A natural disaster can easily disrupt small business operations and may
even force a business to shut its doors permanently. Over the years, the US
Small Business Administration has worked with small businesses, providing
advice and loans for starting a business, as well as starting back up after a
natural disaster.
Disaster recovery assistance
Originally launched in 2008, the US Small Business Administration’s
(SBA) electronic disaster loan application guided applicants through 80 screens
based on responses to questions aimed at determining eligibility. Recently, the
SBA reworked the electronic loan application for business disaster assistance,
making it only three pages in length, the same as the paper application.
“Our goal is to provide support for those rebuilding after a
disaster, and we wanted to make the process more user-friendly,” Karen
G. Mills, SBA administrator, stated in a press release. “Whether
it’s a hurricane, tornado, earthquake or devastating flood, the SBA can
step in to help communities get back on their feet by providing access to both
home and business recovery disaster loans. To make the loan application process
more streamlined and simplified, we have taken a different approach with the
online applications. This improvement will make those first steps toward
recovery more convenient.”
According to the SBA website, any business located in a declared
disaster area that has incurred damage may apply for a loan to help replace
damaged property or restore it to the condition it was in before the disaster.
The SBA can provide up to $2 million in disaster assistance, including economic
injury and physical damage assistance. Real property, machinery, equipment,
fixtures, inventory and leasehold improvements may be repaired or replaced
under the Physical Disaster Loan. The loan covers both uninsured and
under-insured physical damage.
An Economic Injury Disaster Loan helps business owners meet the normal
financial obligations they had before the disaster occurred, by permitting the
business owner to maintain a reasonable working capital position during the
subsequent period affected by disaster.
Unfortunately, not everyone is eligible to receive a loan and, according
to the Institute for Business and Home Safety, an estimated 25% of businesses
do not reopen following a major disaster.
One way to prevent your business from staying down after a disaster is
develop a disaster plan. By identifying the risks associated with natural and
man-made disasters, creating a plan in case of a disaster and keeping those
plans updated, you can help ensure the survival of your business. The SBA
provides several resources to help start a disaster plan, such as a disaster
preparedness guide, as well as checklists and advice on maintaining a
comprehensive management plan, preserving equipment and creating a business
recovery manual.
Although the SBA is generally known for the financial support it
provides to small businesses, “it also plays a critical role in assisting
the victims of natural and other disasters. SBA provides disaster assistance
through capital, counseling and contracting services. Its Disaster Loan Program
helps homeowners, renters, businesses of all sizes and private nonprofits fund
their recovery,” according to the SBA website. — by Casey Murphy
For more information:
US Small Business Administration. Available at: www.sba.gov. Accessed Aug. 3,
2012.
