Disaster Assistance Loans

To provide loans to the victims of declared disasters for uninsured or otherwise uncompensated physical damage.

Agency - Small Business Administration

The Small Business Administration maintains and strengthens the nation's economy by aiding, counseling, assisting and protecting the interests of small businesses and by helping families and businesses recover from national disasters.

Office - For reference to the Disaster Area Office, see Appendix IV of the Catalog under the Small Business Administration.

Program Accomplishments

During fiscal year 2004, 25,024 loans were made for $883,490,400.

Uses and Use Restrictions

Loans made to homeowners, renters, businesses of all sizes, and nonprofit organizations to repair or replace damaged or destroyed real property and/or personal property to its pre-disaster condition.

Credit elsewhere test required for all applicants to determine interest rate.

Loans to homeowners/tenants are made for up to 30 years.

Limit of $200,000 for repair/replacement of real property; $40,000 for repair/replacement of personal property.

The loan limit may be increased by 20 percent to provide protective measures from damages caused by physical disasters.

The interest rate for homeowners/tenants who have credit available elsewhere is determined by a formula based on the cost of money to the U. S. Government, but not to exceed 8 percent.

The interest rate for homeowners/tenants who do not have credit available elsewhere is one-half of the formula rate, but not to exceed 4 percent.

Loans to business may not exceed $1,500,000.

For businesses determined to be able to obtain credit elsewhere, the interest rate is based on a statutory formula, but not to exceed 8 percent, with maturities not to exceed 3 years.

For nonprofit organizations determined to be able to obtain credit elsewhere, the interest rate is based on a statutory formula, with maturities not to exceed 30 years.

For businesses and nonprofit organizations determined to be unable to obtain credit elsewhere, the interest rate may not exceed 4 percent, with maturities up to 30 years.

Under certain circumstances, homeowners and businesses may be eligible for refinancing of existing liens.

There are statutory restrictions on the use of funds for voluntary relocation.

In the case of a Major Source of Employment, the $1,500,000 limitation on disaster business loans may be waived.

Provisions of Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994 apply.

Collateral is required on loans greater than $10,000.

Eligibility Requirements

Applicant Eligibility

Eligible applicants must have suffered physical property loss as a result of a disaster which occurred in an area declared by the President or SBA.

They must also demonstrate an ability and willingness to repay the loan.

Individuals, business concerns, charitable and nonprofit organizations are eligible to apply for assistance.

Beneficiary Eligibility

Individuals, business concerns, charitable and nonprofit organizations. Agricultural enterprises are ineligible.


A signed loan application, financial information, and a signed IRS Form 8821 to enable SBA to obtain tax return information from IRS for the three years prior to the disaster (one year for homeowners and renters). Complete copies of Federal Tax returns for the past three years for business applicants. Financial information on principals and affiliates for business applicants.

Aplication and Award Process

Preapplication Coordination

This program is excluded from coverage under E.O.


Whenever feasible, interviews are held with disaster victims and the program is explained.

Assistance on filing of application is provided.

Application Procedures

Application is made on a standard form for either a home or business loan and filed by mail or with the nearest SBA Disaster office.

Award Procedures

Applicant is notified of approval by authorization letter from SBA.


Eligibility to file terminates 60 days from the date of the disaster declaration, unless extended by SBA.


Small Business Act of 1953, Section 7(b)(1), as amended, Public Law 85-536, 15 U.S.C. 636(B)(1); Disaster Relief Act of 1970, Sections 231, 234, 235 and 237, Public Law 91-606, 42 U.S.C. 4401; Public Laws 93-24, 94-305, 95-89, 96-302, 97-35, 98-166, 98-270, 99-272, 99-349, 100-590, 102-27, 102-395, and 103-75.

Range of Approval/Disapproval Time

Generally, from 7 to 21 days depending on complexity of case and availability of resources.


Reconsideration of a declined application can be requested within 6 months of the initial decline, and appealed within 30 days from the reconsideration decline.


Not applicable.

Assistance Considerations

Formula and Matching Requirements

Not applicable.

Length and Time Phasing of Assistance

Funds must be disbursed within six months of authorization of the loan, unless extended.

Post Assistance Requirements


All borrowers must maintain records on how loan proceeds are used for 3 years after last disbursement.


Not applicable.


Complete financial records must be maintained by business borrower.

Financial Information

Account Identification



Administration - FY 07 $323,853,000; FY 08 $230,982,000; and FY 09 $191,776,000. Loan Program - FY 07 $1,663,000,000; FY 08 $959,000,000; and FY 09$1,061,000,000. Loan Subsidies: FY 07 $290,000,000; FY 08 $155,800,000; and FY 09 $158,300,000.

Range and Average of Financial Assistance

Direct home loans up to a $240,000 limit plus $200,000 additional in some special cases to refinance existing liens and $48,000 additional for protective measures. Direct business loans up to $1,500,000 with additional amounts available for major employment. In fiscal year 2004, average loans were: $25,097 (Home); $75,313 (Business).

Regulations, Guidelines, and Literature

13 CFR Part 123; "Disaster Loans for Homes and Personal Property," DA-1: "Physical Disaster Business Loans," DA-2.

Information Contacts

Regional or Local Office

For reference to the Disaster Area Office, see Appendix IV of the Catalog under the Small Business Administration.

Headquarters Office

Office of Disaster Assistance, Small Business Administration, 409 3rd Street, S.W., Washington, DC 20416. Program Contact: Herbert Mitchell. Telephone: (202) 205-6734. E-Mail: disaster.assistance@sba.gov.

Criteria for Selecting Proposals

Not applicable.

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