Chapter 3 › V.J Small Business Administration Loan Requirement

Does our nonprofit have to apply for an SBA loan first?

FEMA term

Small Business Administration (SBA) loan requirement

Short answer

Only for permanent work on facilities that provide noncritical services. Those nonprofits must apply for an SBA disaster loan and get a determination; FEMA then funds only what the loan won’t cover. Debris removal and emergency protective measures don’t need an SBA application, and facilities providing any critical service never do.

What FEMA requires

For nonprofits with noncritical, essential social service facilities, FEMA funds eligible debris removal and emergency protective measures, but permanent work only to the extent an SBA loan won’t cover it.
Nonprofits that provide no critical services must apply for an SBA disaster loan and receive a determination for permanent work on facilities that provide noncritical services, or mixed-use facilities where the damaged portion provides only noncritical services.
No SBA application is needed for facilities providing critical services, even if they also provide noncritical services.
FEMA and SBA cannot fund what insurance covers; you must pursue the insurance claims you are entitled to.
The PAPPG notes SBA disaster loans of up to $2 million for qualified businesses and most nonprofits, covering losses not fully covered by insurance, with possible mitigation increases of up to 20 percent above the damage if SBA approves.
If you miss the SBA deadline, including any extension, permanent work is ineligible. If you decline a loan, or SBA denies it because you can’t meet its terms, PA is limited to costs the loan wouldn’t have covered.

<table class="pt-table"><thead><tr><th>Services provided</th><th>Emergency work</th><th>Permanent work</th></tr></thead><tbody><tr><td>Critical services</td><td>SBA application not required</td><td>SBA application not required</td></tr><tr><td>Noncritical, essential social services</td><td>SBA application not required</td><td>SBA application required</td></tr></tbody></table>

Documentation

Your SBA disaster loan application and SBA’s determination (approval, denial or your decision to decline), with dates showing you applied before SBA’s deadline; and insurance claims and proceeds.

Watch out · Govstar practitioner advice

Missing the SBA deadline makes permanent work ineligible for PA, and declining or being denied a loan (for example over collateral) limits FEMA to what the loan wouldn’t have covered. Apply to SBA and FEMA at the same time.

Govstar summarizes FEMA’s Public Assistance Program and Policy Guide in plain language and links to the official text. Govstar is independent and not affiliated with FEMA. This is general guidance, not legal advice.