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 can lessen the financial impact of a disaster and save lives as well.
The U. S. Small Business Administration encourages small business owners to prepare for disasters. In fact, the SBA, along with Agility Recovery Solutions, has recently launched the Prepare My Business ( www.preparemybusiness.org ) Web site. Prepare My Business provides tips on how small business owners can develop disaster preparedness plans, and features interactive tools such as monthly webinars on business continuity planning. However, when preparation is not enough, the SBA can help by providing support to homeowners, renters and businesses of all sizes as they rebuild in the aftermath of a disaster. The SBA loan officers are on the job once a disaster declaration is made by the president or the administrator of the SBA.
Typically, the majority of disaster loans are made to homeowners and renters. Homeowners may borrow up to $200,000 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 damages business property, the owner may borrow up to $2 million to repair or replace the building, equipment, machinery, inventory and other business assets. SBA also makes economic injury disaster loans of up to $2 million to small businesses that may not have suffered any physical damage, but were financially impacted by the disaster. Interest rates on all SBA disaster loans are typically 4 percent or less, with up to 30-year terms.
The program is flexible enough to adapt to a number of special situations. For example, some businesses were hurt as the military reservist call-up gained momentum 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.
Last year alone, the SBA approved more than 3,300 business disaster loans totaling $372 million. We're proud to meet our mission of providing this assistance to business owners, especially when we know that they've followed a disaster preparedness plan that has positioned them to rebound, rebuild and start contributing to their local economy once again.
For more information on the SBA's Disaster Assistance programs, visit the SBA's Web site at www.sba.gov/ services/disasterassistance/index. html. Franklin J. Sciortino is the Buffalo District director of the Small Business Administration.