For purposes of disaster recovery, the U.S. Small Business Administration (SBA) and the Federal Emergency Management Agency (FEMA) work together to provide options for additional financial assistance.
After a presidential disaster declaration, the U.S. Small Business Administration (SBA) provides low-interest disaster loans to help recovery for:
- Homeowners repair or replace damaged real estate.
- Homeowners and renters replace damaged personal property such as furniture, clothing, or vehicles.
- Businesses repair or replace disaster-damaged property and equipment.
- Nonprofit organizations recover from disaster-related losses.
Despite the “Business” in the name, you do not have to own a business to apply for these low-interest disaster loans.
The SBA Offers Several Different Types of Disaster Loans:
1. Home and Personal Property Loans
For homeowners and renters whose home or personal belongings were damaged in a declared disaster. These loans can help repair or replace personal property such as furniture, clothing, appliances, and vehicles damaged by the disaster. SBA Disaster Recovery states that renters and homeowners may borrow up to $100,000 for eligible personal property losses.
2. Business Physical Disaster Loans
For businesses of any size and most private nonprofit organizations to repair or replace disaster-damaged real estate, inventory, equipment, machinery, supplies, and other business property. SBA states that qualified businesses and nonprofits may receive up to $2 million for disaster losses not fully covered by insurance.
3. Economic Injury Disaster Loans (EIDL)
For small businesses that suffer substantial economic injury due to a disaster, even if they did not sustain physical property damage. These loans provide working capital to help businesses meet ordinary operating expenses during recovery.
Examples of covered expenses include:
- Rent
- Utilities
- Fixed debt payments
- Continuation of employee health benefits
4. Military Reservist Economic Injury Disaster Loans (MREIDL)
For small businesses that experience financial hardship because an essential employee has been called to active military duty. These loans help businesses cover ordinary and necessary operating expenses until the employee returns.
5. Mitigation Assistance
This is not a separate loan, but an increase to an existing SBA physical disaster loan. SBA may increase a qualifying physical disaster loan by up to 20% of verified damages so borrowers can make improvements that reduce future disaster risk, such as:
- Elevating structures in flood-prone areas
- Improving drainage
- Strengthening roofs and windows against high winds
- Installing safe rooms or storm shelters
For Disaster Legal Services clients, the most common SBA loan types you'll encounter are:
- Home and Personal Property Loans for homeowners and renters.
- Business Physical Disaster Loans for self-employed individuals and business owners.
- Economic Injury Disaster Loans (EIDL) for small businesses that lost income due to the disaster.
When to Apply for SBA Loans
The SBA assigns application deadlines for each declared disaster, and those deadlines are listed in the disaster declaration for your county.
- SBA runs on the same FEMA deadline or extension of deadline. The deadline depends on the specific disaster declaration. There is not one universal SBA deadline for all disasters.
- You usually have 60 days after the disaster to apply. The SBA may extend this date.
- You must apply by the deadline, or you lose your chance to apply.
Do not ignore SBA paperwork. If FEMA asks you to apply for an SBA disaster loan, failing to complete the application can affect eligibility for some FEMA assistance programs.
How to Apply for an SBA Loan
The first step is to apply to FEMA at 1-800-621-3362 or disasterassistance.gov. You must be located in a declared disaster area and meet the eligibility requirements for the type of loan you're requesting.
- Apply to SBA online: You can apply through the SBA Disaster Loan Portal: https://lending.sba.gov/search-disaster/
- Complete and submit the application: the application will ask for information about the disaster-related damage or losses, your residence or business, financial information and insurance information (if applicable).
- Monitor Your Application: You can use the portal to check application status, upload documents, and receive updates on your loan request.
(Inspectors may estimate the cost of disaster damage after a completed application is submitted.)
SBA and Insurance Settlements
Do not miss the filing deadline by waiting for an insurance settlement. Submit your insurance claim immediately and your FEMA application and SBA application as soon as the declaration is announced.
Once your insurance pays, you must repay your SBA loan that covered the repairer replacement costs. SBA cannot give money for damages that your insurance company already covers.
FEMA & SBA
The coordination between FEMA & SBA is part of the disaster recovery process. FEMA grants are generally intended to help with immediate and essential disaster-related needs. SBA disaster loans can provide additional funding for losses that FEMA grants or insurance may not fully cover.
In many disaster declarations, FEMA may refer applicants to SBA.
Common Reasons for an SBA Referral
- Your disaster losses may exceed what FEMA grants can provide
- You have home or personal property damage
- You own a business
- FEMA needs an SBA eligibility determination
A FEMA referral to SBA does NOT mean:
- FEMA denied your application
- You must accept the loan
- You are ineligible for FEMA assistance
FEMA Grants v. SBA Disaster Loans
FEMA grants are not loans. If approved, you generally do not have to repay FEMA grant assistance.
SBA assistance is a loan. If approved and accepted, it must be repaid over time.
| FEMA Grants | SBA Disaster Loans | |
|---|---|---|
| Type of assistance | Grant (generally does not have to be repaid) | Loan (must be repaid with interest) |
| Purpose | Basic disaster-related needs and serious unmet needs | Repair, replace, or recover from larger disaster losses |
| Who can apply | Eligible disaster survivors | Homeowners, renters, businesses, and certain nonprofits |
| Repayment required? | No, in most cases | Yes, loan repayment is required |
| Amount available | Usually more limited and based on eligible needs | Can be substantially higher depending on damages and eligibility |
| What it can cover | Temporary housing, home repairs, personal property, and other qualifying needs | Home repairs, personal property replacement, business property, inventory, equipment, and working capital for businesses |
| Credit check | Not based on ability to repay a loan | SBA evaluates credit and repayment ability |
| Insurance interaction | Helps with needs not covered by insurance | Covers losses not fully compensated by insurance or other sources |
Common Questions
"Do I have to accept an SBA loan?"
No. You can decide whether to accept the loan if approved.
"Should I still complete the SBA application?"
Yes. Completing it can help preserve eligibility for additional FEMA assistance that might otherwise be unavailable.
"Can I receive both FEMA and SBA assistance?"
Yes. Many survivors receive assistance from both programs, as long as the same loss is not paid for twice.
How to Reach Us!
If you’re facing a disaster-related legal issue, we’re here to assist you. Here’s how you can contact us:
- Call our Disaster Hotline at 1-855-204-2569, Monday to Friday, from 9 a.m. to 5 p.m., or leave a message 24/7.
- Email the Disaster Legal Services Team at disasterlegalservices@nmlegalaid.org.
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