How does an HOA apply for an SBA disaster loan to repair common area damage?

By OurHOA · General information · Revised November 3, 2026

How an HOA board applies for an SBA disaster loan for common area storm damage: who qualifies, the 60-day deadline, documents, collateral and owner assessments.

Part of the HOA board handbook: treasurer and money.

Yes, associations can borrow from SBA after a declared disaster

When a hurricane, flood, hailstorm or wildfire is covered by a federal disaster declaration, an HOA or condominium association can apply to the U.S. Small Business Administration for a physical disaster business loan. Under 13 C.F.R. 123.200, almost any business or nonprofit entity whose real or tangible personal property is damaged in a declared disaster area can apply, and SBA's disaster procedures manual (SOP 50 30 9) says condominium and homeowners associations are generally processed as private nonprofits. The loan covers the part of the physical loss that insurance and other recoveries did not pay, up to $2 million under 13 C.F.R. 123.202. It is a loan, not a grant. SBA's disaster page says the first payment is deferred 12 months with no interest accruing during that time, terms run up to 30 years, and a borrower who cannot get credit elsewhere pays a fixed rate of no more than 4 percent. The catch is the clock: the application window for physical damage is 60 days from the declaration, and most boards spend the first month on tarps and adjusters.

Confirm the association is the right applicant

SBA lends to whoever owned the damaged property or was responsible for repairing it when the disaster hit. The manual lists the kinds of areas an association usually claims: hallways, parking areas, sidewalks, driveways, grounds and pools, as the governing documents and state law assign them. That makes the declaration's maintenance article the first thing to pull. Fences, roofs and exterior walls are where boards get it wrong, because some declarations put them on the owner and others on the association. SBA's attorney advisors read the documents and decide, and they will separate common damage from unit damage line by line. Do the same sort yourself first. Walk the property with the insurance adjuster's scope in hand and list each damaged item under one of two headings, association or owner. Anything the documents put on the owner belongs on that owner's own application, not yours. Planned communities, co-ops and road associations qualify the same way when a legal entity owns the property; neighbors who share a private road with no association can apply as individuals or form one.

A sample timeline from storm to application

Day 0: the storm. Photograph every damaged common element before anything is moved, and report the claim to the master carrier. Days 1 to 10: watch for the declaration. SBA posts each declaration on its disaster site with the counties it covers and the filing deadline. The deadline runs 60 days beginning the day after the declaration date. Days 10 to 20: the treasurer gathers the document packet below and creates the association's account on SBA's application portal at lending.sba.gov. Days 20 to 30: the board meets, authorizes the application, names the officer who will sign, and decides how a loan would be repaid. Days 30 to 45: submit. Do not hold the application until the insurance claim settles. SBA reduces the eligible amount by insurance proceeds, so file with your best estimate and report the settlement when it arrives. SBA accepts applications within a 15-day grace period after the deadline without an explanation, and later ones only with a written reason, so treat day 60 as the real deadline. FEMA or SBA sometimes extends the filing period; check the declaration's fact sheet rather than assuming.

The document packet SBA asks associations for

The disaster manual lists what SBA may need to process an association's application. Build the packet now, even before a storm, and keep it with the reserve study: 1. The full governing documents: declaration, CC&Rs or master deed. 2. The bylaws and the articles of incorporation, if the association is incorporated. 3. A current list of officers and directors. 4. Federal tax returns, or annual reports and operating budgets, for the last three years. 5. The master insurance policy. 6. A copy of any special assessment passed for the disaster repairs. 7. A list of owners with names, addresses and phone numbers. Add the adjuster's estimate, contractor bids and your photos. The manual also tells loan officers to set an association's target payment at no less than $25 per owner unless they justify less, and disaster loans are repaid in monthly installments. Use that as a budget floor: a 120-home association should plan for a payment of at least $3,000 a month.

Collateral, borrowing authority and the repayment assessment

Under 13 C.F.R. 123.11, SBA generally asks for collateral on physical loans over $50,000 in a presidential declaration and over $14,000 in an SBA-only declaration. For associations, the manual says SBA usually takes two things: a mortgage on real property the association owns outright, such as the clubhouse or pool lot, and an assignment of a special assessment passed under the bylaws in an amount that will repay the loan. If the real estate covers the loan, SBA may skip the assignment but will still require proof that a dedicated special assessment passed. So before you sign, confirm the association can borrow and can pledge its income: Texas: Tex. Bus. Orgs. Code 2.101(6) lets an entity borrow money and secure the debt by pledging its property or income, though the declaration or bylaws can still require an owner vote. Florida: Fla. Stat. 617.0302(6) gives the same corporate power. During a declared state of emergency, Fla. Stat. 720.316(1)(j) and (k) let the board levy special assessments and borrow and pledge association assets for emergency repairs without an owner vote, for only as long as reasonably necessary under 720.316(2). Outside that window, a meeting that will consider a special assessment needs 14 days' written notice to owners, plus posting on the property, under 720.303(2)(c)2. Colorado: C.R.S. 38-33.3-302(1)(n) lets an association assign its right to future assessments only to the extent the declaration expressly provides. If yours is silent, talk to counsel before promising SBA the assignment. A motion the board can adapt: "Moved that the association apply to the U.S. Small Business Administration for a physical disaster loan of up to $____ to repair common area damage from [event], that [officer] is authorized to sign the application and supporting documents, and that any loan offer be returned to the board for approval before closing."

Owners can borrow their share of a one-time assessment

SBA's manual gives condominium unit owners a path most boards never hear about. If the association passes a one-time assessment to repair common areas, each owner can apply for a home disaster loan that includes their pro-rata share, on top of their own unit damage and personal property, within the program limits. The manual's example is a $4 million project with $1 million of insurance and a $2 million SBA loan to the association: the board assesses 275 owners $3,636 each for the last $1 million, and every owner can borrow that amount. To qualify, an owner gives SBA a copy of the assessment resolution, so word it plainly. A notice paragraph: "On [date] the board levied a one-time special assessment of $____ per unit to repair common area damage from [event]. Owners in the declared disaster area may be able to include this amount in an SBA disaster loan application by the [date] deadline. A copy of the board resolution is attached for that purpose." The manual describes this for condominium owners; owners in other kinds of associations should ask SBA whether their share qualifies. Our guide on how to levy an HOA special assessment covers the vote and notice steps.

If SBA says no

A decline comes in writing with the reasons. Under 13 C.F.R. 123.13, the association can ask for reconsideration in writing within six months of the decline notice, and the request must include the new information that answers each stated reason: a corrected budget, proof of the assessment, a clearer split of common and unit damage. After six months a new application is required. If SBA declines a second time, a written appeal to the processing center director is due within 30 days. Most declines for associations trace back to repayment ability, so the fix is usually a board-adopted assessment that covers the payment rather than a better letter.

Mistakes that cost boards the loan

Waiting for the insurance check. The 60-day window often closes before a large claim settles. File first and update SBA later. Claiming owner damage. Roof or window repairs the declaration puts on owners will be cut from the association's loan and slow the review. Borrowing without a repayment plan. SBA will ask how the payment gets made. Decide on the dedicated assessment before closing, not after the first bill arrives. Skipping the declaration check. A Colorado association whose declaration does not allow assigning assessments, or any association whose documents require an owner vote to borrow, needs that sorted before signing. Letting the paperwork live with one volunteer. Store the application login, the loan documents and the repayment schedule where the next treasurer can find them. Our guide on how to handle an HOA insurance claim after a storm covers the claim side of the same recovery.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

More on dues & money

Or browse all hoa dues, fees & money guides.