Opinion: SBA program finances disaster recovery

As soon as the water level dropped a bit, Breskman and his 18 employees went to work, starting the cleanup and recovery process. He also applied for an SBA disaster loan, which covered rebuilding costs. A year later, Breskman hosted a belated 50th anniversary party for his company.

When disaster strikes, SBA loan officers swing into action once a disaster declaration is made by the president or the administrator of the SBA.

Since 1953, the SBA has approved 1.7 million low-interest disaster loans worth more than $33 billion. After the devastating 2004 hurricane season, when four major storms hit Florida and 13 other states, the SBA approved more than $2 billion in disaster loans to about 63,000 residents and business owners.

Typically, the majority of disaster loans are made to homeowners and renters. Homeowners may borrow up to $250,000 to repair or replace damaged or destroyed real estate. The SBA may also lend up to $40,000 to renters and homeowners to cover the costs of replacing personal property such as appliances, furniture, clothing or cars.

When a disaster causes property damage to a business of any size, the business owner may borrow up to $1.5 million to repair or replace the building, equipment, machinery, inventory and other business assets.

SBA also makes economic injury disaster loans of up to $1.5 million to small businesses that may not have suffered any physical damage but were financially affected by the disaster. Interest rates on all SBA disaster loans are typically 4 percent or less, with terms of up to 30 years.

After the attacks on the World Trade Center and the Pentagon on Sept. 11, 2001, the counties surrounding New York and Washington, D.C., were declared federal disaster areas, allowing business owners and residents to apply for SBA disaster loans.

With the closing of airports and the increased security at the U.S. borders, the downturn in travel wreaked havoc among small businesses across the country. The SBA made the unprecedented move of expanding the economic injury disaster loan declaration, making those loans available to eligible small businesses across the United States and its territories. In the year following the attacks, the SBA approved more than $1 billion in economic injury disaster loans to more than 11,000 small businesses.

The program is flexible enough to adapt to a number of special situations. For example, some businesses were hurt by the loss of a key employee or partner as the military reservists were called up after war was declared in Iraq.

The SBA responded by making economic injury loans available for businesses affected by the call-ups. The Military Reservist Economic Injury Disaster Loan program makes low-interest loans available to help these companies cover their financial obligations until after the employee or partner is released from active duty.

It’s impossible to predict where or how severely a disaster will affect a home or business, but it’s always a good idea to prepare. Maintaining adequate insurance, assessing hazards and developing a solid emergency plan are strategies that can lessen the financial impact of a disaster and save lives as well.

For more information on the SBA’s Disaster Assistance programs, visit the SBA’s Web site at www.sba.gov/disaster_recov/index.html.

Sam Jones is Region VII administrator with the U.S. Small Business Administration.[[In-content Ad]]