14 Minnesota Counties Can Now Get SBA Drought Loans Up to $2 Million at 4% — Here's How

If your business sits in central or western Minnesota and the drought cut into your revenue, a low-interest federal loan is now on the table. The U.S. Small Business Administration is offering disaster loans of up to $2 million, at rates as low as 4%, to eligible small businesses and private nonprofits in 14 Minnesota counties.

Repayment can stretch to 30 years, and borrowers owe no interest and no required payments for the first 12 months after the money is disbursed. The announcement, reported Nov. 10, 2026, says businesses can apply online at sba.gov/disaster.

The 14 Minnesota Counties That Qualify

The SBA said businesses and private nonprofits in these counties are eligible:

• Benton
• Cass
• Crow Wing
• Douglas
• Lincoln
• Lyon
• Mille Lacs
• Morrison
• Otter Tail
• Pipestone
• Stearns
• Todd
• Wadena
• Yellow Medicine

If your business is outside these counties, check sba.gov/disaster. The announcement we reviewed listed only these 14.

The Loan Terms at a Glance

• Maximum amount: up to $2 million.
• Interest rate: as low as 4%.
• Repayment period: up to 30 years.
• Grace period: no interest and no required payments for the first 12 months after disbursement.
• How to apply: online at sba.gov/disaster.

The announcement did not state an application deadline. That matters, because SBA disaster loans carry a filing deadline set in each declaration. Check the declaration details on sba.gov/disaster or call the SBA before you assume you have time.

What These Loans Are For

This story was reported from an SBA announcement that gave few details on loan type, so we looked at how the SBA described an earlier Minnesota drought declaration in 2023. In that case, the loans were Economic Injury Disaster Loans: working capital to cover obligations the business could have paid had the drought not occurred, such as fixed debts, payroll, accounts payable and other bills. They were not meant to replace lost sales or profits.

In that earlier declaration, eligible applicants included small businesses, small agricultural cooperatives, small aquaculture businesses and most private nonprofits that suffered financial losses directly from the drought. Nurseries could apply. The SBA could not lend to farmers, ranchers or other agricultural producers, apart from aquaculture enterprises. The current declaration may differ, so confirm with the SBA which rules apply to you.

Who Might Be Affected Beyond Farms

Drought hits more than crops. A business does not have to grow anything to feel it. Depending on how your sales depend on local conditions, owners who might look into this include:

• Nurseries and garden centers whose sales fall when water use is restricted or customers pull back.
• Equipment dealers, repair shops and suppliers that sell to farmers whose budgets tightened.
• Resorts, marinas, outfitters and campgrounds in the lake country counties, where low water or dry conditions can hurt visitors and bookings.
• Small food processors, feed stores and trucking companies tied to local agriculture.
• Private nonprofits whose donations or services were disrupted.

These are examples of the kinds of businesses that could be affected. Eligibility depends on your size, your type of activity and your financial resources, and the SBA decides each case.

A Practical Checklist Before You Apply

1. Confirm your county and your deadline

Start with the list above, then check sba.gov/disaster for the declaration and the filing deadline. Miss it, and the interest rate does not matter.

2. Document the loss

The SBA will want to see how the drought hurt your business. Gather monthly sales for the last two to three years, your most recent profit and loss statement, and notes on canceled orders, closed days or customers who pulled back. A side-by-side comparison of this year against last year is usually the clearest evidence.

3. Get your paperwork in order

Have your EIN, business license, tax returns and bank statements ready. If you never formalized your business, our guides on getting an EIN and business licenses cover the basics. If you mix personal and business money, a separate business bank account makes the review easier.

4. Compare the loan against your other options

A 4% rate with a 12-month payment holiday is hard to beat among typical small business borrowing, but it is still debt. The SBA's disaster program is separate from its 7(a) program, which our SBA loan guide explains. Work out the monthly payment you would owe once the grace period ends before you accept.

5. Check your insurance first

Disaster loans are generally not a substitute for insurance that already covers your loss. Review your business insurance policy and ask your agent whether any part of the loss is covered. Whatever you receive may affect what you can borrow.

What a $100,000 Loan Could Look Like

To make the terms concrete, here is our own arithmetic, not an SBA quote. A $100,000 loan at 4% over 30 years works out to a payment of roughly $477 a month once payments begin. Under the stated terms, nothing is due for the first 12 months after disbursement and interest does not accrue during that time. At the full $2 million, the same math produces a payment of roughly $9,548 a month. Your actual terms, fees and any collateral requirements will come from the SBA, so use these numbers only to test whether your cash flow could carry the loan.

The 12-month break is useful, but it is not free money. Use it to rebuild your cash position, not to postpone a hard look at whether your sales will recover enough to cover the payment later.

Questions to Ask the SBA Before You Sign

• What is the filing deadline for this declaration, and does my county fall under it?
• Is the loan for working capital, and what expenses can it cover?
• What collateral, if any, will I need to pledge at my loan size?
• How does any insurance payout or other disaster aid change the amount I can borrow?
• Is there any prepayment penalty if business bounces back and I want to pay it off early?

Common Mistakes to Avoid

• Waiting for certainty. Deadlines run from the declaration, not from when you feel ready.
• Assuming you are too small or too far from a farm. The test is whether the drought directly caused your financial loss, not whether you work in agriculture.
• Applying with thin records. Weak documentation slows the review. Build the comparison first.
• Borrowing the maximum by default. Ask for what the losses and the working-capital gap justify, not the largest number allowed.

What We Don't Know Yet

The announcement we reviewed did not include the filing deadline, a declaration number, detailed eligibility rules or SBA contact information. Those details are on sba.gov/disaster. We will not guess at them here, and you should not rely on the 2023 declaration's terms, such as its separate rate for nonprofits, until you confirm they apply now.

The Bottom Line

For a business in one of these 14 counties that lost income to the drought, a loan of up to $2 million at as low as 4%, with 30 years to repay and a 12-month break before payments start, can be the difference between catching up on bills and falling behind. The first step costs nothing: look up your county, find the deadline, and start gathering your records before you apply at sba.gov/disaster.

Sources: Y94 / KFGO-KBRF report of SBA announcement (Nov. 10, 2026); SBA disaster news release on the 2023 Minnesota drought declaration #18158, used only to describe how this type of loan has worked.

Photo by Jasper Wilde on Unsplash