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
5
Disaster Preparedness Tips for Businesses
6
25 percent of
businesses that
close after a
disaster never
reopen
Small Business Losses
- Institute for Business and Home Safety
7
What if your business had to close down for
several days after a disaster?
Facilities/Operations
8
• 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
9
• 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
10
• 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
11
• Consider Business Interruption Insurance • Covers operating expenses in the event of a
business shutdown
• Business Interruption Insurance also compensates you for lost income
Insurance
12
• 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
13
• After the disaster, your insurance company
will need accurate documentation of your
business assets
• Regularly photograph or videotape your
facility, and its contents
Insurance
14
• 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
15
A communications plan is
key to your post-disaster
recovery strategy
Communications
16
• 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
17
The “Message Center” will use phone and
e-mail to support crucial post-disaster
communications
Communications
18
• 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
19
• 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
20
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: [email protected]
- or -
• Visit our Web site at: www.sba.gov/disaster