SBA Disaster Loan Programs: Physical Damage & Economic Injury Explained

Start by finding your disaster declaration in the SBA Loan Portal. Check the covered counties, loan types, and separate filing deadlines. A declaration may offer economic-injury assistance without physical-damage assistance, and neighboring counties may have different eligibility. These are loans you must repay.

Choose the Loan for Your Loss

A large business may qualify for a physical disaster loan and still be ineligible for EIDL. For EIDL, declining sales or lost expected profits alone are insufficient: show that the disaster prevents you from paying regular necessary obligations. SBA must also determine that you cannot obtain credit elsewhere.

A business physical loan may be available when you can obtain credit elsewhere, with a higher rate ceiling. SBA evaluates repayment ability and other program requirements; being in a covered county does not guarantee approval.

Amounts, Costs, and Permitted Uses

The usual combined limit for business physical disaster and EIDL assistance is $2 million, based on eligible losses and need. Receiving both does not create two separate $2 million entitlements. Exceptional statutory waivers may apply to a business that is a major source of employment.

• Physical loan: Repair or replace damaged real estate, machinery, equipment, fixtures, inventory, or leasehold improvements. Ordinary business expansion or upgrades are not covered, apart from required building-code work and qualifying mitigation assistance.
• EIDL: Meet ordinary operating obligations, such as rent, utilities, and fixed debt payments that the business could have paid without the disaster. Do not use it to buy fixed assets, repair physical damage, expand facilities, refinance debt, or pay shareholder loans, dividends, or bonuses.
• Interest: Business physical-loan ceilings are 4% without credit elsewhere and 8% with it; the EIDL ceiling is 4%. These are ceilings, not a promise of a particular rate. Read your declaration and offer for the applicable rate.
• Payments: Current disaster-loan terms defer the first payment for 12 months and do not accrue interest during those first 12 months. Maturities can extend to 30 years, based on the program and repayment ability. Business physical loans with credit available elsewhere generally have a maximum seven-year term.
• Collateral: Physical loans require available collateral above $50,000 under Presidential declarations and above $14,000 under SBA agency declarations. EIDL requires collateral above $50,000. Prepare a list of assets and existing liens; a collateral requirement is different from proof that you can afford repayment.

Insurance and other compensation reduce eligible uncompensated losses. Apply before the deadline even if your insurance claim remains unsettled, and report later payments so the same loss is not funded twice.

Build the Application Around Your Loss

1. Record the declaration and dates. Search your business location in the loan portal. Physical-loan deadlines are commonly 60 days after a declaration and EIDL deadlines commonly nine months, but use the actual filing dates for your declaration, including extensions.
2. Separate property damage from the cash-flow gap. For physical losses, assemble itemized damage, photographs, repair estimates, ownership or lease records, and insurance information. For EIDL, assemble tax returns, current financial statements, liabilities, monthly obligations, and evidence showing how the disaster created the shortfall.
3. Apply directly to SBA. Submit the disaster-loan application in the portal. An SBA business disaster-loan application does not require you to receive a FEMA grant first. If separate FEMA assistance is available for your household, follow its own application rules as well.
4. Answer follow-up requests. Check the portal for status, inspections, and missing records. Keep copies of submitted documents and correspondence. SBA may need both financial verification and a damage inspection.
5. Review the offer. Confirm permitted uses, the actual loan amount, interest, payment start date, term, collateral, and disbursement conditions before signing. Approval is not a grant or permission to spend on any business purpose.

For example, a small shop may have $80,000 of uninsured equipment damage and a separate $25,000 gap in necessary operating expenses. It may seek physical and economic-injury assistance for the respective needs, with evidence for each. Those estimates do not establish an award or let the shop charge the same loss to both loans.

If Your Application Is Declined

Read the written reasons and determine what evidence would address them. For most disaster-loan declines, you can request reconsideration within six months of the denial and provide new information. A size determination follows a separate appeal route. If reconsideration is declined, the written notice explains the further appeal route, generally due within 30 days. Use the notice’s instructions and keep proof that your request was received.

For application help, call 800-659-2955 or request an appointment through the SBA disaster appointment tool. For an existing application, use the portal and the contact instructions on your correspondence.

Avoid These Common Errors

• Choosing the wrong loan: EIDL covers the operating gap, not repairs; physical loans address property damage. Larger businesses cannot assume the physical-loan eligibility rule also covers EIDL.
• Waiting for insurance: An unfinished settlement does not extend a filing deadline. Disclose the claim and later payments.
• Submitting only a revenue decline: Show unpaid necessary obligations and the disaster’s effect, rather than asking EIDL to replace profits.
• Using one old deadline or collateral threshold: Declaration type, geography, and loan type matter. Check the actual declaration before applying.