WASHINGTON—In advance of Hurricane Florence making landfall, the U.S. Small Business Administration (SBA) announced that it beefed up its disaster loan program, which is the main source of federal assistance for small-business owners.
The SBA provides low-interest disaster loans to flood-ravaged businesses and residents to help them get back on their feet.
SBA usually guarantees loans for small-business owners, to mitigate lenders’ risk. However, to provide recovery support to the communities, the agency chooses to lend money directly. It provides disaster loans to businesses of all sizes, nonprofit organizations, homeowners, and renters hit by a disaster like a hurricane, wildfire, flood, tornado, or earthquake.
Businesses can borrow up to $2 million to repair or replace damaged machinery, equipment, and property as well as cover losses related to inventory and working capital.
In addition, homeowners can get loans of up to $200,000 for fixing or changing their primary residence. Homeowners and renters can also borrow up to $40,000 to replace damaged property such as cars, furniture, and clothing.
“SBA is on the ground immediately after a disaster strikes, helping individuals rebuild their homes and replace personal property while partnering with non-profits and businesses of all sizes so they can get back on their feet with the help of low-interest disaster loans,” she said.
Michael Marsha, owner and president of Forest Lake Drapery and Upholstery Fabric Center Inc. in Columbia, South Carolina, was one of the entrepreneurs who got assistance from SBA when his business was hit by a storm in October 2015.
His company’s facility was nearly destroyed, and its entire inventory was ruined. He got an SBA disaster loan to rebuild his more than 50-year-old company, and achieved record monthly sales the following year.
“Words can’t describe it when you go through things like we went through, and then our government picks us up and puts us back in business,” said Marsha. “And on top of that, they are so easy to work with.”
Marsha said SBA staff also offered assistance in re-building the company’s website.
“After the flood, we had too much to do. We didn’t have time to focus on the website,” he said, adding that the SBA’s offer was “phenomenal.”
This year, Marsha received the SBA’s Phoenix Award for Outstanding Small Business Disaster Recovery, for successfully coming back after the flood.
Learning from the experiences of hurricanes Harvey, Irma, and Maria last year, SBA identified many areas to operate more effectively and efficiently, an SBA spokesperson said. To respond to the hurricane events last year, she said the agency recruited 4,000 people in three months, opened more than 400 recovery centers, and handled over a million calls from states hit by the storms.
It also approved over $7.2 billion in disaster loans for the three hurricanes combined. Those loans helped more than 141,000 people rebuild their homes, replace personal property, and repair businesses. SBA approved over $1 billion in loans last year in less than 45 days, reaching a record. The average number of days needed for approval in previous years was about 90, the spokesperson said.
To improve the efficiency of its operations, SBA launched a new version of its “disaster credit-management system,” enabling faster loan processing. In addition, the agency revised its staffing strategy to better respond to large events on time.
