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How to Get a Small Business Disaster Loan

By Andrew Chow, Esq. | Last updated on

Is your small business reeling from the economic effects of a recent disaster? If so, you may qualify for a small business disaster loan to help get you and your business back on your feet.

A small business doesn't have to be physically damaged in order to qualify for an Economic Injury Disaster Loan from the Small Business Administration. These loans focus solely on how cash-strapped a business is, not how much physical damage it's suffered.

How much money is at stake? It depends on the scope of the disaster. For example, after Hurricane Isaac slammed parts of the Gulf Coast last month, the SBA approved $1.4 million in disaster loans for residents and businesses in Mississippi, according to the Associated Press.

How do you get an Economic Injury Disaster Loan from the SBA? Here are some general guidelines:

  1. Wait for a disaster declaration. This declaration can be made by the president or by a federal agency. The SBA maintains a list of officially declared disasters at this website.

  2. Make sure you're eligible. In general, disaster loans are available for small businesses, small agricultural cooperatives, and most private nonprofit organizations, according to the SBA. The business or nonprofit must have suffered economic injury from the disaster, and must be unable to obtain credit from other sources.

  3. Complete an application form. Eligible business owners can apply directly online, or download printable forms to be mailed in. The SBA offers different types of disaster loans, so be sure to use the correct form.

  4. Apply by the correct deadline. The SBA's deadlines for Economic Injury Disaster Loans may differ depending on the disaster. Just don't confuse the EIDL deadline for other types of SBA disaster loans.

  5. Prepare for an inspection. After the SBA receives your application, an inspector will arrive to estimate your damages. Remember, the size of an EIDL is determined solely by a business' economic injury, not by the amount of property damage.

If you have suffered property damage as well, the SBA also offers Business Physical Disaster Loans to cover that. Because the paperwork can be technical and time-consuming, you may want to consult a small business attorney to help expedite the process.

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