Major Changes to SBA’s Disaster Lending Program

adminAdvocacy, Disaster

SBA Increases Home Disaster Loan Limits, Boosts Mitigation, Extends Initial Payment Deferment Waiver and Interest for First Year

Work continues in the greatest transformation of the U.S. Small Business Administration’s disaster programs in the agency’s 70-year history. The newest rulemaking increases support to disaster survivors and small businesses so that they can successfully recover and build resilience to the effects of climate change that have led to more frequent and costly natural disasters.

Along with the Biden-Harris Administration, SBA is working to ensure more flexible and affordable disaster loans are available for small businesses, nonprofits, renters, and homeowners that will allow them to focus on recovering quickly so their communities can survive and thrive again.

SBA is unleashing more capital to help devastated communities rebuild and expanding avenues to mitigate against future damage.


The SBA is also expanding its mitigation assistance to other types of hazards beyond the declared disaster event. Communities are often under threat from multiple types of hazards, including hurricanes, floods, tornadoes, wildfires, earthquakes, and more. Now, property owners can use their disaster loan funds to rebuild stronger and more resilient against multiple types of hazards and not just against a single threat.

In 2022, SBA Administrator Isabella Casillas Guzman announced SBA would waive the interest rate for the first year and extend the initial payment deferment period automatically to 12 months for disasters declared on or after Sept. 21, 2022, through Sept. 30, 2023.

Because of new rules to update disaster lending, this is now permanent and is in place for the most active part of this year’s hurricane season.

Key changes that help disaster survivors will:

  • Increase Loan Limits for Primary Residence: $200,000 to $500,000 for real estate repair or replacement, contractor malfeasance, refinancing, and mitigation for home disaster loans.
  • Increase Loan Limits for Personal Property: $40,000 to $100,000 for replacement of clothing, furniture, appliances, automobiles, and more for home disaster loans.
  • Remove Administrative Limit on Landscaping: Landscaping will be limited to the overall real estate repair limit and not capped at $5,000. This is especially important states that face a persistent threat of wildfires.
  • Increase the Initial Payment Deferral Period: Extending the first payment deferment period from 5 to 12 months for all disaster loans. This change removes the burden for disaster survivors to begin making payments on their disaster loans before communities rebuild and recover.
  • Boost Mitigation Disaster Loans: Eliminates a restriction on property owners to only use disaster loan funds to mitigate a “similar” disaster event that caused damage to their home or business. This change gives property owners more options to mitigate future damage from different types of disasters, reducing the need for future financial assistance.
  • Ease Collateral Requirements: SBA is clarifying collateral requirements in the disaster loan program under which blanket liens on business assets that provide no liquidity in the event of default will not be required. This gives SBA more discretion to determine the collateral required for disaster loans.
  • Reduce Documents Required to Request Reconsideration: Removes the requirement that businesses submit financial statements with every reconsideration or appeal request for a previously declined application. Previously, SBA required business loan applicants to provide current financial statements, even if their applications were not declined for lack of repayment ability.
  • Expand Eligibility to Consumer or Marketing Cooperatives: This change aligns disaster lending with SBA’s 7(a) and 504 business loan programs and allows these cooperatives to apply for the Economic Injury Disaster Loan (EIDL) and Military Reservist Economic Injury Disaster Loan (MREIDL) programs.