SBA loan

How to Cancel an SBA Disaster Loan Application

When disasters strike, the Small Business Administration (SBA) offers disaster loans to help businesses, homeowners, and renters recover. However, there may be situations where you need to cancel your SBA disaster loan application. Whether due to finding alternative funding, changing circumstances, or simply a change of mind, it is essential to know the correct process for canceling your application. This guide will provide you with detailed steps and important considerations for successfully canceling your SBA disaster loan application.

Understanding SBA Disaster Loans

Before diving into the cancellation process, it’s important to understand what SBA loans are and the stages involved in the application process.

Types of SBA Disaster Loans

  1. Business Physical Disaster Loans: These loans help businesses repair or replace property destroyed in a declared disaster.
  2. Economic Injury Disaster Loans (EIDL): These loans provide working capital to small businesses affected by a disaster.
  3. Home and Personal Property Loans: These loans assist homeowners and renters in repairing or replacing damaged property.

The Application Process

  1. Application Submission: Submit your loan application along with required documentation.
  2. Review and Verification: The SBA reviews your application and verifies your losses and eligibility.
  3. Loan Decision: The SBA makes a loan decision based on their assessment.
  4. Loan Agreement: If approved, you sign the loan agreement.
  5. Loan Disbursement: Funds are disbursed to you.

You can cancel your application at any stage, but it’s easiest and most effective to do so as early as possible.

Reasons to Cancel an SBA Disaster Loan Application

There are various reasons you might want to cancel your SBA disaster loan application, such as:

  • Securing Alternative Funding: You may have found a more favorable loan option or received insurance payouts.
  • Changed Financial Situation: Your financial situation may have improved, making the loan unnecessary.
  • Errors in Application: Discovering significant errors in your application might prompt you to cancel and reapply.
  • Change of Plans: A change in business or personal plans that alters your need for the loan.

Steps to Cancel Your SBA Disaster Loan Application

1. Review Your Loan Application Agreement

Start by reviewing any agreements or documents related to your loan application. Look for any specific instructions or clauses about canceling your application.

2. Contact the SBA

The first formal step in canceling your application is to contact the SBA. Here’s how to do it effectively:

  • Identify the Correct Contact: Determine who to contact. This is usually the loan officer assigned to your application.
  • Prepare a Written Request: Draft a written request to cancel your application. Include your full name, application number, and a brief explanation of why you wish to cancel.
  • Send the Request: Send your written request via email or mail to the appropriate SBA office.

3. Follow Up with a Phone Call

After sending your written request, follow up with a phone call to ensure your request has been received and is being processed. Be polite and concise when explaining your situation.

4. Provide Any Required Documentation

The SBA may require additional documentation to process your cancellation request. Be prepared to provide:

  • Written Request Letter: A formal letter stating your intention to cancel the application.
  • Application Reference Documents: Any documents or references related to your loan application.

5. Confirm the Cancellation

Ask the SBA for a written confirmation of your loan application cancellation. This confirmation should state that your application has been canceled and that you are released from any obligations.

What to Expect After Canceling Your Application

Release from Obligations

Once your application is officially canceled, you are released from any obligations related to the loan, provided that no funds have been disbursed. If funds have been disbursed, you will need to return them according to the SBA’s instructions.

Impact on Credit Score

Canceling your application generally does not affect your credit score. However, the initial credit inquiry made during the application process may still appear on your credit report. This is typically a minor issue unless you have multiple inquiries within a short period.

Reapplying in the Future

Canceling your SBA disaster loan application does not prevent you from reapplying in the future. If your circumstances change, you can submit a new application. Make sure to address any issues that led to the cancellation of your previous application.

Tips for a Smooth Cancellation Process

  • Act Promptly: The sooner you decide to cancel, the simpler the process will be.
  • Keep Records: Maintain detailed records of all communications with the SBA regarding the cancellation.
  • Stay Professional: Communicate professionally and clearly with SBA representatives to avoid misunderstandings.
  • Seek Guidance: If unsure, seek advice from a financial advisor to understand the implications of canceling your application.


Canceling an SBA disaster loan application is a straightforward process if you follow the correct steps. By understanding the reasons for cancellation, communicating effectively with the SBA, and providing necessary documentation, you can ensure a smooth and hassle-free cancellation process. Remember to keep records of all communications and confirm the cancellation to ensure you are released from any obligations. With proper handling, canceling your SBA disaster loan application can be a simple and stress-free process, allowing you to focus on other aspects of your disaster recovery efforts.