SBA disaster loans
Low-interest loans direct from the SBA for businesses in a declared disaster area: to repair or replace damaged property, or for working capital to get through the recovery. Up to $2 million, over as long as 30 years.
- Secured on assets
How it works
Unlike most SBA programs, disaster loans come from the SBA itself, not through a bank. They are available only after a disaster has been declared, and only to businesses located in the declared area. The SBA lists current declarations on its site.
Business physical disaster loans: for businesses of any size and most private nonprofits, to repair or replace real estate, machinery, equipment, fixtures, inventory and leasehold improvements damaged in the disaster and not fully covered by insurance. Up to $2 million. Not for upgrading or expanding, except where building codes require it; you may be able to borrow up to 20% more than the real estate damage to make the property safer from future disasters.
Economic injury disaster loans (EIDL): working capital for small businesses, small agricultural cooperatives and most private nonprofits that cannot pay their bills and normal operating costs because of the disaster, even with no property damage. Lost profit or lower sales on their own do not count. Only for businesses that cannot get credit elsewhere. Not for expansion, buying fixed assets, repairs, refinancing or paying owners.
Military reservist EIDL: working capital when an essential employee is called up to active duty.
Terms (as stated by the SBA):
- Up to $2 million combined for a physical and an economic injury loan.
- The first payment is deferred for 12 months, and no interest builds up in those 12 months.
- A fixed rate of no more than 4% if you cannot get credit elsewhere, or no more than 8% if you can (physical loans; EIDLs are at most 4%).
- Up to 30 years, depending on your ability to repay, with no prepayment penalty or fees.
- Collateral is required where possible for physical loans over $50,000 in presidential declarations ($14,000 in SBA declarations) and for EIDLs over $50,000. Real estate is preferred. For loans of $200,000 or less, owners need not pledge their main home if they have other assets of equal quality and value. The SBA will not decline a physical loan only for lack of collateral.
Upsides and downsides
Upsides
- Low fixed rates, capped by the SBA
- No payments and no interest for the first 12 months
- Long terms of up to 30 years, with no prepayment penalty
- Open to businesses of any size for physical damage
Downsides
- Only after a declared disaster, and only in the declared area
- Cannot be used to expand or upgrade, except as building codes require
- Economic injury loans need proof the disaster stopped you paying your bills
Risks
- Larger loans are secured, often on real estate, which you could lose if you cannot repay
- Borrowing for recovery adds long-term debt to a business that may take time to recover
What it costs
- How it is priced
- A fixed rate capped at 4% (8% for physical loans if you can get credit elsewhere), with no interest for the first 12 months
- Costs that are easy to miss
- Collateral, preferably real estate, for larger loans
- Insurance proceeds are deducted from what you can borrow
Up to $2 million combined for physical damage and economic injury. Military reservist loans can exceed this for major employers.
Have a quote? True cost of a loan: work out the APR and total cost
Does it fit?
Could fit when
- Disaster damage to your property or equipment needs repairing or replacing
- You cannot meet your bills because of a disaster and a bank has turned you down
Unlikely to fit when
- You need money to grow or expand, which disaster loans cannot pay for
- Your business is not in a declared disaster area
- Insurance will cover all of your losses
Who can use it
- Business types: Sole proprietorship, Partnership, LLC, S corporation, C corporation, Benefit corporation, Cooperative, Nonprofit
- The business is located in a declared disaster area
- Physical loans cover losses not fully covered by insurance
- Economic injury loans are for small businesses that cannot get credit elsewhere and cannot meet their obligations because of the disaster
Am I ready?
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- Disaster declaration
- Damage records
- Insurance claim
Regulation and protections
Regulators: U.S. Small Business Administration (SBA).
Who runs it: Federal program.
Made directly by the SBA under its disaster loan rules, which cap the rate and set the terms. No prepayment penalty or fees.
Types of provider: The SBA (apply online through the SBA).
Also consider
What has changed
No changes since this page was published. It was last checked against its sources on October 17, 2026.
Sources
- SBA: Disaster recovery (loan types, eligibility, terms and collateral) · checked October 17, 2026
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