Managing Your Business

Should I get a FEMA - SBA Loan After a Natural Disaster?

Updated October 25, 2022
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After watching a number of hurricanes and other natural disasters cause major disruption, you may be like us, and dealing with recovery.  When there is a natural disaster declaration, then one option to help small businesses get back on track is a Small Business Administration (“SBA”) loan. But, does it make sense for you?

Eligibility for an SBA Natural Disaster Recovery Loan

To be eligible, you have to be within an area that is the subject of a natural disaster declaration by the President or the SBA. You can check the Disaster Assistance address toolto see if you are in one of those areas. 

What do SBA Natural Disaster Loans Cover?

To be entitled to relief, you must have suffered business-related expenses which can include loss of your facility, economic loss and business disruption. If you were unable to pay certain bills because of a disruption, you may be eligible for what is referred to as Economic Injury Disaster Loans to give you access to short-term capital to see you through the downturn.

More traditional SBA loans can be used to pay for damage to your business property not covered by insurance. Sometimes, you may get loan approvals for 20% more than your original cost value if you need improvement to your tools and equipment.

Businesses, regardless of size, can apply for up to $2 million for economic losses or $2 million for physical damages.  The total aggregate of the loans cannot exceed $2 million.

How to apply for an SBA Post-Disaster Loan

If you are eligible and need assistance, you should not delay in applying for funds. The SBA or FEMA websites have links to get started and applying online is the quickest way to process your application.  To apply, you will need:

  • Business’s legal name, address and contact information

  • Ownership information including social security numbers for the owners

  • Documentation of the damages

  • Tax returns

  • Financial statements including profit and loss statements and asset lists with depreciation information

Your specific situation may require additional documentation. Recording damage and having detailed records will put you in a better position.

How long does a post-hurricane FEMA/SBA loan take?

Of course, not everyone will get approved and it takes time to process applications. The SBA will check your personal and business credit histories. They will also require personal guarantees from the owners. If you claimed property damage, they will likely conduct an inspection. Historically, it has taken about two to three weeks for the SBA to respond.  If approved, disbursements can be made as soon as five days.

Is there a deadline to apply for a natural disaster SBA loan?

The deadline to file for a loan is usually 60 days from the date of the declaration for physical damages and nine months for economic damages.

For more information, check out the SBA’s helpful reference guide.

Originally published on October 25, 2022, and last edited on October 25, 2022.

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