A Refresher on SBA Disaster Assistance

In the U.S., we're headed for an unusually high wildfire season this year. According to AccuWeather forecasters, the ongoing "megadrought" in the southwest of the country is cause for concern for a small business (SMB). Thankfully, there's help available to small businesses for damaged or lost property, machinery, inventory and business operations due to wildfire or another natural disaster. Let's refresh your basic knowledge of the Small Business Administration (SBA) Disaster Assistance program. 

Do you need an SBA disaster loan?

Small businesses and nonprofit organizations affected by declared disasters could need an SBA disaster loan. A disaster could be wildfire, severe thunderstorms, drought, landslides or civil unrest. To receive federal assistance, the President or SBA Agency needs to designate an area as a declared disaster. If you aren't sure whether your business is located in a declared disaster area, check the SBA's current declared disasters list online. 

If your business is located in an area on the SBA disaster list, you may or may not need a low-interest disaster loan from an SBA lender. Small business owners may need financial assistance from the SBA for the following:

• Losses of company property, machinery or inventory not covered by insurance.
• Loss to your company that the Federal Emergency Management Agency does not cover.
• Unmet business operations due to the disaster.

Types of SBA disaster loans 

If the unfortunate happens, and your company needs disaster assistance, the SBA has loan options.  

• Physical damage loans provide coverage for property, machinery, equipment, fixtures, inventory and leasehold improvements (i.e., build outs to a leased space).
• Mitigation assistance loans cover costs to reduce the risk of damage caused by wind, flood, wildfire, earthquake and hail.
• Economic Injury Disaster Loans (EIDL) provide working capital to small business, small agricultural co-ops and private nonprofits to help with operating expenses during a declared disaster.
• Military reservist loans are for companies with employees called to activity military duty. 

SBA disaster loans are low-interest (4% to 8%) and mature at 30-years with no pre-payment penalty or fees. Collateral is needed for physical damage loans over $25,000 and for EIDL. The loan limit is $2 million for qualified applicants for the physical damage, EIDL and Military Reservist Economic Injury Disaster Loan (MREIDL). 

Get started on an SBA disaster loan

For small businesses in areas where natural disaster threatens your ability to operate normally or add pressure on your company's cash flow, it's a good idea to know where to get help with an SBA disaster loan before you need it. The Law Offices of Donald W. Hudspeth, P.C. are here to provide business legal advice, should you need an advocate. 

Categorised in: Starting a Business in Arizona

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