The electrically small loop is of great practical importance in finding direction and probing magnetic fields. In [1], it was proposed for communication from above ground to observation points within coal mines. In this paper, the interactions of electromagnetic field, produced by a current-excited small loop, with lossy and lossless materials are investigated. The use of a small loop for the NDE of composite materials is also presented. To achieve these goals, solutions of interface problems become necessary. Since the exciting current is not restricted to be time-harmonic, we will solve the problems in the time domain. Also, to obtain economic requirements for computer resources, both storage and running time, a potential approach instead of vector field codes is developed.