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What is an SBA Disaster Loan?

An SBA disaster loan is a low-interest, SBA-backed loan for individuals who have suffered uninsured losses due to disasters. Though secured by the Small Business Administration (SBA), SBA disaster loans are not only for business owners: home-owners/renters, as well as owners of non-profit organizations, are also eligible. To which category an applicant belongs will determine how large a loan he or she is eligible for. The SBA has the following limits on loan amounts:

  • Loans for reparation of business damages – up to $2 million
  • Loans for replacement or repair of homes – up to $200,000
  • Loans for replacement of personal property lost in a disaster – up to $40,000

SBA disaster loans are known also for their low-interest rates (1.75% – 6.6%), and long payment terms (up to 30 years). For more information about applying for an SBA disaster loan, applicants can contact the SBA customer service center at 1-800-659-2955 (TTY: 1-800-877-8339).

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Rates (%)

Interest rates for SBA disaster loans will depend on what the loan is used for, and on whether the borrower is able to borrow any other non-government source to finance their recovery. For applicants looking to repair their business who do not have credit elsewhere, rates are around 3.3%, and roughly 6.6% if another credit is available. For applicants looking to repair their homes with no other credit options, rates are around 1.75% and 3.5% for borrowers with other credit availabilities.

Credit Requirements

Although specific score requirements will vary depending on types and amounts of loans, the SBA, in general, expects applicants to have a good credit score. What’s important overall is that applicants display the ability to afford loan payments. Regular income, substantial revenue, and a good credit score will put you in a good position to obtain an SBA disaster loan. In addition, for loans over $25,000, the SBA will request some collateral, though applicants will not be turned down if they have none to pledge.

SBA Disaster Loan Process

It is recommended that SBA disaster loan applicants first register with the Federal Emergency Management Agency (FEMA). Next, you can apply for a disaster loan on the SBA’s website. From here the SBA will review your credit history and estimate your physical losses to determine eligibility, from which point a loan officer will contact you to discuss further action.  

Securing SBA approval can be a process, but it’s one that’s well worth it. SBA disaster loans are a great way to finance the repairs you need for your home or business and get back on track. With some patience and dedication, you can have your home or business back to normal before you know it.

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