Written by Canterbury Law Group

Do I Qualify for a SBA Disaster Loan?

SBA Disaster Loans Covid 19 - How To Qualify

Wondering whether you qualify for the SBA disaster loan for coronavirus COVID-19. The SBA (Small Business Administration) is stepping up to aid businesses impacted by the Coronavirus. Read on to learn more about recommendations and information regarding COVID-19.

In the current situation many homeowners and business owners are discovering their insurance does not cover as much as they had the impression it would creating issues with progressing forward. While the Coronavirus timeline is not clear at the moment – for many people it may impact their revenue for some time to come.

What is a Disaster Loan?

The role of the SBA has been to support business owners and they have special programs for certain sections of the population as well as offering loans at a low interest rate to assist owners of businesses, renters and homeowners following a disaster such as the coronavirus pandemic. Regardless of your insurance status, FEMA suggests applying for a Small Business Administration loan. There are different kinds of Small Business Administration disaster loans available and one of them should fit your situation.

Economic Injury Disaster Loan Program

This loan is offered to private people, small businesses and nonprofits within a certain area of disaster and is dependent on the degree of economic damage that has bene inflicted. Although property damage is not included as that is not harmed by COVID-19, there are other reasons this loan may apply because of a loss of demand for your products or service and prevent your business from operating. Topping out at $2,000,000 the loan can be financed based on you’re the loss you have sustained. If people cannot contact you, visit you and you cannot operate, this loan could be an ideal option.

Eligibility for EIDL

For this loan, you should do business in a county that has declared a disaster. The terms of repayment depends on your company’s ability to repay the loan. The first port of call will be to look on the Disaster Assistance page of the SBA website. You can also apply online, see affected areas, and check your SBA disaster loan application process.

Disaster Relief for COVID-19

The United States is faced with a large amount of economic fallout right now and the majority of states are eligible for EIDL – Be sure to check through at the SBA website before proceeding. The SBA foresees difficulties for small businesses in many areas such as:

  • Workforce capacity
  • Marketing needs
  • Supply chain and inventory shortfalls
  • Insurance coverage issues
  • Facility clean-up and remediation costs
  • Demand changes
  • Capital access

To have access to these loans you shouldn’t have any other sources of credit as an option and the loans can be utilized to make payroll as well as other expenses, pay debts, accounts payable, and more. Interest rates are 2.75% for nonprofits and 3.75% for small businesses. The term can be as long as thirty years, but this will very much be dependent on your own circumstances.

Physical Disaster Loans for Business

A physical disaster loan can help if your business has been physically damaged in areas that have been declared a disaster. Any business may apply for this loan and the majority of nonprofits may do so as well. Depending on your ability to repay the loan the terms may be flexible, lasting as long as thirty years and interest rates will top out at 4 percent if you have no other credit options and 8 percent if you do. You will need to verify you are in a location where you can apply for this loan by visiting the SBA webpage. If you meet the criteria, you will then have to commence the application process.

What Can a Physical Disaster Loans Be Used For?

They can be used for anything damaged at your physical location to return it’s to its condition prior to the disaster. This includes repairing or purchasing machinery, fixtures, equipment and improvements to the building as well as inventory. You can also get up to an extra 20 percent of your loan value if you improve in a way to prevent future damage to the property.

Physical Property and Home Disaster Loans

A homeowner may also get assistance from the SBA is an area that has been declared a disaster as they offer property and home disaster loans and loans for any loss not covered by insurance or any other form of coverage you may have.

Borrowing Amounts

You may borrow up to $200k to restore your home to the condition it was in prior to the disaster. But no new improvements can be made unless code or a building authority requires it to be. You may be eligible for an additional $40,000 for replacing personal property that has been damaged but it may not be used to replace collections, antiques, a pleasure boat, or RV’s. However, when it comes down to businesses, the most important considerations as to your ability to receive a loan will be your location, your credit history, and worthiness, the ability you have to repay the loan and any collateral you can offer.

The Disaster Loan Process with SBA

Creditworthiness will be key to obtaining a disaster loan. The SBA will do a credit check but if your credit is not great you can still get a loan if you can demonstrate you can pay it back. So, the SBA will also look at the regularity of you paying rent, utilities, and insurance. Knowing your credit score is a very good idea, however when you enter this process. There is no need to be overwrought by a few black marks on your FICA report – as long as most are in ok standing.


If your needs exceed $25,000, it is very likely collateral will be required to obtain an SBA loan. However, if you have no collateral but qualify for an Economic Injury Disaster Loan by SBA, you may be required to provide what is available instead of facing a denial. You will be considered for a loan regardless of whether you can stand collateral or not.

Disaster Declaration

There are seven ways a disaster can be officially declared in an area so SBA Disaster Loans can be obtained according to MerchantMaverick:

  • Presidential Declaration for Individual Assistance: This must be declared by a state governor. The presidential declaration will activate FEMA and SBA Disaster Loans are then accessible nonprofits and businesses
  • Administrative Agency Declaration: The governor of a state declares this, and it activates the SBA Disaster Loan Program for homeowners, renters, and businesses.
  • Presidential Declaration for Public Assistance: Also declared by a state governor. Once the President approves loans for economic injury and physical damage to businesses are made available.
  • Secretary of Agriculture can declare a disaster area: The SBA Will then say when disaster loans for businesses relating to agriculture will become available.
  • Governor Certification Declaration: When a governor goes directly to the SBA and asks for a declaration based on the certification of damages in an area.


  • The Secretary Of Commerce may decide certain eligible small businesses have sustained an economic injury that is directly related to failures in commercial fisheries or resource disasters.
  • A Military Reservist Declaration for individuals considered “essential employees” who are called up for active duty as military reservists in the case of a military conflict. Working capital loans are available to businesses that cannot meet their expenses because essential employees are absent for the above reasons.

SBA Disaster Loan Terms & Rates

Here is a summary of rates and terms for the Economic Injury Disaster Loan and The Business Physical Disaster Loan:

Borrowing Amount: $2,000,000 maximum.

Term Lengths: 7 years maximum if credit is available – 30 years maximum if credit is not available.

Interest Rates: 4 percent maximum if credit is not available. 8 percent maximum if credit is available.

SBA Disaster Loan Application Process

You will need to apply through the Disaster Loan Assistance portal at the SBA website. Here you can check to see if your area is covered, apply and check your submitted application. Here are the documents you will need to proceed further:

  • Gather personal and business financial statements.
  • Include estimates to replace or repair items.
  • Obtain copies of the needed federal documents (income tax information) referenced in the application.
  • Provide a brief overview and history of your business.
  • Start making an itemized list of your losses.

You should know an SBA Disaster Loan can be finalized in as little as 21 days and you may get your funds in increments to cover costs.


If the SBA denies your application or you simply want to look around to find the best options for financing, there are options. Online loans may enable you to receive funds faster but be sure to pay special attention to the repayment terms and the interest rates as these will usually be greater than what the SBA is prepared to offer.

See Also:

Leave a Reply

Your email address will not be published. Required fields are marked *