The Small Business Administration (SBA) Disaster Loan Program provides disaster loans to eligible households and businesses to help them rebuild and recover after a disaster. SBA disaster loans include (1) Personal Property Disaster Loans, (2) Real Property Disaster Loans, (3) Business Physical Disaster Loans, and (4) Economic Injury Disaster Loans (EIDL). As described in this report, each type of loan has a maximum limit that has changed over time. Personal Property Disaster Loans provide creditworthy homeowners or renters located in a declared disaster area with up to $100,000 to repair or replace personal property owned by the survivor; Real Property Disaster Loans provide creditworthy homeowners located in a declared disaster area with up to $500,000 to repair or restore the homeowner’s primary residence to its pre-disaster condition; Business Physical Disaster Loans provide businesses located in a declared disaster area with up to $2 million to repair or replace damaged physical property, including machinery, equipment, fixtures, inventory, and leasehold improvements; and EIDLs provide businesses located in a declared disaster area with up to $2 million to help meet financial obligations and operating expenses that could have been met had the disaster not occurred. EIDL loan proceeds can only be used for working capital necessary to enable the business or organization to alleviate the specific economic injury and to resume normal operations. Loan amounts for EIDLs are based on actual economic injury and financial needs, regardless of whether the business suffered any property damage. The maximum amount that can be provided for a disaster loan, or disaster loan limit, was first established in SBA regulations in 1968. In 1980, Congress began establishing disaster loan limits in statute, followed by SBA regulation updates. Historically, limits for business disaster loans in SBA regulations have been for the same amount as set in statute, whereas limits on home disaster loans in SBA regulations have been for a lesser amount than set in statute. SBA is authorized to establish loan limits lower in regulation than in statute because the statute establishes a ceiling for disaster loans, but not a floor. In 2008, Congress increased the disaster loan limit in statute to $2 million; SBA revised the business loan limits in regulation to $2 million but not the home loan limit. Consequently, the limits on disaster home loans (previously $40,000 for Personal Property disaster loans and $200,000 for Real Property Disaster Loans) remained the same in federal regulation for two decades (from 1994 to 2023). In 2023, SBA revised the disaster loan limit for Personal Property disaster loans to $100,000, and Real Property Disaster Loans to $500,000. Further, SBA announced that the revision allowed the SBA Administrator “to increase maximum loan amounts to homeowners and renters ... based on appropriate economic indicators, [including] current building costs, regional median home prices, the Consumer Price Index, and the Producer Price index” in a disaster declared region (or regions). This report provides an overview of the regulatory and statutory history of SBA disaster loan limits followed by policy options that include information about inflation, construction costs, and median home values and home price trends. This report also includes brief descriptions of SBA disaster loan categories.
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