There are several categories of disaster loan: physical disaster loans, Economic Injury Disaster Loans (EIDL), and Military Reservist EIDLs. The first two loans are designed to provide relief to businesses that are affected by a federally declared disaster. In the case of Military Reservist EIDLs, these loans are designed to make up for economic hardship created by employees leaving to serve in the military.
A common misconception about EIDL loans is that they are only for property damage to buildings or business assets affected by a disaster. But any business or borrower, in a declared disaster area, that is harmed economically by a disaster and that needs working capital can apply for these loans. For instance, the COVID-19 pandemic reduced overall foot traffic and customer availability to many businesses — so this applies. And many of these loans are much easier to gain access to thanks to technological developments.
Additionally, businesses of all sizes can be covered by these disaster loan programs, though private nonprofit organizations need to look to different programs. These loans were designed to help cover losses not already covered by insurance and/or FEMA.