster Recovery Centers. You can also apply online for fastest service. Having your data stored in a cloud makes it easily accessible if you’ve lost computers and access to paperwork in your office.


What Does It Cover?

SBA disaster loans are designed to cover your uninsured physical damages. You may have to apply your insurance to an outstanding mortgage instead of being able to use it to rebuild. Let the loan program know this in your application. You can use the money received from the SBA loan to replace or repair property, machinery, fixtures, and inventory. Making improvements to damaged property against possible future disasters could increase your loan by up to 20%.


After Your Application Is Received

Just as your insurance will send out an adjuster, the SBA will send out their own loss-recovery specialist. This person will verify your loss and determine the extent of the damage to ensure you are making a reasonable request. You are free to hire a CPA or attorney to assist you, but you do want to list that fee on the application.


How Long Does It Take?

SBA disaster loans tend to go much quicker than other SBA loans, but it still can two or three weeks once the SBA receives all the documentation. Remember to make sure that you apply before the deadline ends, even if you don’t have your insurance settlement. The SBA can approve your loan for the entire amount. When you receive your insurance proceeds if they duplicate the SBA loan, that money can be applied to your loan. An SBA loan can be a good choice when you face a disaster because the terms and interest rate will generally be lower than traditional banks.