U. S. Small Business Administration DISASTER ASSISTANCE County Recovery Mtg - SBA 3-2-15.pdfU. S....

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U. S. Small Business Administration

DISASTER ASSISTANCE

Federal Disaster Loans for Businesses of All Sizes, Most

Private Nonprofit Organizations, Homeowners and Renters

SBA Disaster Assistance

• Preparing for Disaster

• How Disasters are Declared

• Types of Disaster Declarations

• SBA’s Disaster Loan Program

Contents

Preparing for Disaster

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Disaster Preparedness Tips for Businesses

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25 percent of

businesses that

close after a

disaster never

reopen

Small Business Losses

- Institute for Business and Home Safety

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What if your business had to close down for

several days after a disaster?

Facilities/Operations

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• Develop a plan to stay in operation if your

business space is unusable

• Assess the internal and external functions of

your company to determine what you need to

stay open

Facilities/Operations

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• Keep extra supplies of hard-to-replace

items your business needs to stay open at

an off-site location

• Buy a back-up generator to keep your

power running

Facilities/Operations

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• Do you have enough insurance to get your business back in operation?

• Review your policy to make sure you understand what isn’t covered

Insurance

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• Consider Business Interruption Insurance • Covers operating expenses in the event of a

business shutdown

• Business Interruption Insurance also compensates you for lost income

Insurance

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• Most insurance policies don’t cover flood

damage

• For information on flood insurance, visit the

National Flood Insurance Program’s website

at: www.floodsmart.gov

Insurance

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• After the disaster, your insurance company

will need accurate documentation of your

business assets

• Regularly photograph or videotape your

facility, and its contents

Insurance

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• Arrange for off-site backup and storage of

vital records and information

• Computer data should be backed up

routinely

• Consider professional information

protection and storage companies to provide

data protection solutions

Protecting Vital Information

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A communications plan is

key to your post-disaster

recovery strategy

Communications

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• Phone numbers and e-mail addresses for your suppliers, employees, customers, the local media, utility companies and emergency responders should be updated regularly

• Copies of the contact list should be kept by a key employee and a backup person

• It’s a good idea to also designate an out-of-region contact to serve as a “Message Center”

Communications

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The “Message Center” will use phone and

e-mail to support crucial post-disaster

communications

Communications

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• Head off rumors of business failure

• Appoint a spokesperson to inform the local

media, suppliers, your customers and others

about your company’s operations and

recovery

Communications

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• To learn how to develop your business disaster plan, visit: www.ready.gov, or call 1-800-BE-READY for free brochures

• The Institute for Business and Home Safety (IBHS) has an “Open for Business” toolkit. Visit them at: www.disastersafety.org

• Ready Rating is an American Red Cross program that helps businesses, schools and organizations become prepared for disasters and other emergencies. Visit them at: http://www.readyrating.org/

Additional Resources

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What’s New?

• DisasterAssistance.gov is a secure, user-friendly website that consolidates information about federally funded government assistance to disaster victims

• After answering a short, online questionnaire, DisasterAssistance.gov helps identify forms of assistance for which applicants may qualify

How Disasters are Declared

Assessing Damages After a Disaster

After a disaster, the state may

request a Preliminary Damage

Assessment (PDA) from either:

• The Federal Emergency

Management Agency (FEMA)

or

• The U.S. Small Business

Administration (SBA)

Preliminary Damage Assessment (PDA)

• When the state requests a Presidential PDA

from FEMA, SBA participates with

FEMA, state and local agencies to assess

the damages

Preliminary Damage Assessment (PDA)

• When the state requests an

SBA-only PDA for an

Agency declaration, SBA

conducts the survey with

state and local officials to

assess the damages

• FEMA does not participate

Types of Disaster Declarations

Types of SBA Disaster Declarations

Physical damage/Economic Injury

• Presidential (Individual and/or

Public Assistance)

• Administrative (Agency)

Economic Injury

• Governor’s Certification

• Secretary of Agriculture

• Secretary of Commerce

• Military Reservist

• In a Presidential Declaration, many Federal agencies

provide assistance

• FEMA is the coordinating agency and delivers

assistance, including:

• Individual Assistance (IA) - provides aid for

temporary housing, serious needs & necessary

expenses for individuals and households

• Public Assistance (PA) - provides aid to state and

local governments for infrastructure

Presidential Disaster Declaration

Presidential Declarations for

Individual Assistance (IA)

• When the President declares a

Major Disaster for IA, SBA’s

disaster loan program is activated

for businesses of all sizes, most

private nonprofit organizations,

homeowners and renters

President

Barack H. Obama

Presidential Disaster Declaration (IA)

Presidential Declarations for

Public Assistance (PA)

• When the President declares a

Major Disaster for PA, SBA’s

disaster loan program is activated

only for certain private nonprofit

organizations that provide

essential services of a

governmental nature

President

Barack H. Obama

Presidential Disaster Declaration (PA)

Presidential Declarations SBA Eligibility

IA Presidential Declaration

• SBA disaster loans for Physical Damage and

Economic Injury are available in the Primary

counties

• SBA disaster loans for Economic Injury are available

in the Contiguous (neighboring) counties

PA Presidential Declaration

• SBA disaster loans are only available to private,

nonprofits in the primary counties

SBA Administrator

Maria Contreras-Sweet

Administrative or Agency declaration

For smaller disasters, SBA’s

Administrator can issue an

SBA–only declaration (called an

Administrative or Agency

declaration)

• This activates SBA’s physical and

economic injury disaster loan

programs

Administrative or Agency declaration

• SBA makes an Agency

physical disaster declaration

at the request of the state,

and based on surveyed

documentation of at least 25

businesses and/or homes

that each sustained at least

40% uninsured property

damage/losses

Declaration Differences

In an SBA Administrative/Agency declaration

• SBA disaster loans for property damage and

economic injury are available in both the primary

and contiguous counties

* In presidential declarations SBA property damage

loans are available only in primary counties

• When a Governor certifies that at least five (5)

small businesses in a disaster area have suffered

substantial economic injury as a result of a

disaster, and need financial assistance not

available on reasonable rates & terms, SBA

activates its Economic Injury Disaster Loan

(EIDL) program for specified primary and

contiguous counties

Governor’s Certification

• When the Secretary of Agriculture designates an

agricultural disaster, SBA activates its Economic

Injury Disaster Loan (EIDL) program for the

specified primary and contiguous counties

Secretary of Agriculture Declarations

• When the Secretary of Commerce makes a

commercial fishery failure or fishery resource

disaster under Section 308(b) of the

Interjurisdictional Fisheries Act of 1986, SBA

activates its Economic Injury Disaster Loan

(EIDL) program for the specified primary and

contiguous counties

Secretary of Commerce Declarations

• Are available to small nonfarm businesses, small

agricultural cooperatives, small businesses

engaged in aquaculture and most private

nonprofit organizations (PNPs)

• Help meet working capital needs caused by the

disaster, even if the business did not have physical

damage

• Help small businesses meet ordinary and

necessary operating expenses/debts until they

recover from the disaster

Economic Injury Disaster Loans (EIDLs)

• If an eligible small business, without credit

available elsewhere at reasonable rates & terms,

is unable to meet its ordinary and necessary

operating expenses because an essential employee

is ‘called-up’ to active duty as a military reservist,

the owner(s) of the small business may apply for

an MREIDL

• This program covers the entire United States and

its territories

Military Reservist EIDL (MREIDLs)

SBA Disaster Loan Program

SBA’s Role in Disaster Recovery

• After an SBA disaster declaration for hurricanes,

floods, tornadoes, earthquakes, wildfires and

other disasters, SBA disaster loans are the

primary source of federal assistance to help

private property owners pay for disaster losses

not covered by insurance or other recoveries

• SBA offers low-interest federal loans to businesses

of all sizes, private nonprofit organizations,

homeowners and renters

• By providing disaster assistance in the form of loans,

SBA helps reduce federal disaster costs compared to

other forms of assistance, such as grants

• These loans require borrowers to maintain

appropriate hazard and flood insurance, reducing

the need for future federal assistance

• SBA’s disaster loans are a critical source of economic

stimulation in disaster-ravaged communities

Disaster Loans Help Recovery

• They help spur employment and stabilize tax bases

by protecting jobs

• Disaster losses are unexpected and create financial

hardships for most disaster victims

• SBA’s low-interest, long-term Federal disaster loans

help make recovery affordable

Disaster Loans Help Recovery

• The law gives SBA several powerful tools to make

disaster loans affordable:

• Low interest rates, generally

• 4% for businesses

• about 3% for nonprofit organizations

• about 2% for homeowners/renters

• Long terms (up to 30 years)

• Refinancing of prior debts (in some cases)

Making Recovery Affordable

SBA’s Office of Disaster Assistance (ODA)

SBA’s Disaster Loan Program

• Is administered through SBA’s Office of Disaster

Assistance (ODA)

• Is SBA’s largest direct loan program and SBA’s

only program for entities other than small

businesses

• For physical damages from a declared disaster,

SBA’s disaster loans are available to more than

just small businesses

• SBA disaster loans are available to:

• Nonfarm businesses of all sizes

• Private, non-profit organizations

• Homeowners

• Renters

Not Just for Small Businesses

Interest Rates for disasters occurring on or after

January 20, 2015:

Current Interest Rates

• The majority of SBA disaster loans are at the lower interest rates

• Credit available elsewhere means that the disaster victim can provide

for their own recovery through private sector borrowing on reasonable

rates and terms without causing financial hardship, as determined by

SBA

Business EIDL Nonprofit Home

No Credit Available 4.00% 4.00% 2.625% 1.813%

Credit Available * 6.00% N/A 2.625% 3.625%

Requirements for loan approval:

• Eligibility - damaged property must be in a

declared county

• Credit History - Applicants must have a credit

history acceptable to SBA

• Repayment - Applicants must show the ability to

repay all loans

SBA Loan Requirements

• Only uncompensated losses are eligible • Disaster losses not compensated by insurance or

other recoveries, such as grants, reimbursement

by another party, settlement of a lawsuit, etc.

• Applicants are not eligible if they have not

complied with the terms of previous SBA loan

agreements • e.g. failure to maintain required insurance

Loan Eligibility Restrictions

• SBA determines the term of each loan in accordance

with each borrower’s repayment ability

• The maximum term is 30 years

Loan Terms

• Business Repair/Replace: $2.0 Million • Real Estate/Machinery/Equip.

• Furniture and Fixtures

• Working capital $2.0 Million • Economic Injury (EIDL)

(Combined loan limit cannot exceed $2.0 Million)

Disaster Business Loan Limits

• A business loan may be increased for mitigation

(preventative measures) by up to 20% of the verified

loss

• The $2.0 million statutory limit applies to the total of

all loans to a single borrower and its affiliates

• SBA may waive the statutory limit if a business is a

Major Source of Employment

Disaster Business Loan Limits

The following types of businesses are not

eligible for EIDLs:

• Speculative businesses

• Multi-level sales organizations (pyramids)

• Hobby Businesses

Loan Eligibility Restrictions

Home Repair/Replace:

Real Estate up to $200,000

Personal Property up to $ 40,000

Refinancing up to $200,000

Mitigation 20% of verified loss

Disaster Home Loan Limits

• For substantially disaster-damaged businesses and

homes, SBA may refinance recorded liens on real

estate, and/or machinery & equipment

• Liens eligible for refinancing include:

• Business loans - real estate and chattel (UCC

filing) liens

• Home loans - real estate liens only

Refinance eligibility cannot be determined until insurance

settlements are final

Existing Federal loans are not eligible for refinancing

Refinancing

• Physical loans • Over $14,000 for Agency declarations

• Over $25,000 for Presidential IA declarations

• EIDLs • Over $25,000 require collateral

Collateral Requirements

SBA takes real estate as collateral

when it is available

SBA will not decline a loan for

lack of collateral; but, SBA

requires that borrowers pledge

available collateral

Insurance Requirements

• SBA requires borrowers to obtain and maintain

appropriate insurance as a condition of most loans

• Hazard insurance – Is required on all secured loans

• Flood insurance - Is required for properties located in a

Special Flood Hazard Area (SFHA), and for properties

damaged in a flood disaster

• Apply online using SBA’s secure Web site

• Apply with an SBA representative at any designated

center in the declared disaster area

• Apply by mailing a completed paper application to

SBA

Three Ways to Apply

Complete the application online using SBA’s Electronic

Loan Application (ELA) at:

http://disasterloan.sba.gov/ela

Online

SBA representatives provide personal service at:

At a Center

Disaster Recovery

Centers

SBA Disaster Loan

Outreach Centers

SBA Business

Recovery Centers

• No appointment is necessary

SBA representative meet personally with individuals at

the centers to answer questions about SBA’s disaster

loan program, explain the application process and help

each individual complete their application online

At a Center

Mail a completed application to SBA

U.S. Small Business Administration

Processing and Disbursement Center

14925 Kingsport Road

Fort Worth, Texas, 76155-2243

For Additional Information

U. S. Small Business Administration

Disaster Assistance Customer Service Center

Phone: (800) 659-2955 TTY: (800) 877-8339

• Email: disastercustomerservice@sba.gov

- or -

• Visit our Web site at: www.sba.gov/disaster