The Small Business Administration offers loans to businesses (including private nonprofits) within declared disaster areas that have suffered damage resulting from the disaster, to repair or replace the property that was damaged. Although the agency was designed to help small businesses, even larger businesses that have incurred damage may qualify. Eligible businesses can receive up to $2 million or up to 20% of the appraised loss of value resulting from the damage, as confirmed by the SBA. Any proceeds from property insurers will be deducted from the total amount of assessed damage, so applicants need to include information about insurance coverage and what has been received with their applications for assistance. As a general rule, this program is meant to aid those who are uninsured, under-insured, or whose insurance has been denied. Public institutions are not eligible, as it is expected that the government will cover the damage and seeking this form of assistance would be double-dipping.
Generally, the revenue can be used for restoration and replacement of any type of property, including facilities, furniture, supplies, tools, vehicles, machines, fixtures, equipment, raw resources, and inventory. Funds may also be used to make the property better able to withstand future disasters. For example, a business in an area that is prone to flooding may use the proceeds to weather-proof its facilities and equipment, or a business near an area that suffers from frequent fire outbreaks may use the money for sprinkler systems, fire extinguishers, flame retardants, and other such measures.
Interest rates are determined by the borrower’s ability to receive credit from other sources. Those who are unable to obtain credit will receive interest rates at or under 4%; those who have other credit options may have interest rates as high as (but no higher than) 8%. Whether or not the recipient has other forms of credit available is determined by the SBA itself, so any related applications for credit (and the outcomes thereof) should be included with the potential borrower’s request.
If your business has suffered from disaster-related damage, consider contacting a bank or other lending institution that works with the SBA to determine what programs and other forms of assistance for which your business may be eligible. The bank should be familiar with the details of the program, and should be able to help you navigate the paperwork and red tape. Take advantage of its expertise to streamline the process for you, so that you can get your business back on track and continue running it in spite of any setbacks nature sends your way.