A Step-by-Step Guide to Filing an SBA Disaster Loan for Your Small Business

Small businesses create two-thirds of new U.S. jobs and account for 44% of U.S. economic activity. That’s why it's crucial to protect them during tough times like the ongoing COVID-19 pandemic. 

As a small-business leader, you have help available. As of March 22, 2020, governors in all 50 U.S. states had their disaster declaration request applications filed and approved. That means small businesses across the U.S. are eligible to apply for disaster loan assistance citing “Coronavirus (COVID-19)” as their “Incident.” 

Along with serving small-business owners, the U.S. Small Business Administration (SBA) provides loans to small agricultural cooperatives and most private nonprofit organizations. The SBA defines a small business as having less than 500 employees. You can use the SBA’s size standards tool to see how your own business is categorized.

If your small business is struggling due to COVID-19, use our step-by-step guide to file your claim. We’ve included links to all tax and SBA forms you’ll need throughout the process. 

The SBA provides 4 types of disaster loans. If you’re applying for a loan to support your small business due to COVID-19, you will file for an economic injury disaster loan (EIDL). This loan type provides:

• Up to $2 million to meet financial and operating expenses that your business could have paid had COVID-19 not occurred.

• Interest rates that won’t exceed 4% per year.

• Loan terms that won't exceed 30 years and will depend on your ability to pay. 

Along with applying for an EIDL, you can also apply for a physical disaster loan if eligible. 

To confirm whether your business is located in a state eligible for loans due to severe storms, floods, drought, or other natural disasters, use the SBA’s database of declared disasters. 

Keep in mind that if you apply for an EIDL and a physical disaster loan, the combined amount cannot exceed $2 million. If COVID-19 is your main reason for filing, you can earn the same amount by filing for an EIDL only.

The SBA allows small-business owners to file claims online, in-person at disaster centers, or via mail. Given current CDC guidelines about social distancing and how quickly COVID-19 is spreading, filing online is ideal to protect your physical health and save time.

To file online, you’ll need to create a username and password for your SBA account. Before filing your application, take the following steps:

• Install Adobe Reader on your computer to view and manage your files. It’s free software with versions for Windows, iOS, and Android devices.

• Ensure you enable cookies and JavaScript in your browser.

• Ensure your browser allows pop-up windows.

Along with your loan application, you will need to submit a signed and dated copy of IRS form 4506-T granting the IRS permission to share your business’s tax return information with the SBA. 

This is important, as the SBA will review your credit before conducting an inspection to confirm your fiscal losses. IRS form 4506-T must be signed by each:

• Principal who owns 20% or more of the business.

• General partner or managing member.

• Owner who holds more than 50% ownership in an affiliated business (including subsidiaries and/or businesses with common ownership/management).

To process your case, your loan officer will also need copies of your:

• Personal financial statement (SBA Form 413).

• Schedule of liabilities listing all fixed debts (you can use SBA Form 2202).

• Most recently filed federal income tax returns.

• A profit-and-loss statement and balance sheet for the most recent tax year, if your most recent tax returns are unavailable.

Along with the above documentation, your loan officer may request other documents as needed. If you’ve never used financial reporting software to organize such files, now is an ideal time to start. 

The SBA is currently receiving high amounts of applications, and the traffic volume is slowing their website down. Try submitting your claim between 7 p.m. and 7 a.m. EDT for faster service. 

If that’s still too slow, try using a browser like Internet Explorer rather than Google Chrome. The SBA reports that some users have had trouble filing their claims using Chrome. Keep in mind that you might experience slow service if you have dial-up internet and/or an older internet browser than Internet Explorer 10.

After the SBA reviews your credit and conducts an inspection, a loan officer will confirm your eligibility. The officer will contact you to discuss the loan recommendation, ask for anything else they need, and provide copies of all decisions. 

The SBA aims to make decisions about all claims within two to three weeks of submission. That said, the current high number of claims could result in delays. 

To prevent delays within your control, make sure to have signed copies of all documents you might need to submit before filing your claim online. The more prepared you are at the outset, the faster the process will move. In the meantime, you can call 1-800-659-2955 if you’d like speak to someone in the SBA’s customer service center.

Amidst the chaos of these last few weeks, small businesses haven’t been forgotten. As states from Maryland to Indiana rolled out relief funds, they included low-interest provisions to support small businesses. Along with help at the federal level, be sure to check for local grants and loans in your area as well.

Larger corporations like Amazon and Facebook have announced plans to offer fiscal support, and promised to share more details soon. 

Finally, check with your bank to confirm how they’re supporting small businesses. Clients at many major banks can request to defer payments, have monthly service fees waived, receive credit line increases, and more. 

We are in uncharted waters right now, but there's help available to get you to the other side.